Identity Theft Victim Claims Emotional Distress

Suzanne Sloane knew giving birth would be painful, but she did not foresee the ensuing two-year ordeal that would wreck her credit and drive her to the brink of divorce.

As Sloane delivered a boy at Prince William Hospital in Virginia on June 25, 2003, Shovana Sloan, a recent hire in the hospital's administration surreptitiously stole the new mother's identity.

Capitalizing on Sloane's similar name and birth date, the rogue employee began in November and December 2003 to use Sloane's Social Security number to obtain credit cards, loans, cash advances and other goods and services totaling more than $30,000. Sloane didn't discover the fraud until the end of January 2004, when Citibank notified her it had cancelled her credit card and advised her to contact Equifax Information Services.

Thus began what the 4th Circuit described recently as Sloane's "many months of emotional distress, mental anguish, and humiliation" as she tried repeatedly to correct errors in the credit reporting agency's file.

The upshot in 2006 was a near-record $351,000 federal jury verdict against Equifax for actual damages: $106,000 for Sloane's economic losses, $245,000 for her mental anguish, plus an order by the judge that Equifax foot Sloane's entire $181,083 legal bill. That grim news for Equifax brightened on Dec. 27, 2007, when the 4th Circuit vacated the grant of attorneys' fees pending further submissions and chopped $95,000 off the emotional distress award. Yet the remaining $150,000 mental anguish award is among the largest ever awarded for negligent erroneous credit reporting under the federal Fair Credit Reporting Act (FCRA).

"The message is that companies who ignore the damages caused by [violations of] the FCRA do so at their peril," says Sloane's attorney A. Hugo Blankingship III, a partner with Blankingship & Associates in Alexandria, Va. The 4th Circuit's approval of hefty compensatory damages is a wake-up call not just for credit bureaus, but for banks, retailers, cellular phone companies and other businesses who risk law suits if they negligently fail to correct erroneous credit information they furnish to credit reporting agencies, Blankingship suggests. "It's going to cost them a lot of money."