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High Court to Tackle Issue of Identity Theft

Law: Justices to clarify how long a victim has to sue a credit agency after fraud is detected.

March 06, 2001|DAVID G. SAVAGE | TIMES STAFF WRITER

WASHINGTON — The Supreme Court took up the issue of identity theft Monday, agreeing to decide whether victims can sue a credit reporting agency if they learn belatedly that an impostor stole their good credit history.

An estimated 750,000 Americans per year fall victims to identity-theft schemes. A stolen Social Security number can help a thief obtain a credit card or a loan.

If the fraud goes undetected by the credit reporting bureau, it can put money in the pocket of the thief and damage the victim's good credit.

Some lawyers for identity-theft victims have sought to hold credit reporting agencies liable for wrongly approving credit for an impostor. They say those agencies must tighten their procedures to detect credit applications from impostors.

But the fate of those lawsuits often turns on a matter of timing.

The Fair Credit Reporting Act says that claims for damages must be brought "within two years from the date on which liability arises."

If the high court follows that rule strictly--as the credit reporting industry wishes--the deadline could expire before victims even learn of a problem.

"Consumers don't know their privacy has been breached. They don't learn they have a problem until they go for new credit. And that may be years later," Los Angeles lawyer Andrew Ryan Henderson said.

He represented Adelaide Andrews, whose Social Security number allegedly was stolen in 1994 by a Santa Monica medical receptionist with the same last name.

Using her real name but Adelaide Andrews' Social Security number, the impostor allegedly was able to obtain a credit card and an apartment in Nevada, based on a credit report from TRW.

The impostor then failed to pay her bills on time.

After the victim discovered the problem, she sued TRW in 1996. But her claims for breach of privacy were rejected as being too late.

In October, however, the U.S. 9th Circuit Court of Appeals revived her claims. It ruled that the time limit begins to run only when the victim learns about the problem, not when the mistaken credit report was first issued.

Lawyers for TRW Inc. appealed to the high court. They said that this open-ended, liberal standard conflicts with the strict language of the law.

A ruling for the victim could also expose the credit reporting industry to a huge increase in legal claims, they said.

The justices agreed to hear the industry's appeal this fall in the case of TRW vs. Andrews, 00-1045.

The three major nationwide credit bureaus say they maintain data on 180 million Americans, or about 90% of adults. TRW left the credit reporting business in 1996 and sold its operation to Experian Information Solutions Inc., a division of Great Universal Stores. The other major firms are Equifax Inc. and Trans Union.

In other business-related cases, the court:

* Agreed to decide whether privately run state prisons can be sued as if they were government institutions.

Lower courts are split on the legal status of private prisons. In the last 10 years, the number of federal inmates in private prisons has soared from 15,476 to 141,361. (Correctional Services Corp. vs. Malesko, 00-860)

* Turned away a bid by United Airlines to block a second class-action lawsuit brought by female flight attendants. The attendants maintain that the airline's lower weight limits for women were unfair and discriminatory.

This legal fight has gone on since the early 1970s. United dropped the policy in 1994, but the suits have continued.

An earlier class-action suit was settled, but a U.S. appeals court said some flight attendants did not get a chance to join the earlier suit. (United Airlines vs. Frank, 00-948)

* Let stand a federal rule that requires Midwestern states to reduce air pollution, particularly from power plants.

Utilities and industry groups had challenged the rule as exceeding the authority of the Environmental Protection Agency. But last week, the court upheld the EPA's authority under the Clean Air Act, and the various pending challenges were dismissed. (Appalachian Power Co. vs. EPA, 00-445)

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