New York has reached a settlement agreement with Equifax Information Services, LLC for inaccurately reporting tens of thousands of New Yorkers’ credit scores to lenders, inflating costs for loans and other products between March and April 2022. Attorney General Letitia James said that due to a coding error, Equifax falsely lowered consumers’ credit scores, leading lenders and insurers to price some of their loans and policies higher than they would have if Equifax had provided accurate credit reports. As a result of the settlement, Equifax will pay $725,000 and implement more safeguards to prevent future errors that raise costs for consumers.
“Credit scores affect some of the most significant parts of New Yorkers’ lives, from the cars they can buy, to the housing they live in, to their ability to start a small business,” said Attorney General James. “Consumers depend on credit bureaus like Equifax to report their credit history accurately. Equifax’s failure to do its most basic job inflated costs for consumers across New York. This settlement will help those affected get restitution, and my office will continue to hold companies accountable when they wrongly raise costs for consumers.”
As one of the nation’s “big three” largest consumer reporting agencies, consumers and lenders have no choice but to let Equifax report their credit history when they seek certain types of credit, like credit cards and car loans. In March 2022, Equifax discovered a coding error that caused it to give inaccurate data to lenders for consumer reports during a three-week period. While Equifax resolved the issue by April 8, 2022, the company estimated that the credit scores of over 77,000 New Yorkers wrongly declined, meaning that Equifax may have provided inaccurate data about them that led to a lower credit score.
In the summer of 2022, Equifax notified the lenders and insurers whose 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.
Dozens of New York consumers also paid Equifax directly for products that showed them their credit scores during the period in which the scores were inaccurate. The Office of the Attorney General (OAG) will contact those who are eligible for restitution. The settlement also requires Equifax to implement consumer safeguards and monitor incident reports that Equifax’s customers file when they encounter an error at least once per week.
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