We’ve told you before about consumers who ended up being denied for loans and facing public embarrassment because their credit report included a note that the person might be a terrorist or an international drug trafficker. But no one seems to want to take the blame for when this kind of mistake happens.

Yahoo News has the tale of another man who couldn’t get a loan because his TransUnion credit report had him flagged as a possible drug kingpin. Actually, he shares part of his name with two drug traffickers on the Treasury Department’s Office of Foreign Assets Control list of Specially Designated Nationals, (aka the OFAC list) so he could be either of them.

Or he could be a guy with a not terribly uncommon name who just wanted a loan.

Regardless, lenders are required to check this list on every loan application they process. Agencies like TransUnion, in addition to selling credit reporting services to banks, also sell a service that checks the OFAC list for the bank.

But since the agencies may not consider the OFAC cross-check as part of a consumer’s regular credit report, it says it can do nothing about removing that flag from the info it sends to lenders.

A rep for the Consumer Data Industry Association, a trade group representing the credit bureaus, says that TransUnion and its pals Experian and Equifax are merely providing the lenders with the information they would have received from OFAC on their own anyway.

“The cases that are out there where there’s been a problem, it’s been a problem because the lender or the auto dealer did not take the proper steps that OFAC itself has laid out in its guidance,” says the CDIA rep. “If the lenders do it right, then the false positives never occur.”

But some say the banks are relying on the credit reporting agencies to provide them accurate information so they can’t be faulted for taking the information at face value. These advocates believe that the credit bureaus are obliged by the Fair Credit Reporting to provide accurate information about consumers to lenders.

The bureaus disagree, claiming that since the OFAC info is sold as a separate product to the credit reports, it does not fall under the FCRA umbrella.

Whether or not the OFAC data is indeed part of the credit report is at the heart of a handful of ongoing lawsuits. Two men recently sued TransUnion for not properly disclosing OFAC data on their reports. According to Yahoo, the information was found on the reports, but buried at the bottom of the document following a subhead that reads “end of credit report.”

“That type of language that they throw in there would lead the consumer to believe that they’re not legally required to provide it to the consumer and perhaps the consumer doesn’t have a right to dispute it and that’s not true,” says the lawyer representing both men.

The rep for the CDIA claims that the only way a consumer can dispute the OFAC data with a credit bureau is if that bureau merges its credit reporting database with the info it receives from OFAC. Until that point, in his eyes at least, the two products remain separate.

So in the end it does appear to be the lender to not see the OFAC flag as a definitive statement that the applicant is a terrorist. It’s up to the lender to do its job and figure out if the applicant is indeed who they say they are.

This is the point at which you Google yourself to see if someone with your name is a suspected terrorist, drug trafficker or money launderer.

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