Declaring that two credit rating agencies “lured consumers into costly recurring payments for credit-related products with false promises,” the CFPB Tuesday ordered Equifax, Inc., and TransUnion to pay fines and restitution totaling $23.1 million and to “truthfully represent” the value of the credit scores they provide, and the cost for obtaining the scores and other services.
“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 in a statement.
Specifically, CFPB stated that the two credit rating agencies (which collect credit information, including a borrower’s payment history, debt load, maximum credit limits, names and addresses of current creditors, and other elements of their credit relationships in order to generate credit reports and scores that are provided to businesses) deceived consumers about the value of the credit scores that they sold, and deceived consumers into enrolling in subscription programs. The agency said both are violations of the 2010 Dodd-Frank Wall Street Reform and Consumer Financial Protection Act.
In addition, the agency stated that Equifax violated the law by requiring consumers to first view advertisements by the company before allowing them to see their credit reports. “This violates the Fair Credit Reporting Act, which prohibits such advertising until after consumers receive their report,” the bureau stated.
In addition to the fines and restitution, the two companies were also ordered by CFPB to:
- Truthfully represent the usefulness of credit scores by clearly informing consumers about the nature of the scores sold.
- Obtain the express informed consent of consumers before enrolling them in any credit-related product with a negative option feature (which automatically enrolls a consumer in a program that charges a recurring fee if the consumer does not cancel a subscription following a low-cost trial period).
- Provide an easy way to cancel products and services with a simple, easy-to-understand way to cancel the purchase of any credit-related product, and stop billing and collecting payments for any recurring charge when a consumer cancels.