For the “failure to conduct proper investigations of consumer disputes,” the Consumer Financial Protection Bureau (CFPB) last Friday announced enforcement actions taken against Equifax, requiring the nationwide consumer reporting agency to pay a $15 million civil money penalty and bring its business practices into compliance with federal law.
The accusations against Equifax mirror allegations made in a lawsuit filed against fellow credit-reporting giant Experian just two weeks ago, in which the consumer watchdog claimed that Experian conducts “sham investigations” into consumer disputes, thereby harming consumers.
In Friday’s consent order, the CFPB detailed Equifax’s misconduct, stating that the company:
- ignored consumer documents and evidence submitted with disputes;
- allowed previously deleted inaccuracies to be reinserted into credit reports;
- provided confusing and conflicting letters to consumers about the results of its investigations;
- and, used flawed software code which led to inaccurate consumer credit scores.
Such coding errors in Equifax’s internal software, for example, led the company “to miscalculate and share inaccurate credit scores for several hundred thousand consumers,” according to the CFPB. Headquartered in Atlanta, Georgia, Equifax processes approximately 765,000 consumer credit disputes each month.
The CFPB also cited Equifax’s pattern of misleading consumers throughout the dispute process through letters that “sometimes contained confusing or contradictory statements,” including both “this has been verified as accurate” and “this item has been deleted,” when the credit reports themselves would suggest neither was the case.
These practices led the CFPB to find Equifax in violation of the Fair Credit Reporting Act (FCRA), specifically its requirements for investigating and processing consumer disputes and assuring maximum possible accuracy of information on its consumer reports.
