October 7, 2022

Equifax is being sued over false credit scores it sent this spring to millions of customers.

In a treatment filed Wednesday in the Northern District of Georgia, Florida, seeking class-action status, attorneys for Nydia Jenkins allege that Equifax’s error led to a much more expensive car loan. The Equifax bug, which was in place for about three weeks, potentially affected millions of people, the lawsuit says.

On Tuesday, the Wall Street Journal reported that Equifax sent incorrect credit scores for millions of customers applying for home loans and auto loans. A coding error at the company affected customers’ scores by up to 20 points in either direction — enough to get some prospective borrowers turned down for loans, the Journal reports mentionted.

As one of the big three credit reporting companies in the US, Equifax provides financial information and scores for consumers, influencing whether people are approved for products such as mortgages, credit cards and car loans, and the interest rate they pay. Most credit ratings range from 300 to 850, with consumers with higher scores receiving more favorable loan terms.

In a statement to CBS News, Equifax said very few people were affected by the bug, which it called a “coding problem.”

“This issue, which was in effect for a period of a few weeks between March 17 and April 6, was fixed on April 6,” the company said.

“As part of our commitment to resolve this issue, Equifax conducted an analysis of the credit scores used for consumers seeking credit during the time period of issue. Our analysis shows that for these consumers there was no shift in the majority of scores during the three-week time frame of the issue. For those consumers who experienced a score change, initial analysis suggests that only a small number of them may have made a different credit decision. While the score may have shifted, a score shift does not necessarily mean that a consumer’s credit decision was adversely affected.”

The company said it would respond further to court filings.

It was pre-approved and then rejected

According to the lawsuit, resident Nydia Jenkins was pre-approved for a car loan in January, but Jenkins’ loan was declined in early April because her reported Equifax credit score was down 130 points, the complaint states.

Because the loan was declined, Jenkins was forced to buy a car from a different dealership at a much higher interest rate, the suit says. Under the original loan, Jenkins was to pay $350 a month, but now she pays $272 every two weeks — or about $2,352 more annually, according to the lawsuit.

“For a credit reporting agency, one of only three, that so many millions of Americans depend on when seeking credit, we must rely on the accuracy and competence of these agencies,” said John Yanchunis, an attorney at Morgan & Morgan representing Jenkins.

“This is a major mistake,” he said.

Janzounis said the damages could be “in the millions,” depending on how many other plaintiffs join. The lawsuit requires Equifax to reimburse the defendants for additional expenses caused by erroneous credit scores and to compensate them for emotional harm. If a jury finds that Equifax’s mistake was intentional, the company could seek up to an additional $1,000 in damages for each defendant.

Credit score changes

According to the Wall Street Journal report, false ratings were sent to Ally Financial, JPMorgan Change and Wells Fargo, among other lenders. The report said a small number of people affected by the Equifax breach went from having no credit score to a score in the 700s, or vice versa.

The news was previously reported by National Mortgage Professionaltrade publication, in May.

Equifax, in its response, emphasized that the underlying credit report information did not change. “[T]here was no shift in the vast majority of ratings during the three-week time frame of the release,” the company said. different credit decision”.

Equifax CEO Mark Begor acknowledged the mistake at a financial conference in June.

“We had a coding issue that was a mistake our technology team made in one of our legacy apps that resulted in some scores coming out that had incorrect data. And we fixed that,” he told attendees, according to a transcript of event.

Begor added that the company is working with affected customers, noting, “We think the impact will be very small, not something that makes sense for Equifax.”

Equifax was previously involved in a Data breach 2017 which exposed sensitive information of nearly 150 million Americans and resulted in the expulsion of the then managing director of the company. Equifax paid $700 million in fines and restitution after the breach.

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