When TransUnion and Equifax got caught for defrauding consumers by urging them to unnecessarily pay for credit scores and products, the Consumer Financial Protection Bureau (CFPB) stepped in to make things right. Now, the CFPB has taken strong action against the credit reporting agencies, forcing them to pay stiff fines as restitution to those they deceived.

In fact, TransUnion and Equifax have been ordered to pay more than $17.6 million in restitution to the consumers they deceived, along with about $5.5 million in fines to the Consumer Financial Protection Bureau for their misdeeds.

The CFPB released a statement along with their fine, stating that TransUnion and Equifax frequently misstated the cost and usefulness of the credit score reports and products they sold, and often lured consumers into agreeing to recurring payment schemes that were inordinately priced.

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

False promises and misrepresentation were the norm, the CFPB found, when TransUnion and Equifax marketed their credit score products and services to consumers, who then set them up in ongoing payment plans that had characteristics of the negative-option billing practices that have drone so much ire from consumer advocates.

The CFPB mandated that going forward, TransUnion and Equifax must truthfully represent the value of the credit scores they provide and disclose the full cost of obtaining those credit scores and other services.

TransUnion, based in Chicago, and Equifax, based in Atlanta, are two of the credit reporting “Big Three” agencies along with Experian, who wasn’t found guilty of wrongdoing by the CFPB. All three credit reporting agencies collect consumer credit information, including borrower names, payment history, account balances, maximum credit limits, current creditor profiles, and instances of late payments, liens, collections and other negative items. With this data in hand, all three agencies assemble it into credit reports that are provided for businesses so they can make future lending decisions based on these consumer profiles.

But the credit bureaus also release this credit profile to consumers so they can see their own credit scores and what information their creditors are reporting. TransUnion and Equifax, through their subsidiary companies, TransUnion Interactive and Equifax Consumer Services, respectively, sell products to consumers that help them track their credit scores, reports, and also ongoing credit monitoring services.

But the CFPB found that Equifax often marketed and sold credit scores to consumers that were based on the company’s own proprietary model, Equifax Credit Score, which is an “educational” scoring system and not commonly used by lenders to make credit and lending decisions. Therefore, the scores they were selling to consumers had little real world value, a fact Equifax failed to disclose as they overstated the scoring model’s importance as if it was based on one of the more popular credit reporting models.

By doing so, TransUnion, and Equifax were found in violation of the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act, since 2011 and 2014, respectively.

The CFPB found that TransUnion and Equifax:

Deceived consumers about the value of the credit scores they sold by making false claims in their advertising, stating that the scores they were selling were based on models that lenders typically used to make lending decisions, when, in fact, they do not.

Deceived consumers into signing up for subscription-based payment programs with advertising claimed that credit score and credit-related products like monitoring were free or cost only $1. Once consumers signed up for a free trial or paid $1, they were automatically enrolled in an expensive ongoing subscription for at least $16 a month unless they canceled. However, consumers often were confused about how or when they could cancel, or didn’t know about the monthly charges at all, a shady practice known as negative option billing.

Equifax was also found guilty of failing to provide a free credit report every twelve months via AnnualCreditReport.com, a violation of the Fair Credit Reporting Act. Since January 2014, consumers had to go to Equifax’s website first when requesting their free credit report, where they were exposed to Equifax advertising. Under the Fair Credit Reporting Act, Equifax is not allowed to display advertising until consumers receive their free credit report.

As part of the Dodd-Frank Act, the Consumer Financial Protection Bureau is entrusted with policing companies or institutions engaged in unfair, deceptive, or abusive acts or practices, or otherwise breaking federal financial laws that protect consumers.

As part of the CFPB’s action:

TransUnion must pay $13.9 million, and Equifax must pay $3.8 million in restitution to consumers they deceived. The credit reporting companies must send notification letters to the consumers that are due restitution.

They must also pay $5.5 million in total fines to the CFPB’s civil penalty fund, with TransUnion contributing $3 million and Equifax, $2.5 million.

TransUnion and Equifax are also ordered to change their marketing and the way they sell these products. In the future, they must truthfully disclose the nature and value of credit scores and products they sell. They also need to get informed consent from consumers before enrolling them in monthly billing payments for products, as well as provide easy instructions and means to cancel those services.

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If you’d like to read the CFPB’s order against Equifax click here.

If you’d like to read the CFPB’s order against TransUnion click here.