Equifax, one of the largest consumer credit reporting agencies among “The Big Three” of itself, Experian, and TransUnion, must contend with antitrust allegations in a class action lawsuit from mortgage lenders, First Financial Lending LLC and Greystone Mortgage Inc., and on behalf of those similarly situated.
The lawsuit, filed May 28 in Philadelphia federal court, claims that the defendants, Equifax Workforce Solutions LLC and Equifax, Inc., have a “stranglehold” over the market for electronic verification of income and/or employment (Electronic VOIE Services), violating Sections 1 and 2 of the Sherman Antitrust Act.
New Jersey-based First Financial Lending and Pennsylvania-based Greystone Mortgage claim that Equifax violated antitrust laws by entering into exclusive contracts and buying up would-be competitors, leading the agency to charge higher prices for its services – “far higher than a competitive market would bear,” the lawsuit reads.
In the lawsuit, the plaintiffs describe the mortgage industry’s reliance on Electronic VOIE Services, since most loan products require confirmation of employment and income. Given that over 20% of consumers have minimal or poor credit history, the lenders claim that payroll data is among the most reliable types of data that can be used to underwrite consumer financial transactions. According to the lawsuit, Equifax exclusively controls 40% of payroll data as a result of its alleged monopoly over Electronic VOIE Services.
Equifax, through its division Equifax Workforce Solutions, controls almost the entire market for VOIE Services through its product the Talx Work Number, the plaintiffs claim. According to the lawsuit, Equifax acquired Talx Corporation in 2007 and its Work Number product is essentially the only way that VOIE report purchasers — lenders, landlords, employers, and individuals — could electronically verify applicants’ income and employment.
The lawsuit also references when the Federal Trade Commission (FTC) filed a complaint against Equifax in 2008 for acquiring competitors, enhancing its ability to raise prices and decrease quality. The result was Equifax entered a consent order with the FTC that limits Equifax's rights to acquire competitors in the market for Electronic VOIE Services for a period of 10 years. The plaintiffs allege that Equifax’s recent spree of acquisitions began shortly after that consent order expired.
Though Equifax may be better known for providing credit history reports, the lawsuit reads that income and employment verification is driving more revenue, making up 40% of Equifax’s annual profits, now reaching $2 billion.
“The ‘Only Equifax’ slogan is not just marketing puffery; it describes how Equifax’s stranglehold on data inputs for Electronic VOIE Services has helped Equifax preserve its monopoly power and use that power to extract super competitive prices,” the plaintiffs allege in the complaint.
The allegations listed in the complaint are reportedly based on public statements by Equifax, regulators, competitors, and the press, as well as interviews conducted with confidential witnesses. One such quote, “If you want income and employment data at scale, the only place to get it is here,” by an Equifax executive is mentioned to support the plaintiff’s argument that “customers have nowhere else to turn.”
The plaintiffs demanded unspecified monetary damages, and are seeking an injunction to stop Equifax’s alleged antitrust practices.
"Equifax is aware of a lawsuit filed against the company in Pennsylvania on May 28, 2024," a spokesperson for Equifax said in an emailed statement. "We will respond to the litigation as appropriate, but do not comment publicly on pending litigation. Every day, verifications from The Work Number® help people with important life events, like applying for a mortgage, purchasing a car, or seeking social service benefits. Our model starts with the consumer’s engagement, and provides consumers, employers, and verifiers a frictionless process that offers the highest-class customer experience, quality, security, speed, accuracy and privacy."
The plaintiffs did not immediately respond to NMP's requests for comment.
