On the afternoon of November 7, 1972, a field representative for the Retail Credit Company traveled from Spokane, Washington, to Sandpoint, Idaho, a town of about five thousand people, and investigated eleven residents in four hours or less. One of them was Stephanie Rasor, who ran two businesses in town, including a motel, and had applied for health insurance. To write her report, the representative spoke with three people: two partners at one service station and the manager of another.
What came back was labeled a health report. It answered its own two questions about her health, an illness or operation, a family history of serious disease, with no both times. What it recorded instead was that she carried a reputation for living with more than one man outside marriage, and a line about her drinking, all of it confirmed, the document said, by several longtime neighbors and businessmen. A week later, Rasor applied for life insurance to secure a federal loan for her motel's expansion. The insurer, Guardian Life, received the same unchanged report and turned her down, citing unspecified criticism from the inspection that had to stay confidential. Rasor was not allowed to read the file. She was only told what it said, and found it shocking.
A federal right in force for about a year and a half gave her a tool none of her neighbors had offered: the right to make the company check its own work. The Fair Credit Reporting Act, signed in October 1970 and effective the following spring, let Rasor demand a reinvestigation and, at her request, require the company to send the correction to whoever had gotten the original. The reinvestigation took most of a day, interviewed ten Sandpoint residents, and came back with a different file: a boyfriend, two separate households, nothing a neighbor currently found worth mentioning. The correction went out to all three insurers who had the original. One reopened her case. In April 1973 she got her policy, at a higher premium than an accurate file would have carried from the start.
By the early 1970s, the members of the credit-reporting industry's trade association, together with its two largest corporations, held more than 180 million files on American citizens, a congressional hearing found. Nobody at Retail Credit checked whether three people talking for an afternoon amounted to real knowledge of a stranger's life before the company sent the same file onward, unchanged, as fact. The danger sits in that gap: the file travels, and the person it describes learns what it says only after a bank or an insurer has already acted on it.
Rasor had sued in March 1973, before she ever got the policy, and a jury awarded her five thousand dollars. The Washington Supreme Court upheld the verdict in 1976, ruling that the report's protection under the Act did not lapse just because the company later reused the same, unchecked file for a loan-related insurance application. The 1970 law did not make Retail Credit Company honest. It made honesty checkable.