The days of the singing band in pirate hats pitching “free” credit reports may be gone, but credit bureau marketing skulduggery is still sailing.
On Tuesday, the Consumer Financial Protection Bureau ordered three of the biggest credit bureaus, TransUnion and Equifax, to pay a total of $5.5 million in fines and give $17.6 million in refunds to customers.
The chief consumer regulatory agency said the two companies had falsely advertised credit scores for sale that they intimated were the same ones used by lenders.
But they weren’t.
FICO credit scores are a proprietary product that assign a score from 300-800 based on a combination of the credit history from each of the three major credit bureaus.
Credit bureaus have to pay a fee to FICO when they sell a credit score so by developing and selling their own score they can keep more of the profits.
The CFPB also said the two companies lured consumers into signing up for credit score programs and credit-related products that were
“free” or “$1.”
In fact, after an initial trial, consumers were enrolled in an auto-renewing subscription of $16 or more.
TransUnion spokesman David Blumberg said in a statement
“that our consumer marketing has been clear and has complied with the law and other government guidance.”
In a statement Equifax spokeswoman Ines Gutzmer said
“the company had changed some of its practices but does not believe it has violated any laws.”
“Consumers should know there is no completely free place to get your literal FICO credit score.”
But you are entitled to get one free credit report each year from each of the three bureaus at annualcreditreport.com.