An Office of Foreign Assets Control (OFAC) alert on a credit report is a notification that your name potentially matches someone prohibited from doing business in the United States. OFAC is the federal agency within the U.S. Department of the Treasury responsible for economic sanctions. Economic sanctions prohibit activities involving trade and financial relations with countries, groups of people, and other entities.
OFAC alerts are set up to notify lenders of a possible match with a person on the U.S. Department of the Treasury’s Specially Designated Nationals (SDN). Names may match:
- Suspected terrorists
- Arms dealers
- Human traffickers
- Drug traffickers
- Money launderers
The SDN list is not limited to the above. In many cases, the OFAC on a credit report may only match first and last names. With relatively imprecise matching methods, innocent people can be harmed by OFAC alerts.
Can You Sue for an OFAC Misidentification?
Consumers who have been misidentified for an OFAC violation may be able to sue liable parties. Whenever you apply for financing or consent to a background check for a new job, credit bureaus will run your information along with the SDN list. If your name matches anyone on the SDN list, an OFAC notation will appear on your report.
The types of matching procedures can differ from consumer reporting agency to consumer reporting agency. When very little information is used as the basis for the search, erroneous matches can become more common than consumers realize. According to records in a recent federal class-action suit, 8,100 consumers had erroneous OFAC alerts in their credit files over a six-month period.
An OFAC flag is supposed to alert a lender to do their due diligence and is not supposed to be an automatic denial. It is the person or organization’s responsibility to request the information to validate the OFAC match. However, many lenders and employers automatically deny an OFAC flagged credit report without doing their due diligence.
Can Creditors Deny My Application Based on an OFAC Alert?
Creditors are not supposed to deny credit based on an OFAC alert without assuring it is accurate but it happens.
According to the U.S. Department of the Treasury, determining a valid OFAC match involves verifying the match through a series of eliminating steps:
- Determine if the OFAC flag is for the SDN list or another sanctions list
- Clarify how much of the person’s name is a match (i.e., if it is only the last name, you do not have a match)
- If the full name is a match, then compare the other information provided (e.g., address, nationality, tax ID, or cedula number)
- If the information is near or exact, the match is likely valid
If a match can be confirmed, then it is the responsibility of the creditor to call the OFAC Hotline. However, many organizations prefer to move on to the next transaction and do not follow through with the above steps. As a result, people who have OFAC alerts on their credit reports often suffer economic and emotional consequences.
What Should I Do if I Find Out My Credit Report Has an OFAC Alert?
If you find out that you have an OFAC red flag on your credit report, it is in your best interest to consult an experienced credit report lawyer to remove the “false positive.” Under the Fair Credit Reporting Act (FCRA), you have the right to have inaccuracies removed from your information. You can contact the credit bureau directly and ask that the false match be removed by following the dispute process:
- Gather all documentation that proves you are not a valid match (e.g., social security card, birth certificate
- Request a copy of the disclosure detailing the OFAC match
- Craft a letter explaining the details of the mistake
- Submit the dispute by phone, mail, or on their website
Unfortunately, many disputes are denied or remain unresolved for months. If you have filed a dispute to correct the false match without success, you may be entitled to damages. A credit report lawyer with a strong history in OFAC-related matters can discuss the details of your case and advise you on the best course of action.
What Damages Are Rewarded in Erroneous OFAC Alert Cases?
The jury found in Ramirez vs. TransUnion violated the rights of consumers under FCRA and awarded statutory damages and punitive damages. The FCRA allows for statutory damages of $100-$1,000.. With the addition of punitive damages, the total recovered compensation amounted to $60 million at the trial court.
Willful or negligent credit report errors may entitle victims to:
- Actual damages
- Statutory damages
- Attorney fees
- Court costs
- Possible punitive damages
Contact Berger Montague for Help Today
An OFAC on a credit report can have devastating consequences on your economic well-being. At Berger Montague, we can evaluate your case to determine what concrete injuries you have suffered and gather the critical evidence needed to establish their value in court. Schedule a consultation with a credit report lawyer today to discuss the details of your claim.