Credit Reporters’ ‘Alert List’ Challenged

SANTA ANA, Calif. (CN) - A mortgage broker claims it was blacklisted, stonewalled and forced out of business by the three major credit reporting agencies. Smart Funding Corp. claims Transunion, Experian Information Solutions and Equifax based their reports on false information and complaints from Smart's former employees.

Nevada-based Smart claims the defendants conspired to boycott it through a monthly "Alert List" of companies "which are barred access to credit data through every credit reporting agency - essentially putting that firm 'out of business.'"

According to the complaint in Orange County Superior Court: "These lists could not be published with the information they contain without an exchange of information pursuant to an agreement among the three companies to boycott any mortgage company any one of the three companies puts on the 'Alert List.' Moreover, given the prospect of affording one or both of its competitors a significant competitive advantage, none of the three companies would under this use of loss without assurance from the others that they would also refuse to deal with a mortgage company placed on the 'Alert List.' Finally, a representative of Equifax told a representative of plaintiff that the three defendants had an understanding not to deal with any entity or person placed on the 'Alert List' by any one of the three companies."

Smart claims that it was put on the list because the credit reporters read negative comments on blogs and thought that Smart was a "credit repair agency" that had been fined by the Federal Communications Commission.

Smart claims the online complaints were posted by "disgruntled former employees, and not clients." It claims that it gave the defendants proof that the information was false, but they refused to talk further.

"Plaintiff's business has all but shut down as a result of defendants' conduct," the complaint states. "Since the Fall of 2009, plaintiff has not been able to properly or appropriately provide mortgage lending services to its prospective borrowers because defendants have prevented it from directly obtaining credit report information. Without being able to request credit reports, plaintiff cannot qualify a client for a mortgage."

Smart seeks exemplary damages from all three credit reporters, for interfering with contract and violating business codes and ethics. It is represented by Maxwell Blecher with Blecher & Collins of Los Angeles.

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