CFPB investigations shuts down Experian credit score scam

| April 22, 2017

By Kelsey Clayton, Indiana Assets & Opportunity Network Manager

INDIANAPOLIS—Thanks to complaints from 43,000 consumers around the country—including over 450 from Indiana consumers—the Consumer Financial Protection Bureau (CFPB) investigated and shut down a nationwide credit score scam that tricked Americans out of their hard-earned dollars by marketing and selling credit scores that they claimed were used by lenders to make credit decisions. In truth, lenders did not use those credit scores when deciding whether to make loans. The CFPB also hit the company with a $3 million civil penalty.

Experian was among the top ten most-complained-about companies in CFPB’s database of consumer complaints nationwide. Hoosiers’ complaints against Experian make it the third most complained-about company by Hoosiers in the CFPB complaint database.

Credit scores are numerical summaries designed to predict consumer payment behavior in using credit. Many lenders and other commercial users consider these scores when deciding whether to extend credit. No single credit score or credit scoring model is used by every lender. However, several companies including Experian have developed so-called “educational credit score” intended to inform consumers, which lenders rarely, if ever, use. These scores are intended to inform consumers.

Experian developed its own proprietary credit scoring model, referred to as the “PLUS Score,” which it applied to information in consumer credit files to generate a credit score it offered directly to consumers. The PLUS Score is an “educational” credit score and is not used by lenders for credit decisions.

The Experian scandal is just the latest in a series of schemes to cheat consumers that the CFPB has uncovered over the past year, including:

• The multimillion-dollar fraud perpetrated by Wells Fargo;

• A pattern of abusive mortgage lending practices perpetrated by affiliates of Citibank, and

• Illegal activity by Navient, the nation’s largest student loan servicer, which failed borrowers at every stage of the repayment process.

“Yet again, the CFPB is doing exactly what it was designed to do: Respond to consumer complaints and shut down the endlessly creative tricks and traps that schemers have set up for the sole purpose of bilking hardworking Americans out of their weekly paycheck,” said Kelsey Clayton, Indiana Assets & Opportunity manager. “Instead of trying to shut this effective agency down as some in Congress are trying so desperately to do, we should be applauding it and making sure it has the resources necessary to keep doing its important job.”

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Category: Business, Consumer, Courts and Justice, Crime & Safety

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Frost Illustrated is Fort Wayne's oldest weekly newspaper. Your Independent Voice in the Community, featuring news & views of African Americans since 1968.

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