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Much attention has been focused on the "Big 3" credit bureaus -- Experian, Trans Union, and Equifax -- both as a source of personal information for identity thieves and a source of frustration for identity theft victims trying to clear up their credit reports. Consumers may not be as aware of other companies which compile reports where fraudulent (or mistaken) information about them may also be listed. 

Two such services that have been around for years -- check verification services and tenant screening services -- have very important impacts in consumers lives'. These "bad consumer blacklists" control your ability to open a bank account, cash a check and rent an apartment. When identity theft victims have had fraudulent checking accounts opened in their name (or bad checks written on an existing account) or had an apartment rented in their name, negative information could be on file with these companies. 

In addition to these well-established consumer "blacklists," this month, the Justice Department gave anti-trust approval to phone companies to start their own clearinghouse of information on consumers who don't pay their bills on time. This new consumer "blacklist" will also have negative consequences for identity theft victims who have fraudulent phone service established in their names.

 All of these screening services are credit bureaus, or consumer reporting agencies (CRAs). They must comply with FCRA requirements and many more stringent state credit reporting laws. Unfortunately, due to a lack of enforcement, not all consumers may be told their rights when denied on the basis of these firms' reports.

Tenant Screening Services Cause Credit Denial

After closing out an existing credit account with Chase Visa due to fraudulent charges by her identity thief, Linda Tapia was denied credit when she tried to reopen an account with Chase three and a half months later because, she was told, there were too many inquiries on her credit report! When Ms. Tapia obtained a copy of her Experian credit report, she discovered a number of inquiries from a company called "UD Registry." Here's what the victim had to then go through (keep in mind, this is only part of her whole story).

  1. Ms. Tapia was directed by Experian to contact the UD Registry to get her name removed from their database.


  2. She called UD Registry to find out why they were accessing her credit report. When she realized that they were a tenant screening company, she explained that she had not rented an apartment in many years and that it must have been something related to her identity thief.


  3. UD Registry asked her to submit a written statement detailing that she was an identity theft victim. Ms. Tapia sent a letter to UD Registry stating she was an identity theft victim along with a copy of her driver license.


  4. UD Registry then sent her a letter stating she should contact the property management company who submitted an application to rent an apartment in Ms. Tapia's name to UD Registry and that she could include a warning statement in her file that she was an identity theft victim, directing potential creditors/landlords to call her before processing an application in her name.

    After going through two layers of credit reporting agencies -- first Experian and then the tenant screening company, UD Registry -- she was able to discover that an apartment and a condo had been rented. One was in her name and one in the name of a woman claiming to be her daughter. Eventually, after she supplied information to the Secret Service on where the impostors might be living, the agency conducted an investigation. 

    While Ms. Tapia's experience did not result in a lasting black mark on her credit, other victims often do not discover that apartments have been rented in their name until they become the defendant named in an unlawful detainer (or eviction) lawsuit and the judgment goes to a collection agency which is ultimately reported on the victim's credit report as a default.

    Victim Becomes Defendant In Eviction Case

    That's what happened to A. Diane Ryan, a resident of Eureka, CA. She first discovered that her name was used to rent a university apartment in Sacramento when she was turned down for a loan at Bank of America. She obtained a copy of her credit report. It listed a debt with a collection agency attempting to collect the defaulted judgment in an eviction lawsuit that had been entered in Ms. Ryan's name when her imposter skipped out without paying the rent. Ms. Ryan has spent six months trying to convince Trans Union that she did not rent the apartment (or co- sign for anyone else) despite the fact that she has lived in the same house that she owns for 31 years. Ms. Ryan found it incredible that no credit agency ever contacted her even though they reported the bad debt under her name and social security number to Trans Union. Bank of America still refuses to grant her the personal loan until the debt is removed from her credit report.

