TransUnion, Equifax, ordered to pay $23 million for credit score deception

TransUnion and Equifax engaged in deceptive marketing of credit scores and products, federal regulators said Tuesday.
TransUnion and Equifax engaged in deceptive marketing of credit scores and products, federal regulators said Tuesday.

TransUnion and Equifax, two of the nation’s three largest credit reporting agencies, have been ordered to pay $23.1  million for deceiving consumers about the usefulness and actual cost of credit scores they sold to consumers.

Consumers were led to believe the scores they sold to consumers were the same scores lenders typically use to make credit decisions, which is the FICO score. However,  the scores the companies marketed  were alternative scores based on other models, the Consumer Financial Protection Bureau said Tuesday.


In addition, the companies falsely claimed their credit scores were free, or in the case of TransUnion, only cost “$1.” The truth was that consumers received a free trial of seven or 30 days, after which they were automatically enrolled in a subscription program, the CFPB said.

Instead, in a practice known as “negative option” marketing, unless the consumers canceled during the trial period, they were charged a recurring fee, usually $16 or more a month.

The CFPB ordered TransUnion, based in Chicago,  and Equifax, headquartered in Atlanta, to truthfully represent the value of the credit scores they provide and the cost of obtaining those scores and other services.

Between them, TransUnion and Equifax must pay more than $17.6 million in restitution to consumers and $5.5 million in fines to the CFPB.

The companies collect credit information about consumers and provide reports and scores to businesses. Through their subsidiaries, they sell credit scores, credit reports and credit monitoring services directly to consumers.

The scores that TransUnion sells to consumers are based on a model from VantageScore Solutions, LLC, which are not typically used for credit decisions.

Equifax sold scores to consumers based on its proprietary model, the Equifax Credit Score, an educational score also not typically used to make credit decisions.

TransUnion, since at least July 2011, and Equifax, between July 2011 and March 2014, violated the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act, the CFPB said.

Equifax also violated the Fair Credit Reporting Act, which requires a credit reporting agency to provide a free credit report once every 12 months and to operate a central source,, where consumers can get their report. Until January 2014, consumers getting their report through Equifax first had to view Equifax advertisements, a violation of the Act.

“We applaud the Consumer Financial Protection Bureau for taking strong and vigorous actions against TransUnion and Equifax to protect the interests of American consumers,” said National Consumer Law Center staff attorney Chi Chi Wu. “In addition to obtaining tens of millions of dollars in relief for consumers, this consent order will protect consumers from being ripped off in the future over deceptive credit monitoring products and sales practices.”

The full text of the CFPB’s Consent Order against Equifax is here: 

The full text of the CFPB’s Consent Order against TransUnion is here: 

More information about credit scores can be found here:  




Paper statements have advantages over ebills, consumer group says

Paying bills by paper doesn't make you a dinosaur. It has advantages over ebills.
Paying bills by paper doesn’t make you a dinosaur. It has advantages over ebills.

Do you prefer getting your  monthly bills in a paper version rather than electronically because you just think it’s a better way to go? Your gut instinct is spot on, a new report by the National Consumer Law Center says.

Banks, credit card companies, and other businesses are aggressively pushing consumers to receive their monthly statements electronically, but the report warns that these efforts can create more harm than good for consumers.

Paper Statements: An Important Consumer Protection by National Consumer Law Center attorneys Chi Chi Wu and Lauren Saunders focuses on the importance of preserving access to this vital form of communication for consumers who want paper statements and records.

“Paper statements may seem old-fashioned, but consumers have good reasons to continue receiving them,” noted National Consumer Law Center Chi Chi Wu. “Paper has its advantages.”

The report notes that millions of Americans — particularly lower-income, less educated, older, and households of color — are on the other side of the “digital divide,” lacking home broadband Internet access. According to a recent Pew Research study:


  • 59 percent of households with incomes under $20,000 and 53 percent of those with less than a high school education do not have home broadband Internet access. Even those with access may have older computers, slow connection speeds, or may lack a printer or money to afford expensive ink to print statements.
  • About half of Hispanics (50 percent) and African Americans (46 percent) lack access to home broadband Internet.
  • Over half (55 percent) of Americans 65 years or older lack home broadband Internet. Even if they have access, older consumers may be less comfortable with electronic statements or find them risky. Paper statements can be critical for family members who are trying to piece together financial records for an older consumer who is incapacitated or has passed away.


The report also notes that mobile devices aren’t a substitute to home computers because of their smaller size and formatting and unsuitability for record keeping.


Even computer-savvy consumers may prefer paper as electronic statements are easy to overlook due to email overload. Consumers may value a physical mail piece as a record-keeping tool and reminder to pay. The report cites studies showing that consumers prefer paper when a payment is due upon receipt, and warns that electronic statements might cause consumers to miss payments.


Electronic statements create barriers for consumers to access vital information because it takes effort to remember the task, find the free time, go to the correct webpage, remember their password, and download the document – as opposed to simply opening an envelope, according to the report.

A December 2015 study by the Consumer Financial Protection Bureau found that over half of consumers who opted for electronic credit card statements are not opening or reviewing these statements and concluded that consumers who are “opt-outs [of paper statements] are for the most part opting out of reviewing their statements entirely.” Paper also provides a more permanent record – if statements are saved on a hard drive, computers can crash or become outdated.


Finally, the report calls on the CFPB to protect consumers’ right to get paper statements by prohibiting banks and credit card lenders from:


  • making electronic statements the default choice;
  • compelling consumers to consent to electronic statements by making it a condition of a product or condition of web access; or
  • charging a fee for paper statements that are required by federal law.

“Paper versus electronic should be the consumer’s choice,” stated Lauren Saunders, associate director at the National Consumer Law Center. “Banks and credit card lenders should not push consumers into electronic statements with fees or coercive measures.”