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Doug Krizner: Maybe you’ve heard one of these stories of mistaken identity. Americans falsely linked to terrorism and drug trafficking during credit checks. The man in northern Californian whose home loan was held up when a credit agency thought he was Saddam Hussein’s son. Or the former California prison employee mistaken for a Colombian drug criminal.

The number of these cases is greater than we thought. Rachel Dornhelm reports on new documents released this week.

Rachel Dornhelm: The letters of complaint the Treasury Department released came from Americans shut out of financial deals, like car loans, mortgages or access to PayPal. The problem? Their names are similar to ones on a Treasury Department watchlist.

Philip Hwang, with the Lawyer’s Committee for Civil Rights in San Francisco, says companies know that doing business with people on the list is illegal.

Philip Hwang: The problem is that many of these businesses don’t have the capacity to do this screening themselves, so they rely upon these third-party companies — some of which are these credit reporting agencies, which say look, we’ll look up the list for you. But some of these companies are getting sloppy.

Stuart Pratt, president of a credit reporting trade group, says lenders need to realize these are yellow flags, not red ones.

Stuart Pratt: It’s easy to determine that what you see in this yellow flag does not relate to this person who is making this application for credit.

Pratt says the Treasury Department needs to familiarize lenders with the system. The Treasury Department says it’s stepping up its outreach efforts.

I’m Rachel Dornhelm for Marketplace.