The Consumer Financial Protection Bureau on Friday announced an enforcement action against Equifax Inc. and its subsidiary, Equifax Information Services LLC, for multiple violations of the Fair Credit Reporting Act and the Consumer Financial Protection Act. The agency found that Equifax failed to properly investigate consumer disputes, provided inaccurate information, and misled consumers with contradictory dispute resolution notices, leading the credit reporting giant to pay a penalty of $15 million.
What happened:
- Equifax, a nationwide consumer reporting agency, processes approximately 765,000 disputes each month.
- The CFPB determined that since at least 2017, Equifax had been using flawed systems and ineffective policies that led to inaccurate credit reporting, harming millions of consumers.
- The order requires Equifax to pay a $15 million civil money penalty, which will be deposited into the CFPB’s victims relief fund, and to bring its dispute resolution processes into compliance with federal law.
Key findings: The CFPB found that Equifax violated consumer protection laws in several ways:
- Failure to properly investigate consumer disputes:
- Equifax did not fully consider documents and evidence submitted by consumers when disputing credit report inaccuracies.
- It excessively relied on furnishers without verifying their responses, often leading to the continuation of incorrect data.
- Equifax provided conflicting or misleading dispute resolution notices to consumers.
- Reinsertion of previously deleted errors:
- Equifax failed to block previously deleted inaccurate information from reappearing on credit reports.
- The company lacked a system to track and prevent recurring disputes over the same inaccurate data.
- Identity theft-related information was not adequately handled, leading to continued reporting of fraudulent data.
- Inaccurate credit scores:
- Equifax’s internal coding errors resulted in miscalculated credit scores being provided to lenders.
- Some consumers were negatively affected, receiving less favorable loan terms due to these inaccuracies.
What Equifax must do: Under the CFPB’s order, Equifax must:
- Implement comprehensive changes to its dispute resolution processes, ensuring compliance with FCRA and CFPA requirements.
- Enhance its consumer communication practices to prevent contradictory dispute notices.
- Establish stronger controls to prevent reinsertions of previously deleted inaccurate data.
- Conduct thorough reviews of consumer-submitted documents and provide clearer guidance to consumers on how to dispute inaccuracies.
- Pay a $15 million penalty to the CFPB’s victims relief fund.
