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CFPB Orders TransUnion and Equifax to Pay $23.1 Million for Deceptive Practices

WASINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) this week took action against Equifax and TransUnion, ordering the two credit reporting agencies and their subsidiaries to pay more than $17.6 million in restitution for deceiving consumers about the usefulness and actual cost of credit scores they sold to consumers. The two firms were also ... Read More »

January 4, 2017
3 min to read


WASINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) this week took action against Equifax and TransUnion, ordering the two credit reporting agencies and their subsidiaries to pay more than $17.6 million in restitution for deceiving consumers about the usefulness and actual cost of credit scores they sold to consumers. The two firms were also ordered to pay $5.5 million in fines to the regulator.

TransUnion will provide more than $13.9 million in restition to affected consumers, while Equifax will pay nearly $3.9 million in restition. The bureau is also ordering the companies to now truthfully represent the usefulness of their credit scores, provide the true cost of obtaining those credit scores and other services, obtain the express informed consent of consumers for services, and provide an easy way to cancel products and services.

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“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.”

Chicago-based TransUnion and Atlanta-based Equifax are two of the nation’s three largest credit reporting agencies. The companies collect information like the borrower’s payment history, debt load, maximum credit limits, names and addresses of current creditors to generate credit reports and scores that are provided to businesses. Through their subsidiaries — TransUnion Interactive and Equifax Consumer Services — the companies also market, sell or provide credit-related products like credit scores, credit reports and credit monitoring directly to consumers.

Many lenders and other commercial users rely, in part, on these scores when deciding whether to extend credit to consumers, the bureau stated. Where the problem lies, however, is that TransUnion’s scores are based on a model from VantageScore Solutions LLC and Equifax’s scores are based on its own proprietary model — neither of which are typically used by lenders to make credit decisions.

The CFPB claims in its consent order that since at least July 2011, Equifax and TransUnion have been violating the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act by deceiving consumers about the value of the credit scores they sold and deceiving consumers into enrolling in subscription programs.

The bureau also charged Equifax with violating the Fair Credit Reporting Act, which requires a credit reporting agency to provide a free credit report once every 12 months. And until January 2014, according to the bureau, consumers who got their report through Equifax first had to view Equifax advertisements. This, the bureau stated, is a violation of the FCRA, which prohibits such advertising until after the consumer receives their free report.

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“Under the Dodd-Frank Act, the CFPB is authorized to take action against institutions engaged in unfair, deceptive, or abusive acts or practices, or that otherwise violate federal consumer financial laws,” the statement from the CFPB read.

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