Consumer credit reporting giant Equifax is now the subject of a proposed class action lawsuit related to a coding error that led to possibly millions of erroneous credit scores being sent to potential home and auto lenders earlier this year.
The suit, filed last week in federal court in northern Georgia — where Equifax is headquartered — alleges that the company’s electronic glitch, which was introduced during a technology change-over, caused a drastic and severe shift in credit scores that resulted in consumers being denied home and car loans or paying much higher interest rates.
The lead plaintiff in the case, Nydia Jenkins of Jacksonville, Fla., claimed that Equifax’s error caused her credit score to dip by 130 points and resulted in her monthly payment for a pre-approved auto loan to increase from $350 a month to $504 a month.
The complaint alleges that Equifax should have foreseen the harm the glitch caused, and that the harm could not be rectified by simply updating affected credit reports.
The suit also alleges that the company violated its duties under the Fair Credit Reporting Act, and continued to provide inaccurate scores and reports even though they knew or should have known they were inaccurate.
The complaint also alleges that even though the company said publicly that no credit reports were affected, privately they acknowledged that they were.
As a result, the suit claims that the plaintiffs:
- Suffered a loss of use and access to financial accounts and/or credit;
- Spent money and time to avail themselves of assets and/or credit frozen or flagged due to inaccuracies;
- Suffered impairment of their credit scores, ability to borrow, and/or ability to obtain credit;
- Suffered lowered credit scores resulting from credit inquiries following inaccurate reports being provided to lenders;
- Suffered costs and lost time obtaining credit reports in order to monitor their credit records to attempt to understand the reasoning behind the denials due to the glitch;
- Suffered lost opportunity costs and loss of productivity from efforts to mitigate and address the adverse effects of the error, including but not limited to efforts to research how to prevent, detect, contest, and recover from the it;
- Suffered the loss of the opportunity to control how their personal information is used; and
- Continue to risk their financial health, which remains subject to further harmful inaccurate reporting as long as Equifax fails to undertake appropriate, legally required steps to protect and ensure the maximum possible accuracy when creating consumer reports using the personal information in its possession.
Equifax officials acknowledged in late May that the error occurred in a three-week period from mid-March to early April, and that it affected about 12% of the credit reports that were sent to mortgage lenders during that time.
However, the company said at the time that less than 9% experienced a change of 10 points or less; less than 3% experienced a change of 11 to 20 points; and less than 1% experienced a change of more than 20 points.
In a statement last week, company officials said that while they regret the error and take the issue seriously, information on consumer credit reports was not affected by the glitch, scores have been updated to consumers and lenders, and that score shifts do not always result in changes to credit decisions.
A company spokeswoman said Monday that as part of Equifax's commitment to resolving the issue, it has conducted an analysis of credit scores used for consumers seeking credit during the time period of the issue.
"Our analysis indicates that for those consumers there was no shift in the majority of scores during the three-week timeframe of the issue," the official said. "For those consumers that did experience a score shift, initial analysis indicates that only a small number of them may have received a different credit decision. While the score may have shifted, a score shift does not necessarily mean that a consumer’s credit decision was negatively impacted. Equifax will respond more fully in its court filings at the appropriate time."
