No Fly, No Buy Act

Flashback: Problems With 'No Buy' Terror Watch List

Similar to "No Fly List," and Like "No Fly List" Impedes Non-Terrorists

June 21, 2009

CBS - Imagine not being able to buy a home, car, or other "big-ticket" item because your name shows up on a terror watch list. That's happening to some people who haven't committed a crime and aren't terrorists, Early Show consumer correspondent Susan Koeppen reported Monday.

The "No Buy" list terror watch list, Koeppen explains, is similar to the "No Fly" list you've probably heard of. The latter is designed to prevent terrorists from boarding planes. And, says Koeppen, the "No Buy" list is hindering some innocent people, in the same way the "No Fly" list does.

Sandy Cortez knows that all too well. When the grandmother from the Denver area went to buy a car, she thought it would be a simple transaction, but she got the shock of her life: Her name popped up on a terror watch list when the dealership pulled her credit report.

"I was actually waiting for the FBI to come charging in through the door with guns blazing!" Cortez told Koeppen.

The Treasury Department's Office of Foreign Assets Control--known as OFAC for short--keeps track of known terrorists, drug traffickers, and proliferators of weapons of mass destruction. The current list has more than 7,000 names and aliases, and companies aren't allowed to do business with anyone on the list. In fact, they have to check the list before any credit transactions can take place.

The Sandra Cortez Koeppen spoke to came up as a possible match for Sandra Cortes Quintero--an accused drug trafficker from Colombia. But besides their first names, no other information matched. The Treasury Department admits the list generates false positives, but refused to tell CBS News how many innocent people have been affected.

"Virtually anyone in America could be on that list," says Phillip Hwang of the Lawyers' Committee for Civil Rights.

His organization put out a report documenting dozens of cases of consumers who were denied homes, health insurance, even the purchase of a treadmill because of an OFAC alert.

"You know, someone who happens to have the last names Lucas, Gibson, Diaz--all of a sudden finds that they are being identified as potential terrorists, and it really creates a lot of anxiety and panic among consumers."

Recently released government documents show complaint after complaint from consumers caught up by the "No Buy" list, Koeppen points out.

One from a Naval officer reads,

"Please tell me this was some mistake and you normally do not treat veterans of the U.S. military who served honorably ... in this fashion."

Another man was confused with Saddam Hussein's son. Another says receiving an OFAC alert subjected him to "serious complications and humiliations."

"This is a very troubling practice," Hwang says, "and the federal government has a responsibility and a role to play, because they are the ones putting out the watch list."

But Treasury officials say it's not them; they say the problem stems from the OFAC matching databases supplied by the credit bureaus. They are among the companies that get paid to search the list and supply information to lenders.

Stuart Pratt, president of the Consumer Data Industry Association, tells Koeppen,

"Congress said there had to be a list. And Congress said there's a law that lenders have to look at the list."

Pratt says the large fines and possible jail time for companies that do business with someone on the list forces his members to cast a wide net in their searches.

"OFAC," says Pratt, "needs to provide lenders with better guidance on what they're supposed to do to match data. The OFAC guidance says, 'Don't (establish a) match off of a single name,' but OFAC doesn't give you much guidance for what you're supposed to do when you have three names... And, by the way, for almost every record on the OFAC list, there are aliases, 'akas.' "

With the Treasury Department and the companies that provide OFAC alerts pointing fingers at each other, consumers such as Sandy Cortez are left to fend for themselves, Koeppen says. She sued the credit bureau that provided her OFAC alert and has spent the past three years trying to clear her good name.

When Koeppen noted that,

"The Treasury Department says, 'Yes, a few innocent people might get caught up in this, but it's for the greater good,' "

Cortez asked, "How does putting OFAC alerts on my credit report, an accountant, a grandmother from Colorado, help national security?"

How do you get off the list once you're on. It's not easy, that's for sure, Koeppen says. If you're applying for credit to buy something big, fill out your paperwork completely, and warn businesses when you walk in that you're popping up in the list, and it's a mistake.