With a growing number of Shanghai residents complaining about false bad credit reports being filed against them, legal experts are calling for the creation of a verification system to insure records are correct before they are placed in the city's personal credit system.

Legal experts point to a recent case in Pudong where the vice president of a local bank was refused a mortgage in June because of a bad credit record that should never have been filed, reported Shanghai Daily.

The banker, surnamed Gong, has filed a suit with the Pudong New Area People's Court.

After his mortgage application was denied, he discovered that Shanghai Unicom had reported to the credit agency that he had an outstanding bill of 1,600 yuan (US$193) that he refused to pay.

A quick investigation discovered the bill was for an account that had been set up using duplicate of Gong's ID card, but with a mailing address that didn't belong to the banker.

"It is obviously unreasonable for Shanghai Unicom to believe Gong applied for the number," said Gong's attorney, Zhu Yujian.

"The telecommunication company also violated Gong's reputation as it transferred the bad credit record to the credit company without informing Gong. Its behavior led to the inclusion of Gong's name on the blacklist."

Since Shanghai Unicom couldn't prove the number was exclusively owned by Gong, it has agreed to help recall the bad record.

According to a regulation that went into effect on February 1, Shanghai Credit Information Services Co, the first consumer and corporate credit agency on Chinese mainland, can collect information about unpaid loans, and other bad credit practices.

"After receiving the bad records submitted by institutions like the telecommunication companies and banks, we sort them into an archive," said a credit company employee surnamed Yu. "But we don't have the right to check and change the information. We require those that send the information to guarantee it is accurate."

By the end of July, the city's credit system had recorded information about 4.77 million people and offered 2.12 million reports on consumers' credit.

"The importance of the personal credit record requires strict verification. While at present, the departments and companies that send the information are also in charge of checking its accuracy," said Huang Shuangquan, a civil law professor at the Shanghai Academy of Social Sciences. "This reflects a loophole in the personal credit system that no authoritative organization is available for verification. It will cause more disputes to happen."

(Shanghai Daily October 20, 2004)