## Facts

- San Antonio Retail Merchants Association (SARMA) operated a computerized credit-reporting system that relied on subscriber businesses to input consumer identifiers and new credit information.
- The system used an “automatic capturing” feature: once a subscriber selected a displayed consumer file, the system automatically incorporated new data entered at the terminal into that file.
- SARMA maintained a negative credit history for William Daniel Thompson Jr., but its system erroneously associated that history with William Douglas Thompson III due to inadequate identifier matching.
- SARMA failed to verify the accuracy of a social security number captured into its system, despite social security numbers being the most important identifying factor for credit reporting.
- Gulf Oil Corporation and Montgomery Ward denied credit to Thompson III based on SARMA’s inaccurate report.
- Thompson III investigated, obtained confirmation that the adverse credit incident concerned Thompson Jr., and provided that information to SARMA.
- The inaccurate information remained in SARMA’s files for nearly 18 months and was corrected only after suit was filed.
- Thompson III asserted humiliation and embarrassment from credit denials and resulting effects on him and his family.

## Issues

1. Whether SARMA failed to follow “reasonable procedures to assure maximum possible accuracy” under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681e(b), causing an inaccurate report and credit denials.
2. Whether the district court clearly erred in awarding $10,000 in actual damages (including emotional distress) and $4,485 in attorneys’ fees.

## Decision

- The Fifth Circuit affirmed the judgment for Thompson III.
- SARMA was liable under the FCRA for failing to employ reasonable accuracy procedures in its automated reporting system.
- The findings of causation (credit denials based on SARMA’s report) were not clearly erroneous.
- The award of $10,000 in actual damages, including humiliation and embarrassment, was supported by the record and not clearly erroneous.
- Attorneys’ fees were affirmed.

## Legal Principles

- Under the FCRA, a consumer reporting agency must follow reasonable procedures to assure maximum possible accuracy of information in consumer reports. (15 U.S.C. § 1681e(b))
- Liability may rest on negligent design or operation of an automated credit-reporting system when the system lacks adequate matching criteria and auditing to prevent misattribution of credit histories.
- A reporting agency’s failure to verify key identifiers (including social security numbers) may support a finding that its procedures were unreasonable.
- Emotional distress, humiliation, and embarrassment may constitute “actual damages” under the FCRA when proximately caused by inaccurate reporting that results in credit denials.
- On appeal from a bench trial, findings on negligence, causation, and damages are reviewed for clear error.

## Conclusion

The Fifth Circuit held that SARMA’s automated “capture” system and weak verification/auditing practices were not reasonable procedures under the FCRA, and it affirmed actual damages (including emotional distress) and attorneys’ fees where inaccurate reporting caused denials of credit.


Thompson v. San Antonio Retail Merchs. Ass’n, 682 F.2d 509 (5th Cir. 1982)