By Rachel Witkowski

WASHINGTON -- Top credit-reporting companies Equifax Inc. and TransUnion have agreed to pay more than $23 million over federal claims that they deceptively marketed and sold credit scores to consumers.

The Consumer Financial Protection Bureau said Tuesday that Atlanta-based Equifax and Chicago-based TransUnion -- two of the three largest credit-reporting firms -- falsely advertised how lenders use credit scores and deceptively charged consumers for subscriptions to check their own score.

Credit reporting firms are required by law to provide one free credit report to consumers every year. Consumers typically end up seeing their credit score or report when applying for a loan, and some banks now offer the score free as part of a bank account.

Equifax and TransUnion collectively have agreed to pay more than $17.6 million in restitution to consumers and $5.5 million in fines, without admitting or denying the CFPB's findings.

"TransUnion and Equifax deceived consumers about the usefulness of the credit scores they marketed, and lured consumers into expensive recurring payments with false promises," CFPB Director Richard Cordray said in written statement.

Equifax and TransUnion in separate statements said they already have fixed many of the issues raised by the CFPB. The cited activities occurred as early as July 2011 for both companies, and for Equifax continued through March 2014, according to the CFPB.

The CFPB said both companies and their subsidiaries falsely advertised a credit score to the consumer as the same score lenders usewhen underwriting a loan. A lender typically uses several different scores that can sometimes include those provided by Equifax and TransUnion to determine the interest rate and eligibility for a consumer credit.

The CFPB also accused Equifax of offering a free credit-score trial and TransUnion of offering a similar trial for $1 after which the companies would automatically enroll the consumer into a subscription once the trial ended. The result was that consumers who didn't cancel their subscription during the trial period were then charged a recurring fee, typically $16 or more a month, the CFPB said.

Equifax agreed to pay $3.8 million in consumer restitution and $2.5 million in civil penalties. TransUnion has agreed to pay more than $13.9 million in consumer restitution and a $3 million penalty.

"The CFPB's investigation into these matters has been ongoing for nearly three years, and Equifax implemented changes addressing the CFPB's concerns shortly after the investigation began," Equifax said. "While Equifax does not believe it has violated any laws and has not admitted any liability, Equifax determined it was in its best interest to resolve the matter."

"We continue to believe that our consumer marketing has been clear and has complied with the law and other government guidance," TransUnion said. "However, we are committed to making improvements to our consumer experience, and over the past several months we have worked cooperatively with the CFPB to be the industry leader."

The CFPB estimates about 700,000 consumers had enrolled in TransUnion's trial subscription then canceled it within two billing cycles but didn't get a refund.

"We have agreed to fund a generous program to fully compensate any consumer who may not have understood that his or her trial program would convert to a subscription," TransUnion said.

Write to Rachel Witkowski at

(END) Dow Jones Newswires

January 03, 2017 19:25 ET (00:25 GMT)

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