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Credit Bureau Rapped On Privacy

Trans Union Corp., one of the nation's largest credit bureaus, is under a judge's orders to stop distributing and selling detailed lists of customers names based on consumer credit information.

James P. Timony, an administrative law judge for the Federal Trade Commission, ruled that Trans Union "invades consumers' privacy when it sells consumers' credit histories to third-party marketers without consumers' knowledge or consent." The FTC announced the ruling Wednesday.

Timony's ruling doesn't prevent companies that gather credit information from selling some details to marketers, but requires credit reporting agencies to ask consumers whether they can use the information.

The ruling that Trans Union violated the federal Fair Credit Reporting Act stems from a 1992 complaint by the FTC against the company, which was accused of selling detailed information about people, including:

  • Each customer's estimated income, based on credit data. The FTC said Trans Union competitors sell income estimates gathered from public records and self-disclosures, along with household income rather than individual income.

  • Details about a person's mortgage loan, such as whether a homeowner took a second mortgage, when the mortgage was due and the maximum mortgage amounts. The FTC said competitors gather similar information from public records and self-disclosure.

  • Lists indicating how many automobile loans a person has, along with details about the type of loan and when it was due. The FTC said other credit bureaus sell lists with the type of vehicles a person owns.

  • Lists of people with credit cards.

Timony noted that Trans Union offers customers the opportunity to ask that their information not be sold, so-called "opt out," but he complained that the procedure doesn't always work.

"While the right to opt out theoretically allows the consumers to request their names to be removed from target marketing lists, most consumers are unaware of the procedure," he said, adding that "there is no credible, direct evidence of the success rate of opt-out actually stopping direct mail or telemarketing calls."

A spokeswoman for Trans Union couldn't be reached immediately for comment.

The FTC originally accused Trans Union in 1992, and another administrative law judge and the full commission upheld those charges. But a federal appeals court overturned the law judge's ruling and returned the case to the FTC, which handed the case over to Timony.

Trans Union, the FTC staff or the commission itself can ask within 30 days that the full trade commission review Timony's ruling.

Written By Ted Bridis