A man complained to me after incorrectly ascribed debts affected his purchase of a house.

The man's lawyer wrote to a credit reporting agency in 1995, advising them that a debt noted against the man's credit report did not relate to him and asking for it to be corrected. Neither the man nor the lawyer received any response from the credit reporting agency.

In 1996, the man tried to arrange a mortgage. The bank declined his application on the basis of a credit report obtained from the credit reporting agency, which showed a number of outstanding debts against the man. The man's lawyer asked the credit reporting agency to explain why the debt that had been the subject of correspondence in 1995 was still listed. The lawyer alleged that three other debts had also been incorrectly ascribed to the man. The lawyer asked for the matter to be cleared up urgently as the man had a deadline for arranging finance.

The lawyer advised the bank of the inaccuracies in the credit report but the bank upheld its decision to decline the finance because the debts were not removed from the credit report.

The man subsequently visited the credit reporting agency's offices and refused to leave until his credit report was corrected. The credit reporting agency duly corrected the information and apologised to the man. The agency said that the debts had been noted on his credit report because of a mistaken identity. The four debts should have been ascribed to somebody else who had similar, but not identical, initials.

Principle 8

Because the information had been corrected by the time I received the complaint, the sole issue that arose related to the accuracy of information under information privacy principle 8. I had to consider whether before it used the information, the credit reporting agency had taken reasonable steps to ensure that, having regard to the purposes for which it was to be used, the information was accurate.

The information was to be used to provide a credit report to a potential credit provider. I considered that accuracy was of vital importance in these circumstances. Incorrect information could result in credit being declined, which could adversely affect the man and tarnish his reputation.

Breach

Due to mistaken identity, the man had four defaults listed on his credit report that were not his. The error was compounded because the debts appeared to have been loaded on four different occasions. While I accepted that errors do occur, in view of the weight that credit information carries, I expected the credit reporting agency to have carried out basic checks to ensure that the correct information was loaded. Checking a person's initials would seem to be a fundamental matter. I also expected particular caution to have been taken when loading information against names which were common - as the man's name was.

I noted that the man and his lawyer had experienced some difficulty in seeking further information about the debts and in correcting the file when it transpired the debts had been incorrectly ascribed to the man.

The errors in loading the debts, together with the failure to address the man's concerns when he drew the errors to the agency's attention, combined to suggest to me that reasonable steps had not been taken to ensure the information was accurate before it was used.

Harm

An action will be an interference with a person's privacy if it breaches an information privacy principle and causes some loss to the individual (section 66(1)(b)(i)) or results in significant humiliation or significant injury to the individual's feelings (section 66(1)(b)(iii)).

In this case, the man had signed a sale and purchase agreement for a house that was conditional on obtaining finance. His application for a mortgage was declined on the basis of the man's credit report and the agreement lapsed. He ultimately purchased the property, but first had to renegotiate to do so and the price increased substantially in that time. I considered this was a loss which could be attributed directly to the credit reporting agency's failure to take reasonable steps to ensure the default listings were accurate.

I noted that the man had also incurred legal fees in trying to obtain correction of the information, rearranging finance and completing a second sale and purchase agreement. I considered this, too, was a loss that could be attributed to the credit reporting agency's failure to take reasonable steps to ensure the default listings were accurate.

I accepted that the man also suffered significant humiliation and injury to his feelings following the refusal of credit. I took into account the stress suffered by the man when finance was declined and the first sale and purchase agreement fell through.

The complaint was settled after the credit reporting agency paid compensation to the man.

Indexing terms: Accuracy of personal information - Credit reporting agency - Four debts incorrectly ascribed to complainant - Credit denied on basis of adverse credit report - Loss -Significant humiliation - financial settlement - Privacy Act 1993, s 66(1)(b)(i) and (iii) - Information privacy principle 8.

June 2001