Borrowers Were Denied Approvals or Charged Higher Interest Rates for Auto Loans, Mortgages, and Credit Cards
Lawmakers Call Out Equifax’s Pattern of Failures to Alert Consumers and Regulators About Issues with Credit Scoring System
August 6, 2022 - Washington, D.C. – On Friday, U.S. Senators Elizabeth Warren (D-Mass.) and Mark Warner (D-Va.) and U.S. Representative Raja Krishnamoorthi (
D-Ill.) sent a letter to Equifax, blasting the company for its failure to correctly report consumer credit scores and its delays in informing lenders and consumers of these problems – resulting in consumers being denied or charged higher interest rates for auto loans, mortgages, and credit cards. The lawmakers are calling on Equifax to answer for the mistakes in its credit scoring system and its failure to alert consumers and regulators about these mistakes.
“This is a deeply troubling allegation, raising questions about the impact your opaque practices may have on America’s financial institutions and on individual borrowers, who may be stuck paying higher costs for loans, credit cards, cars, and houses. Your company owes the public a clear and transparent explanation for why and how it made such grievous errors, the scope of the errors, and why you have failed to notify affected consumers of these errors,” wrote the lawmakers.
Equifax, just one of the three national credit bureaus, maintains credit scores on more than 200 million U.S. consumers and sells this information to lenders to help determine loan decisions. In 2021, Equifax delivered more than 2.8 billion consumer credit card files to U.S. lenders.
New reporting revealed that from March 16, 2022 to April 6, 2022, Equifax sent incorrect credit scores for hundreds of thousands of consumers to lenders, resulting in higher interest rates and denied applications. Equifax claimed that “300,000 consumers experienced a score shift of 25 points or more”, but has not released any additional data on how these consumers were impacted. Swings of 25 points or more could materially impact the rates consumers are offered or even result in an unfair rejection.
In the letter, the lawmakers call out Equifax for its failure to alert consumers of these inaccuracies and for waiting more than three weeks to alert lenders. They also note Equifax’s disturbing pattern of failing to alert consumers and lenders about problems with its credit scoring system. In 2017, the company waited 40 days to alert regulators and consumers about an egregious data breach.
The lawmakers are calling on Equifax to answer a set of questions about its inaccurate credit score reporting, its impact on consumers, and its plans to notify and compensate impacted consumers by August 19, 2022.
Senator Warren has led efforts in the Senate to protect consumers and hold consumer credit agencies accountable for massive data breaches and exploiting consumers:
- In September 2019, Senator Warren raised concerns with the Federal Trade Commission (FTC) about reports that consumers who opted to receive $125 in compensation as a part of the Equifax breach settlement received suspicious-looking emails forcing them to complete additional, complicated steps in order to receive payments, which appeared designed to discourage applications.
- In August 2019, Senator Warren requested that the Federal Trade Commission investigate misleading Equifax settlement descriptions which did not advise consumers affected by the Equifax data breach of the likely reduction of their settlement payments.
- In June 2019, Senators Warren and Ron Wyden (D-Ore.), and the late Representative Elijah Cummings (D-Md.) released a Government Accountability Office (GAO) report identifying significant gaps in the federal government's treatment of citizens' personally identifiable information.
- In May 2019, Senator Warren and the late Representative Cummings reintroduced the bicameral Data Breach Prevention and Compensation Act with Senator Mark Warner (D-Va.) and Representative Raja Krishnamoorthi (D-Ill.) to hold large credit reporting agencies accountable for data breaches involving consumer data.
- In 2018, Senator Warren and the late Representative Cummings released two GAO reports, prepared at their request, detailing how hackers exploited significant vulnerabilities at Equifax to gain access to the sensitive personal information of more than 145 million Americans and recommending stronger consumer protection efforts to prevent another Equifax disaster.
- In April 2018, Senator Warren released the first comprehensive review of consumer complaints in the wake of the breach, revealing that the CFPB received more than 20,000 consumer complaints following the Equifax breach.
- In February 2018, Senator Warren released a 15-page report containing the findings of a four-month-long investigation into how Equifax failed to protect the personal data of more than 145 million Americans.
Source: Senator Elizabeth Warren
