CFPB Fines Experian For Misleading Consumers On The Use Of Credit Scores

Posted by Patrick Barnard on March 23, 2017 No Comments
Categories : Residential Mortgage

The Consumer Financial Protection Bureau (CFPB) is fining credit bureau Experian for allegedly misleading consumers that the credit scores it provided were the same ones that lenders use when making credit decisions.

Experian will pay $3 million to settle the allegations; however, it has admitted no wrongdoing.

The CFPB says from 2012 to 2014, Experian mislead consumers when it claimed in marketing materials that the “PLUS Scores” it was providing were the same ones used by lenders to make credit decisions. The CFPB says that the “PLUS Score” is a proprietary scoring model developed by Experian and is almost never used by lenders.

“No single credit score or credit scoring model is used by every lender,” the bureau says in a release. “In addition to the credit scores that are actually used by lenders, several companies have developed so-called “educational credit scores,” which lenders rarely, if ever, use. These scores are intended to inform consumers.”

The “PLUS Scores” that Experian was selling to consumers were, in fact, “educational” in nature, the CFPB says.

The misleading claims were a violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB says.

In a statement, officials from Experian say although they do not think the company violated the law, they nonetheless decided to settle “in the interest of moving our business forward and staying focused on delivering an exceptional product and service experience to our clients and consumers.”

“The [CFPB’s] consent order addresses past products and marketing disclosures and does not reflect current marketing practices,” the company says in its statement. “Experian will execute all actions directed by the CFPB; except for limited changes, our current marketing practices are already compliant with the order.”

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