Equifax hit with $15 million penalty over poor dispute handling

Equifax, one of three nationwide consumer reporting agencies, was ordered Friday to pay a $15 million civil money penalty for failing to conduct proper investigations of consumer disputes.

The Consumer Financial Protection Bureau (CFPB) – in a release familiar in many ways to one issued just more than a week prior regarding another consumer reporting agency, Experian – noted violations by Equifax of both the Consumer Financial Protection Act (CFPA) and the Fair Credit Reporting Act (FCRA).

The bureau said it found that Equifax ignored consumer documents and evidence submitted with disputes, allowed previously deleted inaccuracies to be reinserted into credit reports, provided confusing and conflicting letters to consumers about the results of its investigations, and used flawed software code which led to inaccurate consumer credit scores.

The bureau said Equifax violated the FCRA, including by:

• failing to properly conduct reinvestigations of disputed information in consumer files;
• failing to prevent the improper reinsertion of previously deleted information from consumer files;
• failing to provide adequate written notice to consumers of the results of its reinvestigations;
• failing to follow reasonable procedures to assure maximum possible accuracy of information Equifax reports on consumers; and
• failing to block reporting of information consumers identified as resulting from identity theft and to provide appropriate notice when such blocks were declined or rescinded.

It further found that Equifax engaged in unfair acts or practices in violation of the CFPA by:

• using ineffective systems, flawed processes, and excessive deference to furnishers to resolve consumer disputes and failing to adequately inform consumers of the results of reinvestigations; and
• selling inaccurate consumer credit scores and credit attributes after it introduced “test code” into a production environment in a scoring model server.

The order requires Equifax to bring its dispute resolution processes into compliance with the FCRA and CFPA; and pay a $15 million CMP into the bureau’s victims relief fund.

CFPB Orders Equifax to Pay $15 Million for Improper Investigations of Credit Reporting Errors