The Consumer Financial Protection Bureau handed out a $3 million fine to Experian over its marketing of credit scores.
Experian told consumers the credit scores it marketed and provided were used by lenders to make credit decisions; lenders did not use those same Experian scores to make such decisions, the bureau said.
The credit score at the heart of the bureau’s consent order is Experian’s proprietary credit scoring model, referred to as the “PLUS Score.” The Costa Mesa, Calif., company applied the model to information in consumer credit files to generate a credit score offered directly to consumers, the bureau said. The PLUS Score is an “educational” credit score and is not used by lenders for credit decisions.
From at least 2012 through 2014, Experian violated the Dodd-Frank Act by deceiving consumers about the use of the credit scores it sold, the CFPB said. In its advertising, Experian falsely represented that the Plus Scores it marketed and provided to consumers were the same scores lenders use to make credit decisions.
In fact, lenders did not use those scores, and in some instances, there were significant differences between the PLUS Scores and the various credit scores they actually use. As a result, Experian’s credit scores in these instances presented an inaccurate picture of how lenders assessed consumer creditworthiness.
Experian also violated the Fair Credit Reporting Act, which requires a credit reporting company to provide a free credit report once every twelve months and to operate a central source – AnnualCreditReport.com – where consumers can obtain their report. Until March 2014, consumers getting their report through Experian had to view Experian advertisements before they got to the report. This violates the Fair Credit Reporting Act prohibition of such advertising tactics.
“Experian deceived consumers over how the credit scores it marketed and sold were used by lenders,” said CFPB Director Richard Cordray. “Consumers deserve and should expect honest and accurate information about their credit scores, which are central to their financial lives.”