Credit Reports And The Law Of Defamation

• Published date: 28 March 2022
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation, Libel & Defamation
• Law Firm: Gardiner Roberts LLP
• Author: Mr Stephen Thiele

Individuals and businesses are zealously concerned with protecting their respective reputations. Having a stellar reputation can be an important asset. For individuals, a positive reputation is important for career success. A positive reputation can lead to better job opportunities and promotions within the workplace. For businesses, a positive reputation can lead to attracting better employees, to increased sales, to higher profits and to higher company value.

One of the ways to measure reputation, particularly financial reputation, is through a credit rating. A person with a positive credit rating is generally, among other things, able to easily borrow money at preferable interest rates.

Credit ratings are impacted by credit reports, which are summaries of a person's credit history compiled by credit bureaus. These bureaus obtain information from various sources, including lenders and creditors, about how a person uses credit, such as whether a person regularly misses loan payments or whether debts have been sent to a collection agency. A person with a low credit score will have a negative financial reputation. Accordingly, it is not surprising that a person with a low credit score will sometimes bring a defamation action against either a credit bureau or creditor for damages caused to his or her reputation as a result of information disclosed on a credit report.

The tort of defamation allows a person to recover damages where their reputation is harmed by false written or oral statements of another that are made to a third person. Lenders and creditors who provide information about a person to a credit bureau certainly provide written or oral statements to a third person.

However, the recent British Columbia decision in Sun v. Mercedes-Benz Financial Services Canada Corp., 2022 BCSC 443 serves as a reminder that a defamation action for a low credit score is a very difficult action to win.

In this case, the plaintiffs leased a car for use in their business. Under the lease, they were required to pay $381 a month for 51 months. As well, the lease provided that the plaintiffs, as lessees, were not allowed to use the car in "any unintended, injurious or unlawful manner." To do so constituted an act of default under the lease and permitted the lessor to exercise various remedies, including terminating the lease, taking possession of the car and selling it.

During the term of the lease, the car was involved in an alleged crime. The police were required to...