FTC: Equifax Improperly Sold Consumer Credit Data

Equifax, one of the three major credit-reporting agencies, has settled charges by the Federal Trade Commission that it improperly sold lists of consumers who were late on their mortgage payments.
Both Equifax and the companies that allegedly bought and resold the information – Direct Lending Source and its affiliates – will pay a total of nearly $1.6 million for violating the FTC Act and the Fair Credit Reporting Act (FCRA), the FTC said today.
Equifax will pay $393,000 to resolve allegations “that its inadequate procedures led to the sale of lists of consumer information to firms that should not have received them,” the FTC said.
Equifax sold more than 17,000 pre-screened lists of millions of consumers to companies, including Direct Lending Source, which later resold some lists to third parties. The third parties used the data to pitch loan modification and debt relief services to people in financial distress.
As part of a separate settlement, Direct Lending Source will pay a $1.2 million civil penalty. Direct Lending is also barred from using or selling prescreened lists without a permissible purpose, or in connection with solicitations for debt relief or mortgage assistance relief products or services.
The lists sold by Equifax contained information about millions of consumers, including sensitive information such as credit scores and whether they were 30, 60, or 90 days late on their mortgage payments.
In addition to requiring the payment of $393,000, the proposed settlement with Equifax prohibits the credit bureau from:
» Furnishing prescreened lists to anyone that it does not have reason to believe has a permissible purpose to receive them;
» Failing to maintain reasonable procedures to limit the furnishing of prescreened lists to anyone except those who have a permissible purpose to receive them; and
» Selling prescreened lists in connection with offers for debt relief products or services and mortgage assistance relief products and services, when advance fees are charged, with limited exceptions.

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