AG Henry Obtains $485,000 from Equifax and Promise to Assist in Additional Consumer Relief Regarding Coding Error

March 14, 2024 | Topic: Consumers

Equifax Pays Penalty to Resolve Allegations that it Provided Inaccurate Consumer Reports for Nearly Three Weeks in 2022

HARRISBURG – Attorney General Michelle Henry announced a settlement with Equifax regarding the national consumer credit reporting agency’s error that resulted in inaccurate reports to lenders, inflating costs for tens of thousands of consumers with loans and insurance policies.

Equifax estimated approximately 51,000 Pennsylvanians who applied for a loan or insurance experienced a negative score shift – meaning that Equifax provided inaccurate data that may have led to a lower credit score.

The settlement, in the form of an assurance of voluntary compliance, prompts Equifax to pay a penalty of $470,000 to the Pennsylvania Treasury, and $15,000 in additional costs to the Office of Attorney General.

The settlement marks the largest penalty imposed in a consumer finance case by the Office of Attorney General since at least 2010. Equifax previously settled with the Office in 2019 following a massive data breach.

“As one of the nation’s largest consumer reporting agencies, American consumers and lenders depend on Equifax to provide accurate consumer reports,” said Attorney General Michelle Henry. “This settlement holds Equifax accountable for failing to do its most basic job. We hope that today’s announcement will cause more lenders and insurers to adjust interest rates and refund overpayments to any consumers who were impacted by a negative score shift. We appreciate that Equifax has promised to accept requests for reimbursement from lenders and insurers through the end of 2024.”

In March 2022, Equifax discovered the coding error which caused Equifax to give inaccurate data to lenders for consumer reports during a three-week period. The inaccurate scores led lenders and insurers to price some of their loans and policies higher than they would have if Equifax had provided accurate consumer reports. Equifax partially resolved the issue on April 6, 2022, and it fully resolved the issue by April 8, 2022.

In the summer of 2022, Equifax notified the lenders and insurers whose consumer borrowers were potentially harmed by the coding error.

Equifax offered to reimburse the lenders for any interest rate adjustments the lenders and insurers made to give consumers the interest or premium rates that they would have qualified for if it had provided accurate consumer reports. As a result, dozens of lenders and insurers have provided remediation to consumers and obtained reimbursement from Equifax to cover the cost of this remediation.

As part of the Attorney General’s settlement, Equifax has agreed to continue to reimburse lenders and insurers affected by the coding error to ensure that affected Pennsylvania consumers can be made whole. Requests for reimbursement received by Equifax from its lender or insurer customers must be made before December 31, 2024. The Office of Attorney General strongly encourages lenders and insurers to review the loans and policies they originated during March and April 2022 and provide remediation to any consumers who were impacted.

Consumers who wish to notify the Office of Attorney General that they believe they were harmed as a result of the scoring error or any other conduct by Equifax or another company may file a complaint, email, or call 1-800-441-2555.

The Equifax settlement was filed in the Philadelphia Court of Common Pleas by Assistant Director for Consumer Financial Protection Nicholas Smyth.

Since the Office of Attorney General launched the Consumer Financial Protection Unit in July 2017, the unit has obtained more than $331 million in relief for over 493,000 Pennsylvania consumers. This number includes $124 million in restitution, $41 million in penalties and other payments, and $207 million in debt cancellation.

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