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CFPB Fines Experian $3 Million for Deceiving Consumers About Credit Scores

The Consumer Financial Protection Bureau took action against Experian and its subsidiaries for falsely claiming in advertisements that credit scores it offers and provides to consumers are used by finance sources to make credit decisions.

by Staff
March 23, 2017
3 min to read


WASHINGTON, D.C. — The Consumer Financial Protection Bureau took action against Experian and its subsidiaries for falsely claiming in advertisements that credit scores it offers and provides to consumers are used by finance sources to make credit decisions. Today’s announcement comes almost 15 months after the bureau took similar action against Equifax and TransUnion.

The CFPB ordered Experian to truthfully represent how its credit scores are used and to pay a civil penalty of $3 million. Based in Costa Mesa, Calif., Experian is one of the nation’s three largest credit reporting agencies, and markets, advertises, sells, offers, and provides credit scores, credit reports, credit monitoring, and other related products to consumers and third parties.

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“Experian deceived consumers over how the credit scores it marketed and sold were used by lenders,” said CFPB Director Richard Cordray. “Consumers deserve and should expect honest and accurate information about their credit scores, which are central to their financial lives.”

In January 2017, the bureau ordered Equifax, TransUnion and their subsidiaries to pay more than $17.6 million in restitution for deceiving consumers about the usefulness and actual cost of credit scores they sold to consumer. The two firms were also ordered to pay $5.5 million in fines to the regulator.

The CFPB’s main issue was that the two credit reporting agencies advertised to consumers that finance sources relied on their scores when making credit decisions. The problem was the scores TransUnion sold to consumers were based on a model from VantageScore Solutions LLC. The scores Equifax sold to consumers were based on its own proprietary model. Neither scoring models were typically used by lenders to make credit decisions.

In the case of Experian, the credit reporting agency developed its own proprietary credit score model, referred to as the “PLUS Score.” It’s considered an “education” score intended to inform consumers, but it is not used by lenders for credit decisions.

The bureau charged that between at least 2012 and 2014, Experian violated the Dodd-Frank Wall Street Reform and Consumer Protection Act by deceiving consumers about the use of the credit score it sold. The CFPB also charged Experian with violating the Fair Credit Reporting Act, which requires a credit reporting company to provide a free credit report once every 12 months and to operate a central source — AnnualCreditReport.com — where consumers can obtain their report.

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And until March 2014, consumers getting their report through Experian had to view Experian advertisements before they got to the report, a violation of the FCRA’s prohibition of such advertising tactics.

In addition to the civil fine and order to truthfully represent its scores, the bureau ordered Experian to develop and implement a plan to make sure its advertising practices relating to credit score and on internet pages that consumers access AnnualCreditReport.com comply with federal consumer laws and the terms of the CFPB’s consent order.

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