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Credit-Reporting Firm Settles With FTC

October 29, 1998|From Bloomberg News

A unit of First American Financial Corp., the Santa Ana title insurance and real estate services giant, on Wednesday agreed to settle Federal Trade Commission allegations that it failed to give consumers a fair chance to dispute inaccurate credit reports.

The FTC charged that First American Credco Inc., the largest U.S. provider of specialty credit reports, routinely failed to investigate disputed credit information as federal law requires. On the "rare occasions" when Credco launched an investigation, it failed to correct inaccurate or obsolete information in its files, the FTC said.

The dispute involves Credco's "instant merge" reports, which use computers to give mortgage companies, auto dealers, and other lenders combined information from the three national credit bureaus, Equifax Inc., Experian Corp. and Trans Union Corp.

Credco spokesman Per Gothe said the settlement won't force any changes in the company's business practices. The company, along with many others in the industry, in recent years began using an automated consumer dispute verification system that allows it to electronically contact creditors about disputes.

"We vigorously deny the allegations, but rather than spend another three years in court, we decided to settle the matter," Gothe said.

The FTC said the system for challenging reports failed to meet requirements under the U.S. Fair Credit Reporting Act.

Shares of First American rose $1.94 to close at $28.88 on the New York Stock Exchange.

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