     Linda Tapia and Diane Ryan are among many identity theft victims who have contacted the PIRGs who have had apartments rented in their name which they knew nothing about--until they saw a copy of their credit report with a collection judgment or other inquiry related to property rented in their name. As Postal Inspectors have indicated, a growing number of identity thieves are renting apartments to serve as mail drops for their ill-gotten gains. Consumers should be aware that numerous national and local tenant screening services may contain fraudulent listings if an identity thief has rented housing in their name. 

    Tenant screening services collect information on unlawful detainer actions (eviction lawsuits) from court records and credit information from the major credit bureaus which they then sell to landlords who subscribe to these services to screen prospective tenants. Additionally, tenant screening reports may include subjective information obtained from the landlord regarding the behavior of the tenant. An identity theft victim may be listed with one of these tenant screening services as having defaulted on an unlawful detainer judgment and not even know it. 

    Tenant screening reports are consumer reports under the federal Fair Credit Reporting Act (FCRA), and as such, consumers should be able to obtain a copy of their own report and dispute any mistakes or inaccuracies from any of these bureaus. (For a discussion, See Cotto v. Jenney, 721 F.Supp. 5 (D. Mass. 1989); FTC Official FCRA Staff Commentary Section 603(d) item 6F.) 

    Also, the California Consumer Credit Reporting Act (CCCRA) specifically includes tenant screening reports within its definition of a "consumer report." (California Civil Code Section 1785.3) Tenant screening companies are covered under the CCCRA's requirements regarding disclosure to consumers, consumer's right to dispute information, and duty to investigate and delete inaccurate information. (See UD Registry, Inc. v. State of California, 34 Cal.App.4th 107 (1995), certiorari denied 64 USLW 3484; Cisneros v. UD Registry, Inc. 39 Cal.App.4th 548, 559 (1995); For a more complete history of California's history addressing tenant screening companies and tenant blacklisting, see "Can Government Limit Tenant Blacklisting," by Gary Williams 24 Southwestern University Law Review 1077, 1087-1090 (1995).)

     Some of the larger services, such as UD Registry, based in Southern California, allow consumers to obtain a copy of their own report for a fee. Others that we contacted claim that they only provide landlords with credit information from one of the Big 3 credit bureaus and direct consumers to the bureau that they use. In PIRG's view, the activities of tenant screening companies deserve greater scrutiny for compliance with applicable laws. 

    For a listing of some tenant screening services and the areas they serve, please see Appendix B. Consumers should check with local apartment associations and in the yellow pages of their local phone directories to find the services most commonly used in their area.

    Check Verification/Guarantee Companies

    • Samantha discovered she was a victim of identity theft when a check she wrote at a grocery store would not clear through SCAN. SCAN is one of several national companies that keeps information on bad check writers which it provides to merchants who pay a fee for their services. When Samantha contacted SCAN, she learned that several fraudulent checks had been written in her name at major department stores and other retail outlets. She suspects that her identity was stolen from a loan application, since the bank where the fraudulent checking account had been opened had a copy of her driver's license and a recent pay stub which contained her social security number. Samantha is still in the process of doing follow-up 11 months after she first discovered the fraud. 
    • Another fraud victim, June, found out that over $2,000 worth of checks had been processed using her driver's license number for the purchase of merchandise at a major department store. She was told by the police to fill out a fraud form with the department store, but it refused to take action. Not only did the department store not tell June how to clear her name with the check verification companies, but it also told her that they were putting her driver's license number in their computer database of bad check writers from whom not to accept checks. 


    According to the credit industry's Nilson Report, merchants' losses due to check fraud increased 18 percent from 1995 to total $13 billion in 1996. Identity theft victims like Samantha and Jayne who have had bad checks written in their name will be listed with any one of several national or local check verification or guarantee companies, such as SCAN, Telecheck, CheckRite, CheckCare, and Equifax. Check verification companies will approve or disapprove a check based on a consumers' bad check writing history compiled from a number of sources. Their records may include the consumer's name, address and phone number, checking account number and bank, and any identification, such as driver's license number that was used to cash the check. Some of these companies, known as check guarantee services, will also cover the cost of bad checks for merchants and then attempt to collect the debt from the consumer. 

