Business 8th Edition by Marianne Jennings

Exercise 2

The Father with the Prodigal Son's Credit Rating
Facts
TRW, Inc. is one of the nation's largest credit reporting agencies. Subscribing companies report to TRW both the credit information they obtain when they grant credit to a consumer and the payment history of the consumer. TRW then compiles a credit report on that consumer to distribute to other subscribers from whom the consumer has requested credit.
John M. Stevenson is a 78-year-old real estate and securities investor. In late 1988 or early 1989, Mr. Stevenson began receiving numerous phone calls from bill collectors regarding arrearages in accounts that were not his. Mr. Stevenson first spoke with TRW's predecessor\Chilton's, to try to correct the problem. When TRW purchased Chilton's, Mr. Stevenson began railing TRW's office in Irving, Texas. In August 1989, he wrote TRW and obtained a copy of his credit report dated September 6, 1989. He discovered many errors in the report. Some accounts belonged to another John Stevenson living in Arlington, Texas, and some appeared to belong to his estranged son, John Stevenson, Jr. In all, Mr. Stevenson disputed approximately sixteen accounts, seven inquiries, and much of the identifying information.
The reverse side of the credit report contained a printed notice describing how consumers could send a written dispute of the accuracy of their credit reports to the local TRW office. Mr. Stevenson, however, called TRW to register his complaint and then wrote TRW's president and CEO on October 6, 1989, requesting that his credit report be corrected. His letter worked its way to TRW's consumer relations department by October 20, 1989, and on November 1, 1989, that office began its reinvestigation by sending consumer dispute verification forms (CDVs) to subscribers that had reported the disputed accounts. The CDVs ask subscribers to check whether the information they have about a consumer matches the information in TRW's credit report. Subscribers who receive CDVs typically have 20 to 25 working days to respond. If a subscriber fails to respond or indicates that TRW's account information is incorrect, TRW deletes the disputed information. Mr. Stevenson understood from TRW that the entire process should take three to six weeks.
As a result of its initial investigation, TRW removed several of the disputed accounts from Mr. Stevenson's report by November 30,1989. TRW retained one of the remaining accounts on the report because the subscriber insisted that the account was Mr. Stevenson's- The others were still either pending or contained what TRW called "positive information." It also began to appear that Mr. Stevenson's estranged son had fraudulently obtained some of the disputed accounts by using his father's Social Security number. This information led TRW to add a warning statement in December 1989, advising subscribers that Mr. Stevenson's identifying information had been used without his consent to obtain credit. Meanwhile, Mr. Stevenson paid TRW a fee and joined its Credentials Service, which allowed him to monitor his credit report as each entry was made. TRW finally completed its investigation on February 9,1990. By then, TRW claimed that all disputed accounts containing "negative" credit information had been removed. Inaccurate information, however, either continued to appear on Mr. Stevenson's reports or was reentered after TRW had deleted it.
Mr. Stevenson filed suit in Texas state court alleging both common law libel and violations of the Fair Credit Reporting Act (FCRA). TRW removed the case to federal court, and on October 2, 1991, the case was tried before a federal court without a jury. The district court granted judgment for Mr. Stevenson on both the libel and FCRA claims, and TRW appealed.
Judicial Opinion
WILLIAMS, Circuit Judge
Congress enacted FCRA... [T]o guard against the use of inaccurate or arbitrary information in evaluating an individual for credit, insurance, or employment, Congress further required that consumer reporting agencies "follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom" a credit report relates.
Consumers have the right to see their credit information and to dispute the accuracy or completeness of their credit reports. When it receives a complaint, a consumer reporting agency must reinvestigate the disputed information "within a reasonable period of time" and "promptly delete" credit information that has been found to be inaccurate or unverifiable.
The record, however, contains evidence from which the district court could find that TRW did not delete unverifiable or inaccurate information promptly. First, TRW did not complete its reinvestigation until February 9, 1990, although TRW's subscribers were supposed to return the CDVs by December 4, 1989. Second, § 1681i(a) requires prompt deletion if the disputed information is inaccurate or unverifiable. If a subscriber did not return a CDV, TRW claims that it deleted the disputed information as unverifiable. Yet, some disputed accounts continued to appear on Stevenson's credit report for several weeks. One subscriber failed to return the CDV, but its account appeared on the report issued on February 9, 1990. Another subscriber returned its CDV by December 4, 1989, indicating that TRW's information was inaccurate, yet the information was not deleted until after February 9,1990.
Allowing inaccurate information back onto a credit report after deleting it because it is inaccurate is negligent. Additionally, in spite of the complexity of Stevenson's dispute, TRW contacted the subscribers only through the CDVs. Although testimony at trial revealed that TRW sometimes calls subscribers to verify information, it made no calls in Stevenson's case. TRW relied solely on the CDVs despite the number of disputed accounts and the allegations of fraud. TRW also relied on the subscribers to tell TRW whether to delete information from Stevenson's report. In a reinvestigation of the accuracy of credit reports, a credit bureau must bear some responsibility for evaluating the accuracy of information obtained from subscribers.
The bureau had exhibited no ill will toward the plaintiff and had acted to fix the problem. Likewise, TRW provided Stevenson's credit report on request, did not conceal information about his report, investigated the disputed accounts, and attempted to resolve the complaints. TRW moved slowly in completing its investigation and was negligent in its compliance with the prompt deletion requirement. The record does not reveal, however, any intention to thwart consciously Stevenson's right to have inaccurate information removed promptly from his report.
TRW maintains that most of Stevenson's distress was the result of the many calls he received from creditors of the fraudulently obtained accounts. TRW correctly questions the relevance of these creditors' calls to violations of FCRA. Nearly all of these calls occurred before Stevenson filed his written dispute and TRW began its reinvestigation. Only after that did the FCRA violations occur. Stevenson's distress because of creditors' calls arose before TRW's FCRA violations.
The record reveals evidence, however, that Stevenson suffered mental anguish over his lengthy dealings with TRW after he disputed his credit report. First, Stevenson testified that it was a "terrific shock" to him to discover his bad credit rating after maintaining a good credit reputation since 1932. Second, Stevenson was denied credit three times during TRW's reinvestigation: by Bloomingdale's, by Bank One, and by Gabbert's Furniture Company. Stevenson testified that he had to go "hat in hand" to the president of Bank One, who was a business associate and friend, to explain his problems with TRW. As a result, he obtained credit at Bank One. Third, Stevenson had to explain his credit woes to the president of the First City Bank Colleyville when he opened an account there. With a new president at First City Bank, Stevenson had to explain his situation again. Despite the fact that he was ultimately able to obtain credit, Stevenson testified to experiencing "considerable embarrassment" from having to detail to business associates and creditors his problems with TRW. Finally, Stevenson spent a considerable amount of time since he first disputed his credit report trying to resolve his problems with TRW.
The district court properly found that Stevenson had suffered humiliation and embarrassment from TRW's violations of FCRA. We affirm the award of $30,000 in actual damages based upon the finding of mental anguish. We also affirm the award of S20,700 in attorney's fees.
Are the damages reasonable?