Equifax pressured by lawmakers to explain — and fix — faulty credit scores
Congressional lawmakers are pressing Equifax to explain how the credit bureau misreported hundreds of thousands of, and how it plans to make up for the error.
Reports from the Wall Street Journal and National Mortgage Professional revealed that, over a three-week period this spring, Equifax sent out incorrect scores for consumers applying for mortgages, auto loans and credit cards. Equifax has said that it resolved the problem, which it attributed to a software coding issue, on April 6 and that only a small number of people were affected. But the company has not released any more details on the incident.
In a letter on Friday to Equifax CEO Mark Begor, two senators and a House member took him to task for the company’s silence.
“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,” states the letter, signed by senators Elizabeth Warren and Mark Warner, and Rep. Raja Krishnamoorthi.
Equifax “failed to alert consumers about these inaccuracies, and waited several weeks before warning lenders,” they added.
In a statement to CBS MoneyWatch, Warren called the incident “scandalous,” adding, “Equifax needs to clearly explain who was affected and how this happened, and the company needs to help consumers who were ripped off.”
Begor acknowledged the reporting snafu at an industry conference in early June. However, consumers still haven’t heard directly from the company.
Equifax did not reply to a query from CBS MoneyWatch regarding its plans to reach out to affected people.
The company’s “inability or unwillingness to provide full and complete information to the public, to lenders, or to affected consumers is deeply troubling,” the Democrats wrote.
They asked exactly how long Equifax knew about the errors before alerting lenders, when the company plans to contact consumers and what remedy it will offer to anyone who ended up paying higher interest rates or was denied a loan because of a faulty credit score.
The lawmakers also demanded a detailed accounting of the credit-scoring errors, including how they were caused; how Equifax learned of the mistake; the exact number of inaccurate scores that were sent out; how many led to a loan rejection or a higher interest rate; 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 rate throughout the loan?” they wrote. “Will Equifax compensate consumers who were denied loans because of the error, and if so, how?”
Prepare for lawsuits
A Florida woman who was forced into a pricey car loan as a result of an incorrect Equifax score is now. The lawsuit, which is seeking class-action status, notes that over the three-weeks period Equifax sent out erroneous scores, 25 million credit reports were pulled from the three credit-reporting bureaus.
Given those figures, millions of Americans could have been affected by the error, the suit claims.
Equifax has been in lawmakers’ crosshairs before over a major data breach in 2017, which resulted in the exposure of 150 million Americans’ financial information.
That incident led to the ouster of the company’s then-CEO and to Equifax paying ato the government. As part of the deal, Equifax is also required to improve its security practices and get regular outside assessments of its data security program.
However, it’s not clear whether the security provisions have an effect on Equifax’s scoring systems.
“In 2017, following your company’s egregious data breach, Equifax waited 40 days to alert regulators and consumers and offered unreliable and insufficient assistance, mistakes we urge you not to repeat when addressing these credit score inaccuracies,” the letter says.