If you paid for an Equifax or TransUnion credit report in the past six years, you might be entitled to a refund, according to the Consumer Financial Protection Bureau (CFPB).
Earlier this month, the government watchdog claimed these two credit bureaus exaggerated the utility of their credit information. They also used misleading advertising.
Here’s where the CFPB says TransUnion and Equifax crossed the line — and how you can find out if you’re owed a refund.
Overstated usefulness of credit scores
As two of three major credit bureaus, TransUnion and Equifax collect information on consumers’ credit habits. Both track consumers’ credit accounts, loans, and history of repaying debts owed in a responsible manner.
In addition to credit reports, TransUnion and Equifax also sell credit scores. A credit score is a three-digit number that provides a snapshot of a consumer’s borrowing track record and creditworthiness. Many lenders will factor a credit score into their decision to approve or deny a loan or credit product.
However, consumers might not know that they have several credit scores. Lenders use FICO credit scores most often (90 percent of the time) to assess borrower’s creditworthiness.
But TransUnion provides its customers with credit scores using the VantageScore model, while Equifax uses its own internal scoring system. Yet both “falsely represented that the credit scores they marketed and provided to consumers were the same scores lenders typically use to make credit decisions,” the CFPB reports.
“Credit scores are central to a consumer’s financial life and people deserve honest and accurate information about them,” CFPB Director Richard Cordray said in a statement.
Tricked consumers into purchasing subscriptions
The two credit bureaus also employed deceitful language that hid the costs of subscription services. Consumers would sign up to get credit products that were advertised as free or just $1.
However, these products weren’t actually free. There was a short seven-day or 30-day trial during which the product as free or just $1. At the end of this period, customers were rolled into a subscription program that charged them a recurring monthly fee of $16.
To avoid these costs, customers would need to opt out of the service before the trial period ended. However, “this billing structure, known as ‘negative option,’ was not clearly and conspicuously disclosed to consumers,” according to the CFPB.
Essentially, consumers might not have realized they had enrolled in a subscription. And would be subsequently surprised with a charge each month.
Will you get a refund if you bought an Equifax or TransUnion credit report?
The CFPB ordered both credit bureaus to make several changes to their advertising. These should make costs clearer and services more transparent for users.
They are also required to provide monetary restitution totally $17.6 million to affected customers. The CFPB ordered TransUnion to pay $13.9 million to its affected consumers, and $3.8 million in payouts from Equifax.
If you were a customer of TransUnion between July 2011 and January 2017, you might be among the affected customers. Equifax’s affected customers would have paid for its services between July 2011 and March 2014.
If you suspect you were affected, however, you don’t need to take any further actions. The CFPB is requiring TransUnion and Equifax to identify affected customers and send letters notifying them of restitution.
Interested in a personal loan?Here are the top personal loan lenders of 2018!
|Lender||APR Range||Loan Amount|
|1 Includes AutoPay discount. Important Disclosures for SoFi.
2 Includes AutoPay discount. Important Disclosures for Payoff.
3 Important Disclosures for FreedomPlus.
4 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
5 Important Disclosures for LendingPoint.
6 Important Disclosures for LendingClub.
All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.16% to 35.89%. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at time of application. The origination fee ranges from 1% to 6% and the average origination fee is 5.49% as of Q1 2017. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months or longer.
7 Important Disclosures for Earnest.
8 Important Disclosures for Avant.
* The actual rate and loan amount that a customer qualifies for may vary based on credit determination and other factors. Funds are generally deposited via ACH for delivery next business day if approved by 4:30pm CT Monday-Friday. Avant branded credit products are issued by WebBank, member FDIC.
** Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33
* Important Disclosures for Upgrade Bank.
Upgrade Bank Disclosures
** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.
|7.73% – 29.99%||$1,000 - $50,000||Visit Upstart|
|6.26% – 14.87%1||$5,000 - $100,000||Visit SoFi|
|6.99% – 35.97%*||$1,000 - $50,000||Visit Upgrade|
|8.00% – 25.00%2||$5,000 - $35,000||Visit Payoff|
|4.99% – 29.99%3||$10,000 - $35,000||Visit FreedomPlus|
|5.99% – 18.99%4||$5,000 - $50,000||Visit Citizens|
|15.49% – 34.49%5||$2,000 - $25,000||Visit LendingPoint|
|6.16% – 35.89%6||$1,000 - $40,000||Visit LendingClub|
|6.99% – 18.24%7||$5,000 - $75,000||Visit Earnest|
|9.95% – 35.99%8||$2,000 - $35,000||Visit Avant|