CFPB Orders TransUnion and Equifax to Pay for Deceiving Consumers about Credit Scores

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Written By ESR News Blog Editor Thomas Ahearn

The Consumer Financial Protection Bureau (CFPB) has ordered TransUnion and Equifax, Inc. to pay a total of more than $17.6 million in restitution to consumers, along with fines totaling $5.5 million to the CFPB, for deceiving consumers about the usefulness and actual cost of credit scores they sold to consumers, according to a news story on the CFPB website.

Under Consent Orders from the CFPB – which empowers consumers to take more control over their economic lives – TransUnion must pay more than $13.9 million in restitution to affected consumers while Equifax must pay almost $3.8 million in restitution to affected consumers. The companies also must send notification letters about the restitution to affected consumers.

“TransUnion and Equifax deceived consumers about the usefulness of the credit scores they marketed, and lured consumers into expensive recurring payments with false promises,” CFPB Director Richard Cordray stated in the news story. “Credit scores are central to a consumer’s financial life and people deserve honest and accurate information about them.”

TransUnion and Equifax are two of the nation’s three largest credit reporting agencies – along with Experian – that collect credit information to generate credit reports and scores that are provided to businesses. The companies also market, sell, or provide credit-related products directly to consumers, such as credit scores, credit reports, and credit monitoring.

Credit scores are numerical summaries designed to predict consumer payment behavior in using credit. Many lenders and other commercial users rely in part on these scores when deciding whether to extend credit. The CFPB claims TransUnion and Equifax violated the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act by:

  • Deceiving consumers about the value of the credit scores they sold.
  • Deceiving consumers into enrolling in subscription programs.

Equifax also violated the Fair Credit Reporting Act (FCRA), which requires a credit reporting agency to provide a free credit report once every 12 months. Under the Dodd-Frank Act, the CFPB is authorized to take action against institutions engaged in acts or practices that violate federal consumer financial laws. Under the consent orders, TransUnion and Equifax must:

  • Pay more than $17.6 million in total restitution to harmed consumers.
  • Truthfully represent the usefulness of credit scores it sells.
  • Obtain the express informed consent of consumers.
  • Provide an easy way to cancel products and services.
  • Pay $5.5 million in total penalties.

The text of the CFPB’s Consent Order against Equifax is here. The text of the CFPB’s Consent Order against TransUnion is here. More information about credit scores can be found here. The CFPB news story is at

As reported by ESR News in October 2016, a U.S. Court of Appeals ruled the structure of the CFPB – an independent agency established by Congress in the Dodd-Frank Act of 2010 – was unconstitutional and that the current CFPB Director “enjoys more unilateral authority than any other officer in any of the three branches of the U.S. Government, other than the President.”

In the Opinion, the three-judge panel ruled in the case of PHH Corporation, et al., v. Consumer Financial Protection Bureau that the CFPB “will continue to operate and to perform its many duties, but will do so as an executive agency akin to other executive agencies headed by a single person, such as the Department of Justice and the Department of the Treasury.”

In September 2016, ESR News reported that the CFPB fined Wells Fargo Bank, N.A. $100 million – the largest penalty the CFPB ever imposed – as part of a total fine of $185 million “for the widespread illegal practice of secretly opening unauthorized deposit and credit card accounts,” according to a CFPB press release.

In October 2015, the CFPB ordered two of the nation’s largest employment background check firms to correct their practices, provide $10.5 million in relief to harmed consumers, and pay a $2.5 million civil penalty for allegedly failing to take steps to ensure the information they reported about job applicants was accurate, ESR News reported.

More Information about Credit Reports from ESR

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