Believe it or not, the news that broke today by the Federal Trade Commission that a resolution had been decided in the Equifax case isn’t the first time the credit bureau’s been in hot water. In fact, there have been several settlements Equifax has been forced into because of its being on the wrong side of the law. Equifax is one of the “big 3” credit bureaus that collect and provide information on consumers to lending institutions, employers, insurance companies and in Equifax’s case, sometimes even telemarketers. That’s where it seems to run into trouble ever few years – making unethical and in some instances illegal decisions that jeopardize consumers’ identity and credit ratings.
Before we take a look at the historical perspective, the latest settlement handed down this week includes proof that Equifax violated not only the Fair Credit Reporting Act, but another law when it opted to participate in improper sales of lists that included millions of American consumers’ private information, including whether or not they were behind in their mortgage payments, if they owned credit cards and other financial information.
This Week’s Ruling
The FTC said Equifax agreed to pay its full $392,803 in gross revenues “as disgorgement of its ill-gotten gain from the conduct challenged by the Commission’s complaint.” Further, Equifax may no longer provide pre-screened lists to companies. The kicker in this specific detail is that Equifax is only prohibited from providing those lists to anyone or any company it doesn’t believe has a “permissible purpose”. This suggests Equifax may police itself, despite its past history on clearly being unable to do so. Another part of the settlement includes a requirement that the credit bureau may not become lax in maintaining procedures dealing with the release of this or any other kind of consumer information. Anyone requesting access must provide to Equifax the details of who they are and a reasonable justification that the information won’t be misused. Of course and as expected, there are new stipulations that Equifax may not, with very few exceptions, sell lists to companies offering debt relief or mortgage assistance services if those companies or services require upfront payments from consumers.
The ruling is quite specific, but as mentioned, Equifax has a history of playing fast and loose with federal regulations. In 2003, the credit bureau was ordered to pay one quarter million dollars to settle charges that is, once again, violated FCRA regulations. This time, it was alleged that its blocked-call rate and hold times violated provisions, thereby making it more difficult for consumers to report and resolve errors on their credit reports. Because federal laws require credit bureaus to provide 800 numbers and customer service reps, it was discerned the company failed to meet compliance.
2000 Court Case
Before then, in 2000, all three credit bureaus shelled out a total of $2.5 million to settle accusations of more violations. This time, according to the Federal Trade Commission’s complaints, all three bureaus – Equifax, Experian and TransUnion – actively blocked calls from over a million consumers who sought information about their credit reports, including errors. These extended wait times are the same reasons for the 2003 settlement with Equifax; in fact, as a result of this earlier finding, when it was hit with the same charges three years later, there was an additional requirement for Equifax to pay an another $250,000 for violating the original consent decree.
2006 Court Case
In 2006, a federal jury found Equifax was yet again breaking the law and as a result, it was ordered that time to pay $351,000 to woman who sued the company after learning her identity had been compromised, even after a fraud alert had been placed on her file. This remains the largest known Fair Credit Reporting Act (FCRA) verdict against Equifax. In fact, the victim was even awarded close to $250,000 for emotional stress alone. The jury reached its decision fairly quickly and agreed that Equifax was negligent in its responsibility to protect consumers, conduct a “reasonable” investigation when complaints were filed and even after the victim had point out the errors, the company still refused to delete it. Worse – it even reinserted the same wrong information after it had been removed.
Perhaps what’s most alarming is the victim in that case had always exercised caution when it comes to her identity and credit. During a visit to her hospital emergency room, a worker accessed the then-patient’s information including her social security number, and immediately began opening fraudulent credit card accounts. When the victim noticed the discrepancies, she notified all three bureaus. After being assured the problems would be remedied, she learned Equifax’s failure to maintain its own policies resulted in her credit scores dropping more than 250 points. This made it impossible for her to buy an investment property or even open a legitimate credit card account.
It quickly became a massive brouhaha with even CitiFinancial feeling the spotlight. The bank, however, opted to settle outside a courtroom. It should also be noted that the Citi was named in the original lawsuit and before being dismissed from it, the judge heard testimony that Equifax was actually creating multiple credit files for any number of consumers, thereby lessening the bank’s liability. Still, for some time later, the woman applied for credit with Wachovia bank and it received several Equifax files on the applicant, proving that even lawsuits aren’t always enough to get ensure the credit bureaus, or at least in this case, Equifax, follow ethical business practices.
The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. Consumers are encouraged to visit the website for free information on hundreds of topics relating to their money, security and other consumer-based publications. You can find these resources at ftc.gov or by calling toll-free, 1-877-FTC-HELP (1 877-382-4357). The Federal Trade Commission also provides online complaint forms where the information is shared with the Consumer Financial Protection Bureau and appropriate actions are taken between the two agencies. You can visit CFPB at consumerfinance.gov.
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