Credit Report Agencies Forced to Refund Consumers $17.7 Million
TransUnion and Equifax are refunding $17.7 million to consumers and paying $5.5 million in fines for giving consumers misleading and deceptive credit scores. The credit reporting agencies were using Vantage scores or the Equifax Credit Score to calculate credit scores, while lenders most commonly use credit scores based on FICO scores to determine loans and interest rates. The Consumer Financial Protection Bureau is fining TransUnion and Equifax for making consumers believe the credit scores they were seeing online were the same credit scores the lenders were using. Transunion and Equifax were also unfairly enrolling consumers into a subscription service with routine payments, making it difficult for consumers to access free services.
Most lenders use some form of a FICO score when calculating interest rates and loans for bigger purchases like homes and cars. There are different varieties of FICO scores, but all FICO scores are inspired by how well consumers make payments on time and whether consumers keep their credit card balances below their limits. TransUnion and Equifax have been misinforming consumers about their credit scores used by lenders by not using FICO scores in their calculations. Transunion has been using Vantage Scores in their calculations while Equifax has been using their own system, the Equifax Credit Scoring system to determine credit scores.
TransUnion and Equifax have also been interfering with a consumers’ right to a free annual credit report. Consumers can access their free credit reports once a year from TransUnion, Equifax, and Experian on AnnualCreditReport.com. TransUnion and Equifax have been advertising similar credit reporting services and products for either free or one dollar online for the past couple years. When consumers were using the products being marketed by TransUnion and Equifax for little or no cost, they would be automatically enrolled in a subscription with a reoccurring monthly payment. Over the course of a year, these monthly payments could add up to $200, way more than the free or one dollar price that was being advertised.
It has been determined that Equifax and TransUnion have been involved in these bad, unfair business practices since July 2011. The two credit reporting agencies were granted 60 days to create a new plan to fix the problems. After the 60 days, Equifax and TransUnion are supposed to contact all consumers effected by the subscriptions services informing them how to get their refund. Credit scores are the focus of a consumer’s financial life and consumers deserve the right to access accurate credit reports easily. If you are noticing errors on your credit reports, you can contact the consumer lawyers at Doucet & Associates Co., L.P.A. for help by calling (614)944-5219, or you can learn more about how to correct an error yourself by reading about the Fair Credit Reporting Act on our website by clicking here.