August 15, 2022
Equifax pressured by lawmakers to explain and fix faulty credit scores

Congress lawmakers are pressing Equifax to explain how credit bureaus misreport hundreds of thousands american credit scoreAnd how it plans to compensate for the error.

report from wall street journal And national mortgage businessL revealed that, over a three-week period this spring, Equifax sent incorrect scores to consumers applying for mortgages, auto loans and credit cards. Equifax said it resolved the issue on April 6, which it attributed to a software coding issue and that only a small number of people were affected. But the company has not released further details about the incident.

In a letter Friday to Equifax CEO Mark Begor, two senators and a House member called him to task for the company’s silence.

“Your company wishes to provide a clear and transparent explanation to the public as to why and how it made such serious errors, the scope of the errors, and why you failed to notify affected consumers of these errors.” LetterSigned by Senators Elizabeth Warren and Mark Warner, and Representative Raja Krishnamurthy.

Equifax “failed to alert consumers about these inaccuracies, and waited several weeks before alerting lenders,” he said.

In a statement to CBS Moneywatch, Warren called the incident “reprehensible,” adding that “Equifax needs to clearly explain who was affected and how it happened, and the company needs to help consumers who are ripped off.” Had gone.”

“deeply disturbed”

Begor acknowledged the reporting snafu at an industry conference in early June. However, consumers still haven’t heard from the company directly.

Equifax did not respond to a query from CBS MoneyWatch about its plans to reach those affected.

“The company’s inability or unwillingness to provide complete and complete information to the public, lenders or affected consumers is deeply disturbing,” the Democrats wrote.

He asked how long Equifax knew about the errors before alerting lenders when the company plans to contact consumers and what remedies it would offer to anyone who has paid higher interest rates. Or the loan was denied because of a faulty credit score.

Lawmakers also called for detailed accounting of credit-scoring errors, including how they occurred; How Equifax learned about the mistake; the exact number of incorrect digits sent; how many led to loan rejection or higher interest rates; And whether the company has alerted financial regulators.

“Will Equifax compensate consumers who were forced to take out loans at higher rates because of this error, and if so, will Equifax continue to compensate for the higher rates throughout the loan?” they wrote. “Will Equifax compensate consumers who were denied credit due to error, and if so, how?”

prepare for lawsuits

A Florida woman who was forced into an expensive car loan as a result of an incorrect Equifax score is now suing the company, The lawsuit, which is seeking class-action status, notes that over the three-week period Equifax sent out incorrect scores, 25 million credit reports were pulled from three credit-reporting bureaus.

Given those figures, millions of Americans could have been affected by the error, the suit claims.

Equifax has been in the crosshairs of lawmakers before a major data breach in 2017 that resulted in the exposure of 150 million Americans’ financial information.

That incident caused the company’s then CEO and Equifax to pay $575 million settlement to the government. As part of the deal, Equifax is also required to improve its security practices and receive regular external evaluations of its data protection program.

However, it is not clear whether the security provisions have an effect on Equifax’s scoring system.

The letter said, “In 2017, following a serious data breach at your company, Equifax waited 40 days to alert regulators and consumers and offer unreliable and insufficient support, the mistakes we are making in your credit score.” I urge you to reiterate when addressing errors.”

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