Credit Rater Discredited

After James Millstone learned that his automobile insurance was about to be canceled, he traced his trouble to his credit rating; he had apparently been given a black mark by O'Hanlon Reports Inc. of New York. Under the federal Fair Credit Reporting Act, he was entitled to have access to "the nature and substance of all the credit information." But Millstone was told by O'Hanlon's St. Louis office that his file was on its way to New York. Eventually, he was read a partial summary, which tagged him as "very much disliked by neighbors ... a hippie type ... participated in peace demonstrations... strongly suspected of being a drug user."

Enraged, Millstone, an assistant managing editor of the St. Louis Post-Dispatch, went to court. There, evidence made it clear that the file-in-New York story--plus a rule that the consumer himself could not read the summary or even touch it--were standard O'Hanlon techniques for dealing with inquiries. In addition, O'Hanlon's investigator, who earned $1.85 for his efforts, actually interviewed only one neighbor and failed to verify what he was told.

"A flagrant violation" of the credit act's provisions designed to ensure accuracy and disclosure, said U.S. Judge H. Kenneth Wangelin. In what the current Privacy Report of the American Civil Liberties Union calls a "precedent-setting decision," Wangelin ordered O'Hanlon to pay Millstone $2,500 for actual damages, $12,500 for attorneys' fees and $25,000 in punitive damages. O'Hanlon thought that too harsh and is appealing.

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