In recent years, consumers being denied loans and extended credit lines because of a false OFAC alert doing the rounds. When an OFAC alert appears on a consumer’s credit report, it tells the lender that the consumer’s name matches a name in the United States SDN list. However, OFAC alerts can be issued in error and can cause problems for consumers.
What Does OFAC Mean?
OFAC stands for The Office of Foreign Assets Control. The OFAC is a branch within the Department of the Treasury. Their primary focus is administering and executing economic sanctions against groups of people, like drug traffickers or terrorists.
What Is An OFAC Alert?
An OFAC alert can appear on a consumer's credit report. The OFAC notification tells the lender that the consumer's name matches a name on the SDN list. The SDN list stands for the Treasury’s Specially Designated Nationals. The SDN list includes names of suspected terrorists, arms dealers, traffickers, and money launderers who are banned from doing business in the United States.
How An OFAC Alert Appears on Your Credit Report?
When a consumer applies for credit, the lender requests a copy of their credit report from a credit reporting agency. The CRA pulls the credit report as well as searches the consumer's name against the SDN list. If the consumer's name matches a name on the SDN list, the credit report will contain a notation or alert that shows this.
However, many CRA’s search against the SDN list using only first and last names. This is why lenders are not supposed to make a final decision on offering credit based on an OFAC search alone. Lots of people share the same name. It is the lender's responsibility to cross check the official list provided by the U.S. Treasury to verify if the OFAC alert is correct or not.
Unfortunately, many lenders would rather deny the consumer than take the risks associated with lending to someone on the SDN list. This means you could be denied credit because of a false OFAC alert.
Your Right To Dispute A False OFAC Alert On Your Credit Report?
You have the right to dispute and resolve any errors on your credit report, including an incorrect OFAC alert.
If you’ve found a false OFAC alert on your credit report, here’s what to do next:
- Contact the credit bureau of concern and ask for a copy of your disclosure. Under the FCRA, you have a right to this information.
- If a false OFAC alert is connected to your name and reported to lenders, contact the creditor ASAP. Let them know the alert is incorrect and you are not on the SDN list.
- Send in an official dispute letter to the bureau and a request to remove the OFAC alert immediately.
- If the credit bureau refuses to: provide you with your disclosure or, remove the false OFAC alert within 30 days of your dispute,
Then you will want to contact legal counsel, like a consumer protection lawyer. They can help you get the alert removed and even sue for damages.
Bottom Line
The OFAC alert system is meant to protect American consumers and creditors. Sometimes the system doesn’t work perfectly, and negligence can land you with a false OFAC alert. When you identify a false OFAC alert on your credit report, it’s important to dispute it immediately and follow through with all necessary steps.
