Credit Bureaus Deceptively Offering “Free” Credit Score

You’ve probably seen the commercials on TV: a young person is desperate to move out of her parent’s home, or a couple is looking to get a bigger place. All they need to do is push a few buttons and voila! A free credit score report appears, getting them one step closer to making their dreams a reality. Unfortunately, the idea of the free credit score doesn’t exactly work that way, and some credit bureaus are being disciplined for deceptively offering “free” credit scores.

Equifax and TransUnion were hit with large fines as the Consumer Financial Protection Bureau (CFPB) charged them with deceptive marketing practices. The companies must pay fines totaling $5.5 million to CFPB as well as a total $17.6 million in restitution to their customers

Deceptively “Free” Credit Scores

Both companies were accused of enrolling their customers in credit monitoring programs or other credit-related systems that were advertised as free or for a cost of just $1. In reality, these programs merely offered a free introductory trial, after which customers were being charged a monthly automatic renewal fee, which was sometimes as much as $16.

An “Educated Guess” Instead of the Real Thing

The deceptive practices did not stop at the monthly subscriptions. The companies were offering credit scores hinting (and sometimes claiming) that were the same results FICO provides to lenders. However, what customers actually received were not exact scores, rather educated guesses that were sometimes quite a few points off.

CFPB cited the ads run by the companies as deceptive marketing. For example, Equifax ran an ad that said, “Banks and lenders will most likely check your credit – make sure you see what they see.” But the score they provided was not the one banks would actually use. Although Equifax did disclaim this information, CFPB stated that it was not done in a conspicuous way, and many consumers failed to see it. Equifax had also set up their website so that consumer would have to click through two pages of ads to get to the free credit report page, which CFPB says is a violation of the Fair Credit Reporting Act.

TransUnion, also ran ads that said the free credit scores they offered were the same ones that “lenders” or “landlords” would see. Instead, TransUnion offered its own product, known as VantageScore, which also provided more of an estimate instead of the real thing.

The three major credit bureaus do offer one free credit report annually via www.annualcreditreport.com. However, FICO charges them a fee when they purchase a credit score from them, so they developed their own method of providing a credit score that is in the same arena as FICO’s (but not used by lenders) in order to keep more of the profits. While some consumers are just interested in getting an idea of their credit score and are therefore satisfied with the “best guess” scenario, others need to have the real thing, especially when they’re looking to purchase an item like a car or house, which usually requires getting a loan.

On top of the fines, the credit bureaus have been ordered to obtain consumers’ consent before enrolling them in any credit services and to make opt-out or cancellation choices easier to find and understand.

Contact an Ohio Debt Lawyer

Large companies sometimes take advantage of their consumers and trick them into paying extra for products or services they really don’t need. The debt relief attorneys at Luftman, Heck & Associates aren’t afraid to go up against these companies to stop these tactics from infringing on your rights.

Call us today at (888) 726-3181 or email us at advice@ohiodebthelp.com to schedule a free consultation to discuss your debt relief options.