TransUnion and Equifax were ordered by the Consumer Financial Protection Bureau (CFPB) this week to pay more than $17.6 million in restitution and $5.5 million in penalties for misleading consumers about the credit scores they sold them.
“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 says TransUnion and Equifax, two the largest credit reporting agencies, violated the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act by selling consumers credit scores that are based on models that are not typically used by lenders to make credit decisions.
The companies also deceived consumers into enrolling in credit score subscription programs that were advertised as free or cost only $1. However, after a trial period they were automatically enrolled in a $16 per month, or more, subscription program if they didn’t cancel. The CFPB said this was not clearly disclosed to consumers. Equifax also violated the Fair Credit Reporting Act by making consumers view an advertisement before getting their annual free credit report.
The companies were ordered to truthfully represent the value of credit scores they sell and obtain consent from consumers before enrolling them in a subscription program. Also, TransUnion must pay $13.9 million and Equifax must pay $3.8 million in restitution to affected consumers. In addition, TransUnion and Equifax were ordered to pay $3 million and $2.5 million, respectively, to the CFPB’s civil penalty fund.