Big problem for major credit bureau
The Federal Trade Commission (FTC) has announced a settlement with credit bureau, Equifax over allegations that the company sold mortgage borrowers’ information to Direct Lending when late on payments, then failed to take action when they became aware that Direct Lending was turning around and reselling the information elsewhere. In two separate actions, both Equifax and the companies that allegedly bought and resold the information from it will pay a total of nearly $1.6 million to resolve charges that they violated the FTC Act and the Fair Credit Reporting Act (FCRA).
Between 2008 and 2010, Equifax is said to have sold over 17,000 separate lists containing borrowers’ personal information like credit scores, contact information, and how delinquent they had become on their mortgage. The FTC reports this pertains to millions of U.S. consumers during this period but has not released an exact number of those impacted.
Under the FCRA, it is illegal for the consumer reporting agency to share consumer information, and illegal to obtain a pre-screened list from a consumer reporting agency unless it is to make offers of credit or insurance that will be honored if consumers meet pre-selected criteria. The FTC says that Direct Lending was buying the lists and reselling them for general marketing purposes, which is strictly forbidden.
According to the FTC, companies that purchased lists from Direct Lending have been the subject of law enforcement investigations.
Settling for $1.6 million
As part of a settlement with the FTC, Equifax will pay $393,000 and is barred from furnishing pre-screened lists to any entity that it does not have reason to believe has a legal purpose to receive them, and will be barred from selling pre-screened lists in connection with offers for debt relief products or services and mortgage assistance relief products or services, when advance fees are charged, with limited exceptions.
In a separate action announced simultaneously, Direct Lending will pay a $1.2 million civil penalty, and barred from using or selling pre-screened lists without a permissible purpose, or in connection with solicitations for debt relief or mortgage assistance relief products or services.
Consumers have come to fear that a late payment on their mortgage will get credit reporting agencies’ attention and have an impact on their score, but due to it being illegal, it was surely surprising to some that they were inundated by questionable debt relief offers they had not pre-qualified for.
