Atlanta-based Equifax agreed Tuesday to pay $6.3 million in fines and restitution after a federal agency accused it of misleading customers who bought its credit scores and other products. Photo courtesy of Equifax.

Equifax to pay fine, refunds for credit report sales

A federal agency ordered Atlanta-based Equifax and another credit reporting company, TransUnion, to pay more than $23 million in fines and restitution for allegedly misleading customers about credit score services they have marketed.

The two companies, which are among the nation’s Big Three credit agencies, misled consumers on the cost and value of credit score services sold from 2011 to 2014, according to the Consumer Financial Protection Bureau.

The companies didn’t admit or deny the CFPB’s allegations in consent orders with the agency.

“The CFPB’s investigation into these matters has been ongoing for nearly three years, and Equifax implemented changes addressing the CFPB’s concerns shortly after the investigation began,” the company said in a statement.

“While Equifax does not believe it has violated any laws and has not admitted any liability, Equifax determined it was in its best interest to resolve the matter with the CFPB,” the company said.

The federal agency said the companies misleadingly marketed their scores as the same ones used by banks and other lenders to make credit decisions. The CFPB said most lenders use so-called “FICO” scores offered by another companiy, Fair Isaac Corp., while the credit reporting companies’ own methodology may produce different scores.

It wasn’t immediately clear how many people were affected. The consent orders direct the companies to determine the customer pool.

It could be a large number, given the number of incidents where hackers stole personal information on millions of consumers at large retailers in recent years, prompting people to check their credit reports.

The CFPB said the two firms also deceived customers into signing up for subscriptions, typically for $16 a month, for their credit scores and other information that often can be obtained for free.

Under federal law, consumers can obtain one free credit report annually from each credit reporting firm, or up to three a year from the three major firms.

“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.”

The CFPB said the two firms’ actions violated the federal Fair Credit Reporting Act.

Equifax agreed to pay a $2.5 million civil fine and to provide $3.8 million in restitution to customers. TransUnion, based in Chicago, agreed to pay a $3 million fine and to provide more than $13.9 million in restitution.

The companies also agreed to provide clearer information on the cost and usefulness of their services, and to get customers’ express consent before signing them up for monthly subscriptions.