Investing.com -- New York Attorney General Letitia James has secured a settlement of $725,000 from Equifax (NYSE:EFX) Information Services (NASDAQ:III), LLC (Equifax) for inaccurately reporting the credit scores of tens of thousands of New Yorkers to lenders. This incorrect reporting, which occurred between March and April 2022, inflated loan costs and other product prices for consumers.
The issue arose due to a coding error that resulted in Equifax falsely lowering consumers' credit scores. This led lenders and insurers to price some of their loans and policies higher than they would have if Equifax had provided accurate credit reports. As part of the settlement, Equifax will implement additional safeguards to prevent future errors that could increase 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. "Equifax’s failure to do its most basic job inflated costs for consumers across New York."
Being one of the nation's "big three" largest consumer reporting agencies, consumers and lenders must rely on Equifax to report their credit history when seeking certain types of credit, such as credit cards and car loans. In March 2022, Equifax discovered a coding error that caused it to provide inaccurate data to lenders for consumer reports over a three-week period. The company resolved the issue by April 8, 2022, but estimated that the credit scores of over 77,000 New Yorkers were incorrectly reduced.
In the summer of 2022, Equifax informed the lenders and insurers whose borrowers potentially suffered from the coding error. The company offered to reimburse these lenders for any interest rate adjustments made to provide consumers with the interest or premium rates they would have qualified for with accurate consumer reports. As a result, dozens of lenders and insurers have provided remediation to consumers and received reimbursement from Equifax to cover the cost of this remediation.
Several New York consumers also paid Equifax directly for products that displayed their credit score during the period in which the scores were inaccurate. The Office of the Attorney General (OAG) will reach out to those eligible for restitution. The settlement also mandates Equifax to implement consumer safeguards and monitor incident reports filed by customers who encounter an error at least once per week.
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