Credit-reporting agencies TransUnion and Equifax have been ordered by federal regulators to pay about $23 million for their false advertisements that claimed that the credit scores they sell to consumers are the same ones lenders use to make credit decisions.
The announcement was made on Tuesday by the Consumer Financial Protection Bureau that TransUnion and Equifax must pay fines totaling $5.5 million and return about $17.6 million to wronged consumers. According to the agency, the two companies lured consumers into making payments of $16 or more per month for credit scores and related products such as credit monitoring. The alleged violations occurred between July 2011 and March 2014.
In a statement, TransUnion said that it continues to believe that its advertising has been clear and has complied with laws. “Our trial credit monitoring service has given consumers low-cost access to their credit report and credit score and allowed them to conveniently cancel monitoring services at any time online or by phone. However, we are committed to making improvements to our consumer experience, and over the past several months we have worked cooperatively with the CFPB to be the industry leader in designing the enhanced, voluntary marketing disclosures that go beyond the current legal and regulatory requirements to which we agreed as part of this settlement.”
Equifax also responded without admitting to any wrongdoing and noted that it made changes to address the agency’s concerns soon after the CFPB’s investigation began. “While Equifax does not believe it has violated any laws and has not admitted any liability, Equifax determined it was in its best interest to resolve the matter with the CFPB,” the company said in a statement.
TransUnion and Equifax Inc. are two of the three biggest credit-reporting agencies in the US along with Experian. The credit scores they generate are used to determine whether consumers can qualify for a cellphone plan, a car loan, a mortgage, and a range of other loans. The reporting agencies base the scores on a consumer’s debt-paying history, how much debt they carry and other factors.
The CFPB maintained that the scores sold to consumers by the two companies were not typically used by lenders when making credit decisions.
Thus, TransUnion and Equifax have agreed to clearly inform consumers about the nature of the scores they’re selling and to provide an easy and hassle-free way to cancel products and services.