In consumer law, general law


Two of the nation’s three major credit reporting agencies, Equifax and TransUnion, have agreed to pay more than $23 million to resolve claims that they misled customers and lured them into paying monthly subscriptions for credit-related products. The Consumer Financial Protection Bureau (“CFPB”) announced consent orders against the two companies on January 3, according to the Wall Street Journal and Fortune. A “consent order” is an agreement between the company and the CFPB that the company will take certain action, in return for which the CFPB will close its investigation into the particular activity. By entering into the consent order, neither Equifax nor TransUnion admitted any wrongdoing.

The CFPB claimed that Equifax and TransUnion lured customers into subscribing to monthly credit reports by offering free or $1 credit reports. To get the initial report the customer had to sign up for ongoing reports, sometimes at a cost of $16/month. Additionally, Equifax and TransUnion were accused of falsely portraying the credit scores they sold to consumers as the same scores lenders use to make lending decisions. In reality, lenders use a variety of different scoring mechanisms to determine a potential borrower’s creditworthiness.

The third major credit reporting company, Experian, was not a part of this investigation.

This is the latest incidence of large, well-respected companies betraying the public trust. Only a few months ago Wells Fargo was exposed for having opened nearly two million phony accounts in customers’ names to meet sales goals. The fallout from that has led to a drop of 30% or more in new customers and credit card applications at Wells Fargo, once one of the most trusted names in the financial industry.

What this means for consumers is you have to be vigilant about your own financial affairs. A lot of people who say they are looking out for you are really just looking out for themselves.

Recommended Posts

Leave a Comment

Free Consultation

Not readable? Change text.

Start typing and press Enter to search