WASHINGTON, Jan. 4 (UPI) -- TransUnion and Equifax Inc. have agreed to pay more than $23 million over allegations that they deceived consumers about the usefulness and cost of credit scores.
"TransUnion and Equifax deceived consumers about the usefulness of the credit scores they marketed, and lured consumers into expensive recurring payments with false promises," Consumer Financial Protection Bureau Director Richard Cordray said in a statement on Tuesday. "Credit scores are central to a consumer's financial life and people deserve honest and accurate information about them."
The companies and their subsidiaries will pay $17.6 million in restitution to consumers and $5.5 million in fines to the CFPB, which also ordered the companies to truthfully represent the value and cost of credit scores and to acquire the consumer's consent when signing up for a credit-related product with a negative option billing plan in which consumers are charged automatically.
The CFPB said TransUnion and Equifax violated the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act for years since 2011. Additionally, Equifax violated the Fair Credit Reporting Act, the CFPB said.
The CFPB also said the companies must provide an easy way for consumers to cancel products or services.
To ascertain credit scores, TransUnion uses a model from VantageScore Solutions, LLC., while Equifax uses its proprietary model, the Equifax Credit Score. The CFPB said those models to generate credit scores that TransUnion and Equifax gave to consumers are not generally used by lenders to make credit decisions -- suggesting the companies misled consumers about their usefulness.