•Deceiving consumers about the value of the credit scores they sold; and
•Deceiving consumers into enrolling in subscription programs.
In its advertising, Equifax falsely claimed that credit scores and credit-related products were free. In the case of TransUnion, the cost was promised to be only $1. What neither made clear to consumers was that unless the ‘service’ was cancelled during its 30-day trial period, consumers would be charged a recurring fee—usually $16 or more per month.
Additionally, Equifax violated the Fair Credit Reporting Act, which requires a credit reporting agency to provide a free credit report once every 12 months and to operate a central source— AnnualCreditReport.com—where consumers can get their report. Until January 2014, consumers getting their report through Equifax first had to view Equifax advertisements—another illegal act. By law, such advertising is allowed after consumers receive their report.
Beyond the costs of restitution and fines, CFPB will now hold Equifax and TransUnion accountable for changes in the way they operate. From clearly informing consumers about the nature of the scores they are selling to consumers; to providing simple, easy to understand information on how to cancel the purchase of any credit-related product, and ending billing and collection payments for any recurring charge once a consumer cancels the service.
The two final enforcement requirements are probably the most important of all:
1. Before enrolling a consumer in any credit-related product with a negative option feature, TransUnion and Equifax must obtain the consumer’s consent; and
2. Truthfully represent the value or usefulness of products sold.
“We applaud the Consumer Financial Protection Bureau for taking strong and vigorous actions against TransUnion and Equifax to protect the interests of American consumers,” said National Consumer Law Center staff attorney Chi Wu. “In addition to obtaining tens of millions of dollars in relief for consumers, this consent order will protect consumers from being ripped off in the future over deceptive credit monitoring products and sales practices.”
For more information on credit scores, visit CFPB’s web at: https://www.consumerfinance.gov/about-us/blog/what-you-need-know-understanding-why-offers-your-credit-score-are-not-all-same/.
(Charlene Crowell is the communications deputy director with the Center for Responsible Lending. She can be reached at Charlene.crowell@responsiblelending.org.)
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