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Insurer Unlawfully Poached Consumers' Credit Reports

March 8, 2007

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New York Attorney General Andrew M. Cuomo announced a settlement affecting nearly 400 New York consumers whose credit reports were unlawfully accessed by an insurance company. Under the settlement, Administrators for the Professions, Inc. (AFP), a New York insurance company, is paying $229,600 in compensation to those consumers.

Between November 2000 and March 2006, AFP obtained more than 800 consumer credit reports on approximately 400 different individuals from the credit reporting agencies Equifax and TransUnion. An overwhelming majority of the consumers' credit reports were acquired for purposes not permitted by the federal and state Fair Credit Reporting Acts.

Credit reports may be legally obtained by agents such as potential credit grantors, employers, or insurers, or with a consumer's permission. AFP, however, illegally provided credit reports for use as investigative tools in civil litigation, for use in connection with insurance claims, and for satisfying requesters' personal curiosity.

Credit reports were also unlawfully attained for investigators trying to locate parties in matrimonial and other personal matters, and for individuals looking to acquire information about an estranged spouse.

"Companies with access to a consumer's credit report must be vigilant in ensuring that such access is not abused or used unlawfully. Consumers' privacy must be protected, and the integrity and confidentiality of a consumer's credit report must be preserved."

Rebecca J. Weber, Executive Director of the New York Public Interest Research Group (NYPIRG), said, "Misuse of an individual's credit report can cause a lifetime of financial trouble. This scheme has affected hundreds of New Yorkers, and NYPIRG applauds Attorney General Cuomo for a successful crackdown on corporate crime."

Phyllis Hill Slater, Executive Council Member for the New York State office of the American Association of Retired Persons (AARP), said, "AARP commends Attorney General Andrew Cuomo for his efforts to ensure New Yorkers' personal credit information is not accessed without their consent. As older New Yorkers tend to be prime targets of fraud and abuse, it's important our laws are enforced to protect them."

Chuck Bell, Programs Director for Consumers Union, the publisher of Consumer Reports, said, "Consumer credit reports contain highly sensitive personal financial information, including social security numbers, home addresses, credit history, and employment information. It's critical that businesses obey the restrictions in federal and state laws that protect this information from unauthorized disclosure."

As a result of AFP's unlawful acquisition of consumers' credit reports, the credit files of those consumers inappropriately reflected that a credit "inquiry" had been made. The inclusion of such an inquiry in the credit files of these consumers could adversely affect their credit score or result in other negative consequences.

Under the settlement with the Office of the Attorney General, AFP agreed not to acquire a consumer credit report unless it is for a permissible purpose as set forth in federal and state law. AFP agreed to pay $229,600 in compensation for consumers whose credit reports were illegally accessed; those consumers whose credit reports were obtained on one occasion will receive $600, while consumers whose credit reports were accessed on two separate occasions will receive $1,000. AFP will also pay the State of New York $85,000 for penalties and $15,000 for costs related to the investigation.

In addition, AFP will provide the list of all affected consumers to Equifax and TransUnion, and direct those credit reporting agencies to delete all references to the illegal inquiries from each consumer's credit file.

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