Research and Statistics

TransUnion to pay $60 million to consumers flagged as criminals


A jury sided with a consumer who claimed TransUnion violated federal law over OFAC alerts

The content on this page is accurate as of the posting date; however, some of our partner offers may have expired. Please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.

TransUnion to pay $60 million to consumers it flagged as criminals


TransUnion will pay $60 million to consumers it mistakenly labeled as possible terrorists or drug dealers, under an order issued Tuesday by a federal jury.

The decision stems from a 2012 class-action lawsuit that alleged the credit bureau failed to notify consumers who were reported to lenders as being included on a “blocked persons” list kept by the Treasury Department’s Office of Foreign Assets Control (OFAC). The list includes terrorists, narcotics traffickers, arms dealers and other criminals who are prohibited from doing business in the U.S.

In 2011, plaintiff Sergio Ramirez of Fremont, California, was a denied a car loan at a local Nissan dealership because his TransUnion credit report contained an “OFAC” alert. Dealership employees showed Ramirez a copy of his credit report, which contained the names of two other men with similar names who were on the OFAC list.

According to the lawsuit, Ramirez called TransUnion to dispute the error, but was told there was no OFAC alert in his file. Shortly thereafter, TransUnion sent Ramirez a consumer file disclosure that included his personal and credit account information – including the hard inquiry generated when he applied for the car loan – but no OFAC alert. A few days after that, Ramirez received a letter from TransUnion stating his name was a potential match with the two other OFAC-listed men who appeared on his credit report at the car dealership.

In the lawsuit, Ramirez alleged TransUnion’s communication did not constitute a proper consumer file disclosure under the Federal Credit Reporting Act (FCRA). Siding with Ramirez, the jury determined the bureau should pay each member of the suit – including other consumers falsely tagged with OFAC alerts – $7,337.30 in punitive and statutory damages.

Lenders are required under the USA Patriot Act to check the names of all credit applicants against the OFAC list, and face huge fines if they don’t. TransUnion, Equifax and Experian began selling OFAC alert services to lenders around the time the law was passed. However, credit reporting industry representatives maintain lenders should not make credit decisions based solely on alerts and should check the list themselves.

Some credit bureaus don’t consider an OFAC alert to be part of a consumer’s traditional credit file, so it can’t be disputed. But consumer advocates have criticized the bureaus’ matching methods, saying the firms only use consumers’ names and not dates of birth or Social Security numbers.

The Ramirez case wasn’t the first or last time TransUnion was sued for FCRA violations related to OFAC alerts. In 2010, a federal appeals court ruled against the company after a Colorado woman was held up from buying a car due to an erroneous OFAC alert. Another suit filed in 2012 by Pennsylvania native Ronald Miller is being decided in a district court.

See related: Experian fined $3 million for deceptive credit score marketing, Credit bureaus to refund $17.7 million for score marketing

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

What’s up next?

In Research and Statistics

Cash back cards survey: Complex is out, simple is in

Flat-rate offers now outnumber cards with tiered paybacks, a new survey finds

See more stories
Credit Card Rate Report
Cash Back

Questions or comments?

Contact us

Editorial corrections policies

Learn more