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Consumer Financial Protection Bureau fined Equifax $15 million for consumer-related errors credit reportsaccusing the company of failing to adequately investigate the disputed information, a federal watchdog announced Friday.
Equifax is one of the three main credit reporting agencies in the US, and this group also includes Experiment AND TransUnia.
“Equifax ignored consumers’ documents and evidence submitted in the dispute, allowed previously corrected inaccuracies to be re-inserted into credit reports, provided consumers with misleading and contradictory letters regarding the results of investigations, and used defective software code that led to inaccurate assessments of consumers’ creditworthiness,” he added. according to the CFPB order.
Why credit reports are important
Credit reports are a book of consumer credit data, such as loan repayment history and bankruptcy filings.
The financial consequences of inaccurate information on these reports can be “serious,” said Adam Rust, director of financial services at the Consumer Federation of America, a consumer rights group.
“It can change your ability to apply for a loan, find a job, rent an apartment, and all the other things that are fundamental to managing your personal life,” Rust said.
CFPB says Equifax had a ‘flawed’ process
According to the CFPB, Equifax resolves approximately 765,000 consumer disputes per month.
The company’s “flawed” dispute resolution policies and technology failures have occurred since at least October 2017, “to the detriment of millions of consumers,” according to the CFPB, which accused Equifax of violating the Fair Credit Reporting Act.
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Equifax settled allegations against ‘[turn] website dedicated to the CFPB’s long-running investigation,” a company spokesman wrote in an email.
A spokesman said the company has invested more than $1.5 billion in technology and infrastructure improvements over the past few years, including “significant changes” to its dispute resolution process and consumer support.
“Our goal is to help people be their best financially, and we know that consumers and our customers rely on our data to make important financial decisions,” they wrote. “Even one mistake affecting the consumer is one mistake too many.”
The $15 million civil penalty follows a CFPB lawsuit filed Jan. 7 against another credit bureau, Experian, reproach the company conducted “sham” investigations into credit report errors. In a statement posted on its website Experian said the lawsuit was “completely baseless” and an “example of irresponsible overreach.”
“Credit bureaus have been sued many times for this type of conduct,” said Chi Chi Wu, senior staff attorney at the National Consumer Law Center. “These are decades-old problems.”
Equifax data breach also in 2017 breached personal data 147 million consumers, which the company finally agreed to settle for $700 million.
How to maintain good hygiene on your credit reports
Consumers should check their credit reports at least once a year, Rust said. So does the Federal Trade Commission recommends checking before submitting an application for a loan, loan, insurance or job.
Consumers should make sure they recognize identity information on their credit report, such as addresses and Social Security numbers, and verify that your account information, such as your debt balance and delinquency status, is accurate.
“It’s just good financial hygiene practice,” Rust said.
Importantly, a credit report is different from a credit score. The latter is a numerical score cross-referenced with information contained in the consumer’s credit report.
“If you notice a sudden change in your credit score, that’s a signal,” Rust said.
The three major credit bureaus allow consumers to request a free copy of their credit report once a week. Consumers can request a copy at AnnualCreditReport.com and by calling 1-877-322-8228. Other sites may charge consumers fees or be fraudulent, According to to the Federal Trade Commission.
What to do if there is an error on your credit report
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Consumers who notice an error on their credit report should dispute it in writing with documentation. Mail it to the credit bureau and ask for a receipt, Wu said. Consumers have a better chance of solving their problems by mail than online, she added.
Consumers should also file a complaint with the CFPB and the attorney general’s office, Wu said.
Consumers can request that a statement about their dispute be included in their files and future credit reports, and can ask the credit bureau to provide the statement to anyone who received a copy of their report in the recent past, Wu said.
Consumers who are unable to correct the error after repeated attempts should consult a lawyer, she added.
“Not every mistake will be worth filing a lawsuit,” she said. “But if your loan becomes more expensive because of an error on your credit report, that’s the kind of real damage [for which] it may be worth considering taking the case to court.”
Consumers can find a lawyer through organizations such as National Association of Consumer AdvocatesWu said.
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