Two of the three major credit-reporting agencies, Equifax and TransUnion, will pay a total of more than $17.6 million in restitution to consumers, and fines totaling $5.5 million, for deceiving customers about the cost and usefulness of credit scores and other products they sold, according to the U.S. Consumer Financial Protection Bureau (CFPB).
TransUnion, since at least July 2011, and Equifax, between July 2011 and March 2014, allegedly deceived consumers about the value of the credit scores the agencies sold. Both credit bureaus “falsely represented that the credit scores they marketed and provided to consumers were the same scores lenders typically use to make credit decisions.” In fact, the scores sold by TransUnion and Equifax were not typically used by lenders to make those decisions, the CFPB said.
“TransUnion and Equifax deceived consumers about the usefulness of the credit scores they marketed, and lured consumers into expensive recurring payments with false promises,” said CFPB Director Richard Cordray. “Credit scores are central to a consumer’s financial life and people deserve honest and accurate information about them.”
The CFPB also found that TransUnion and Equifax deceived consumers into enrolling in subscription programs by telling them thatt their credit scores and credit-related products were free or, in the case of TransUnion, cost only “$1.”
“In reality, consumers who signed up received a free trial of seven or 30 days, after which they were automatically enrolled in a subscription program,” the CFPB states. “Unless they cancelled during the trial period, consumers were charged a recurring fee – usually $16 or more per month. This billing structure, known as a “negative option,” was not clearly and conspicuously disclosed to consumers.”
According to consent orders, TransUnion must provide more than $13.9 million in restitution to affected consumers. Equifax must provide almost $3.8 million in restitution to affected consumers. The companies must send notification letters about the restitution to affected consumers, the CFPB said.
Read the full text of the CFPB’s consent orders with Equifax and TransUnion.