Did Credit Bureaus Rip You Off?

We hear it all the time. People scream in frustration because of credit bureau practices. Now the Consumer Financial Protection Bureau (CFPB) dealt a walloping blow to two of the big three — Equifax and TransUnion. The CFPB ordered them to refund more than $17.6 million dollars to consumers and pay a fine of $5.5 million to the CFPB for deceiving consumers about the worth and the cost of credit scores they sold.

CFPB Director Richard Cordray 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. Credit scores are central to a consumer’s financial life and people deserve honest and accurate information about them.”

Credit reporting agencies like TransUnion and Equifax collect credit information, including a borrower’s payment history, debt load, maximum credit limits, names and addresses of current creditors, and other elements of their credit relationships.

Financial companies like FICO use credit report information to calculate credit scores. They then sell those scores to lenders and businesses who assess your worthiness to get a loan or make a purchase.

But TransUnion and Equifax, through their subsidiaries, also sell credit-related information to consumers like credit scores, credit reports and credit monitoring.

The tricky part comes next.

The CFPB points out that lenders use a variety of scores to make decisions.

TransUnion sold scores to consumers based on a model from VantageScore Solutions, LLC. The CFPB says, “VantageScores are not typically used for credit decisions.”

Equifax sells scores to consumers based on its own model, the Equifax Credit Score. The CFPB describes it as “an educational” credit score that also is typically not used by lenders to make credit decisions.

Between July 2011 and March 2014, both companies advertised and sold their “credit scores” to consumers claiming lenders used their scores to make decisions. The CFPB says they lied.

“In fact, the scores sold by TransUnion and Equifax were not typically used by lenders to make those decisions. Deceiving consumers into enrolling in subscription programs, in their advertising, TransUnion and Equifax falsely claimed that 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 explained.

And it got worse because unless you cancelled during the trial period, they charged you a $16 recurring fee every month.

If you went to AnnualCreditReport.com and tried to get your free credit report from 2011 to 2014, you probably saw a lot of Equifax adds for the things they want to sell you. This violated the Fair Credit Reporting Act that prohibits that kind come-on until you actually get your free report. 

Because of the CFPB investigation, TransUnion and Equifax will stop the deceptive practices and pay more than $17.6 million in total restitution.

TransUnion will pay $13.9 million in restitution and $3 million to the CFPB’s civil penalty fund.

Equifax will pay $3.8 million in restitution and $2.5 million to the fund.


How Do you Get a Refund from TransUnion or Equifax?

The companies must send letters to notify you. They have about 60 days to work out a plan for repayment and then 30 days to send you a letter and the money. They must allow you to cancel any questionable deal.

Published by

Barbara Nevins Taylor

As the winner of 22 Emmy Awards and a slew of journalism honors and awards, I created ConsumerMojo.com to give you the straight story about complicated stuff. Tell us what you want to know and we'll get you the answers.