    These companies are not only used by merchants to determine whether they will or will not accept a consumer's check, but also by banks to determine whether they will allow a consumer to open a checking or other account with their bank. It has been reported that more than 86,000 retailers, including department stores, convenience stores and supermarket use the services of 22 of the largest check verification companies. ("Computers Keep Check Files; Retailers Lining up to Get On Line with Check Verifiers," by Brian E. Albrecht, The Plain Dealer, Cleveland, OH, April 20, 1997.

     According to surveys conducted in California and New York, a large number of banks base denials of new accounts on whether a consumer's name is listed with ChexSystems' database. A 1991 survey by Consumer Action revealed 36 of 54 California banks surveyed automatically deny new accounts to anyone on ChexSystems database. A City of New York Department Of Consumer Affairs' 1992 report, "ChexSystems, The Banks' TRW," found that NY's five largest banks either automatically deny accounts or gave inconsistent responses.

     California and other states subject "check service systems" to the same requirements as credit reporting agencies. (See California Civil Code Section 1785.5) While the 1970 federal Fair Credit Reporting Act (FCRA) did not specifically include or exclude check service systems, courts and the Federal Trade Commission consider lists of consumers check writing histories to be consumer reports subject to the FCRA requirements regarding notice to consumer, including the right to obtain a copy of their report and dispute inaccuracies. (Estiverne v. Saks Fifth Avenue & JBS, 9 F.3d 1171 (5th Cir. 1993); followed by Cisneros v. UD Registry, 39 Cal.App. 4th 548 (1995); FTC Official Staff Commentary Sect. 603(d) Item 6E.) 

    Recognizing the growing number of consumer complaints regarding false and inaccurate information used to characterize them as bad check writers, Congress clarified the federal law with an amendment offered by Sen. Howard Metzenbaum (D-OH) in 1994 which required consumer reporting agencies to include the dates, original payees, and amounts of any checks upon which any negative characterization of the consumer is based. (15 U.S.C. Section 1681g)

     Additionally, under the new 1996 amendments to the FCRA, when a consumer reports that information regarding checks was fraudulent or inaccurate, merchants will have to conduct an investigation of information provided to the check verification company and report the results to the check verification company or the consumer within 30 days. Consumers may have the right to sue merchants that fail to do so. (For further discussion of FCRA amendments relating to the duties of merchants and other furnishers of information to credit reporting agencies, See Section II below.) 

    Despite these protections, many identity theft victims have reported that even after contacting these companies, filling out fraud forms, and providing them with information from the bank regarding the fraudulent checks, they continued to be turned down by merchants when they write checks because their name and driver's license number keeps coming up as a bad check writer. Victims of check fraud should contact all of the major check verification companies listed in the CALPIRG/Privacy Rights' identity theft guide (see Appendix A), and any problems with clearing up inaccuracies should be reported to the FTC. 

    *Pseudonyms have been used for victims in this section at their request.

    Telephone customer blacklists

    According to a recent AP story, the Justice Department on September 10, 1997 gave its approval to phone companies who want to compile and share information about customers who fail to pay their long-distance phone bills. ("Government Helps Phone Companies Collect," by Jeannine Aversa, AP Writer, Washington Post [from Washington AP], September 3, 1997.) Major long distance carriers such as AT&T, MCI, and Sprint would use an independent clearinghouse to which they would supply information and also tap in to find out whether a potential customer has defaulted on their long distance bills.

     What the article fails to mention, however, is the impact that such a clearinghouse will have on identity theft victims who have had long distance phone accounts opened in their name. This will be yet another "blacklist" from which victims would have to clear their names. According to a Department of Justice spokesperson, the new clearinghouse will have to comply with all FCRA requirements, so consumers should be able to request a copy of their report and be given the opportunity to correct inaccuracies.



©1999 Public Interest Research Groups