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CFPB Fines Major Credit Reporting Agency for Deceiving Consumers

Mon 27 Mar, 2017  /  by   /   Client Alerts

03/27/17 – The Consumer Financial Protection Bureau (CFPB) has taken action against a major national credit reporting agency and its subsidiaries for allegedly deceiving consumers about the use of credit scores it sold to consumers.

The California-based agency—one of the nation’s three largest credit-reporting agencies—markets, advertises, sells, offers, and provides credit scores, credit reports, credit monitoring, and other related products to consumers and third parties.

The defendant developed its own proprietary credit scoring model, which it applied to information in consumer credit files to generate a credit score it offered directly to consumers. The CFPB’s investigation found that, from at least 2012 through 2014, the defendant violated the Dodd-Frank Wall Street Reform and Consumer Protection Act by falsely representing to consumers that the credit scores it marketed and provided to consumers were the ones used by lenders to make credit decisions.

The defendant also violated the Fair Credit Reporting Act, which requires a credit reporting company to provide a free credit report once every twelve months and to operate a central source – AnnualCreditReport.com – where consumers can obtain their report. Until March 2014, consumers getting their report through the defendant had to view the agency’s advertisements before gaining access to the report.

The CFPB has ordered the defendant to truthfully represent how its credit scores are used, put in place an effective compliance management system, and pay a civil penalty of $3 million to the Bureau’s Civil Penalty Fund.

CFPB Press Release, Consent Order.