CFPB rules against Equifax and TransUnion
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The Consumer Financial Protection Bureau (CFPB) recently penalized TransUnion and Equifax for not dealing fairly with consumers who purchased their credit score. Together, the two credit bureaus were commanded to pay $17.7 million in refunds to consumers and another $5.5 million in fines for their actions. A spokesman for the CFPB said the two bureaus violated the Dodd-Frank financial reform law.
TransUnion and Equifax Accusations
The CFPB says the two credit bureaus encouraged consumers to sign up for credit score programs and products that were advertised as free or for one dollar. However, these programs were not free, that was an introductory price and these were subscription programs that cost $16 or more a month on an auto-renewal basis.
TransUnion defended itself with representative David Blumberg saying, “Our consumer marketing has been clear and has complied with the law and other government guidance.” Equifax rep Ines Gutzmer said that Equifax, “does not believe it has violated any laws.” CFPB doesn’t agree since they hit them with fines and ordered refunds to consumers.
Misrepresentation of Information
Another issue the CFPB brought up against Equifax and TransUnion was misrepresenting credit scores they sold. The CFPB’s spokesman Sam Gilford said in a statement that the two bureaus misrepresented the scores they provided as being the same one used by creditors to make lending and credit line decisions. The scores provided are not FICO scores.
Most lenders and credit card issuers use some version of a FICO score. TransUnion provided consumers with a VantageScore and Equifax provided an “Equifax Credit Score” they calculate themselves. The CFPB claimed that the credit bureaus did not make clear to consumers that the scores they were purchasing were not the same scores that a potential creditor would use.
Additional Accusations Against Equifax
The CFPB also said that Equifax made further trouble for consumers by prominently placing ads on Annual Credit Report dot com, which is used to access annual free credit reports, in such a way that consumers couldn’t get their free credit report without viewing ads for paid versions of proprietary non-FICO credit scores.
From now on, both Equifax and TransUnion have been ordered by the CFPB to disclose the true cost of any credit-related products, billing terms for subscription services, simple means to cancel subscription services, and to clearly express to consumers that scores purchased are “not likely to be the same score used by lenders or other commercial users for credit decisions.”
Are You Owed a Refund From Equifax or TransUnion?
Consumers that bought credit-related products from TransUnion as far back as 2011 and from Equifax between 2011 and 2014 may be affected by the penalties ordered by the Consumer Financial Protection Bureau. The two credit bureaus have 60 days to file their plan on how they will comply with the order and then must notify eligible consumers by mail on how to get a refund.
Most credit score programs provide non-FICO scores to consumers, but you can get a FICO score from certain banks, credit unions, and card issuers. Discover is now offering free FICO scores to everyone, not just their own customers. Capital One provides free scores to customers as well, but these aren’t FICO, they are Vantage Scores, which are not used by creditors for lending decisions.
If you purchased a credit score from Equifax or TransUnion in the affected period, keep an eye on the mail in case you’re owed a refund so you can file your response in a timely manner. To get an actual free FICO score via Discover, go to Credit Scorecard dot com and create an account. You’ll not only see your FICO score but also info on what is helping or hurting your score.
To find out more about rebuilding your credit score after bankruptcy, contact Credit Score Keys.
Resource: CFPB statement on Equifax and TransUnion
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