According to the Consumer Financial Protection Bureau (CFPB), the answer is yes!

Everybody knows that your credit score is one of your most valuable financial tools. In fact, your credit worthiness is the cornerstone of your financial health, and well-managed credit opens economic opportunity and saves you thousands of dollars. You would be hard pressed to find a number more relevant and critical to a consumer than a credit score.

That’s why, as a consumer, you should be alarmed to learn of the events that have taken place this year between the CFPB and the three largest credit reporting bureaus in the nation.

In January of this year, the Consumer Financial Protection Bureau took action against two of the three Credit Bureau behemoths, Transunion and Equifax for deceiving consumers. The charges levied against these credit bureaus are significant, so just who is the CFPB and what did they find?

Who Is The Consumer Financial Protection Bureau?

Before we can talk about the CFPB, we need to touch on the financial crisis of 2008 and ensuing recession. During this time, financial institutions were on the verge of collapse due to excessive risk taking, and they required massive bailouts to prevent the possible collapse of the global financial system. It was in response to this time that the U.S. Government enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The Dodd-Frank Act was created to regulate the financial industry to limit risk and enforce transparency and accountability. It was thanks to this act that the Consumer Financial Protection Bureau (also known as the CFPB) was created. The CFPB is in charge of overseeing the Federal financial laws that protect consumers.

The Investigation And Its Findings

During the CFPB’s investigation, it was found that Chicago-based Transunion and Atlanta-based Equifax deceived consumers by

• Misleading consumers about the value of the credit scores they sold. This charge stems from the credit bureaus falsely stated that the credit scores they were providing customers through their services were the same credit scores that lenders used to make lending decisions, when in fact they were selling credit scores that were not used by most lenders. In fact, the scores provided have the potential to be dramatically different to what a lender sees.
• Tricking consumers into reoccurring payments.

This charge stems from the promise of free or cheap credit scores. Once individuals purchased these inexpensive scores, after a brief trial period, they were automatically enrolled into a costly subscription.

Additionally, Equifax was found to be in violation of the Fair Credit Reporting Act for advertising to its customers before they could view their mandated free annual credit report.

The Penalty

Due to the serious nature of the CFPB findings, Transunion and Equifax are required to pay $17.6 million in consumer restitution and fines that total $5.5 million to the CFPB.

“Transunion and Equifax deceived consumers about the usefulness of the credit scores they marketed and lured consumers into expensive recurring payments with false promises,” said CFPB Director Richard Cordray. “Credit scores are central to a consumer’s financial life, and people deserve honest and accurate information about them.”

But Wait! There’s More!

In March of this year, the CFPB also fined Experian $3 Million for deceiving consumers in marketing their credit scores. Much like Transunion and Equifax, the CFPB charges that Experian also claimed that the credit scores they provided to consumers were used by lenders when in fact The PLUS Score they used, is educational and not used by lenders for credit decisions. Additionally, Experian also violated the Fair Credit Reporting Act by showing advertisements to their customers before they could access their free annual credit report.

“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.”

What Does This Mean For You?

If you were negatively impacted by these deceptive practices, you should expect to receive a notification through the mail or electronically. While consumers are fortunate to have a government agency like the CFPB looking out for their interests, it is equally important to do your due diligence in protecting your financial health and credit. To do that, FFEF recommends that you create a household budget that encourages paying off debt and saving money. Get your free annual credit report every year and go through it to be sure it is accurate and up to date. If you find discrepancies or incorrect information, file a dispute with the credit bureaus to get them removed and/or changed. As always, Family Financial Education Foundation is happy to help you with financial disputes, debt management, budgeting assistance and your credit score. Call 877-789-4206 for a FREE financial consultation.

For more information on this matter and additional educational resources from the Consumer Financial Protection Bureau, go to https://www.consumerfinance.gov.