Federal court finds credit bureau at fault

For the London Free Press - February 14, 2011 Read this on Canoe

PIPEDA: Law requires a high degree of accuracy when collecting personal information

The recent Federal Court of Canada decision in Nammo v. Transunion marks the first time damages have been awarded under the Personal Information Protection and Electronic Documents Act.

Mr. Nammo, the self-represented applicant, was awarded $5,000 in damages after the credit bureau disclosed inaccurate personal information to a bank in connection with his loan application, which was declined as a result. This decision is a departure from previous cases, which have refused to award PIPEDA damages.

For example, Randall v. Nubodys Fitness Centres was based on the facts that there was no injury to the applicant sufficient to justify an award of damages, the respondent did not benefit commercially from the breach, the respondent did not act in bad faith and there was no link between the disclosure and the employer's alleged retaliation against the applicant.

The court determined the violation of the applicant's rights under PIPEDA was "the result of an unfortunate misunderstanding," and an award of damages should only be made "in the most egregious situations."

The court in Nammo stated the violation of Mr. Nammo's rights was not "the result of an unfortunate misunderstanding." The court noted that PIPEDA requires personal information to be as accurate, complete and up-to-date "as is necessary for the purposes for which it is to be used."

In this case, the breach involved financial information of high personal and professional importance, and therefore required a high standard of accuracy and completeness.

The court held the credit bureau's conduct rose to the level of an egregious situation. The decision was based on the facts that the disclosure of inaccurate information was directly linked to the refusal of the loan and injury to Mr. Nammo, that the credit bureau profited from the disclosure, that the credit bureau failed to rectify the problem in a timely manner and that the credit bureau acted in bad faith in failing to take responsibility.

The court awarded $5,000 in damages for the humiliation he suffered as a result of having his loan application denied and the further humiliation and inconvenience from the delay before the error was properly corrected. It will be interesting to see whether this case opens a floodgate of litigants seeking damages under PIPEDA.