N.Y. Insurer to Pay Customers for Unlawful Access to Credit Reports

March 30, 2007

New York Attorney General Andrew M. Cuomo has negotiated 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.

According to Cuomo, 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.

Headquartered in Manhasset, N.Y., AFP is the management company, conducting all day-to-day operations for Physicians’ Reciprocal Insurers (PRI), a medical malpractice writer.

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, according to officials.

Officials said 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,” Cuomo said.

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 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.

Source: New York Attorney General’s

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