WASHINGTON, Nov. 13 (UPI) -- In a major blow to consumers, the Supreme Court ruled Tuesday that people who are the victims of mistaken credit reporting have a very limited time to file suit.
The court said under federal law, consumers have to file within two years of the of time a reporting mistake is made, even if they don't discover the mistake until that period runs out.
That means if someone's credit is wrongfully damaged, possibly because of identity theft, and the person doesn't learn about it for years, then he or she has no recourse in court against the credit agency.
The federal Fair Credit Reporting Act orders credit agencies to maintain "reasonable procedures" to avoid improper disclosure of consumer credit information.
The act says that if an agency commits a violation, then a consumer has two years from the time of that violation to file suit -- unless the agency has "willfully misrepresented any information" it was supposed to disclose to the consumer.
In June 1993, Adelaide Andrews visited a radiologist's office in Santa Monica, Calif., and filled out a form as a new patient.
The form asked, among other things, for her name, birth date and Social Security number.
Adelaide Andrews "handed the form to the office receptionist, one Andrea Andrews ... who copied the information and thereafter moved to Las Vegas," the Supreme Court said Tuesday.
Andrea Andrews "attempted on numerous occasions to open credit accounts using (Andelaide) Andrews' Social Security number and her own last name and address."
At least four times, the companies opening the accounts requested a credit report from TRW Inc., and each time TRW's computers matched the first name, first initial and Social Security number to Adelaide's credit.
With the match, TRW supplied Adelaide's credit history to the company checking Andrea's credit.
Adelaide didn't know about the activity until May 1995 when she tried to refinance her home mortgage and received a copy of her credit report from TRW.
In October 1996, almost a year and a half after discovering what was going on, Adelaide Andrews filed suit against TRW in Los Angeles under the Fair Credit Reporting Act.
A federal judge barred her claim, ruling that that TRW's mistaken credit reporting occurred more than two years before her filing.
However, a federal appeals court reversed, saying there is a "general federal rule" that a statute of limitations starts running when someone discovers that he or she has been harmed, not when the harm takes place.
Tuesday, the Supreme Court reversed the appeals court.
Speaking for a unanimous court, Justice Ruth Bader Ginsburg said the two-year time limit applies, except when an agency has "willfully misrepresented" its reporting.
"Where Congress sets out particular exceptions to a general prohibition," Ginsburg said from the bench, "courts have no warrant to enlarge the exceptions absent a green light turned on by the legislature. In this case, we would distort (the law's) text were we to convert the explicit, limited exception into the general rule .... We do not lightly attribute to words Congress wrote redundancy or trivial significance."
The ruling sends the case back down for a rehearing based on its principles.
(No. 00-1045, TRW vs. Andrews)
