topic Re: Experian - Unfair and Deceptive Trade Practices (Potential Class Action Lawsuit?) in General Credit Topics

Experian - Unfair and Deceptive Trade Practices (Potential Class Action Lawsuit?)

soliloquy — Wed, 16 Mar 2011 19:24:22 GMT

Without giving out a lot of information right now, I work for a law firm somewhere and I approached a senior partner today about filing a potential class action lawsuit against Experian for Fair and Deceptive Trade practices amongst other things for its refusal to give us our FICO credit scores while still providing them to lenders. I explained that there are all kinds of "could be" damages that might result from Experian refusing to give us our FICO scores.

That decision, which has yet to be challenged by regulators or lawmakers, conceals from consumers a vital piece of their credit information.

The senior partner seems to think that there is a case there but he also says it is a bear to try and battle the credit reporting agencies. He mentioned that there needs to be a minimum number of Plaintiffs to establish a class action lawsuit in this state and so I wanted to see if there is really an interest amongst the general population in suing for your right to find out the credit score.

Experian is pretending the FICO is no big deal.

"There is no one credit score that all financial institutions use to make decisions, and there is also no one credit score that consumers must use to help them understand and manage their credit," Experian spokeswoman Susan Hensen wrote me in an e-mail. "There are many reputable credit scores on the market that consumers can use to evaluate their creditworthiness before making financial decisions."

Experian has been reciting this line of garbage for years.

The other issue, of course, is these FAKO scores which Experian chooses to sell instead. When consumers buy credit scores directly from Experian, they're sold what the bureau calls "educational" scores, Experian's PLUS or the VantageScore, a formula cooked up with the other two major bureaus that's gone over like a lead balloon with lenders.

So many consumers have been fooled by this gambit, thinking they're getting FICOs when they're not, and they should be made to state clearly that these are NOT FICO scores...

Opinions?

What are your thoughts?

Re: Experian - Unfair and Deceptive Trade Practices (Potential Class Action Lawsuit?)

Anonymous — Thu, 17 Mar 2011 01:36:58 GMT

I like the idea Just curious as to what one would have to do in order to participate.

Re: Experian - Unfair and Deceptive Trade Practices (Potential Class Action Lawsuit?)

RobertEG — Thu, 17 Mar 2011 10:33:35 GMT

Is this only directed at Experian?

Just curious... is this because they cancelled their prior reciprocal agreement with Fair Isaac to provide their scores generated under their scoring agreement with FI back to FI for their sale on their myFICO site? Apparently, FI did not contest this termination. This looks like a hornets nest.

Re: Experian - Unfair and Deceptive Trade Practices (Potential Class Action Lawsuit?)

ForceMd — Thu, 17 Mar 2011 12:18:18 GMT

I agree that there might be a case regarding misrepresenting Plus, Vantage and other scores as FICO scores by the three bureus. They are taking blatant advantage of consumer ignorance.

As much as I hate to say it though, the EX rep has a point. At the end of the day, it is the lender's desicion (not EX or any of the bureu's ) what scoring algarithm they will use to determine consumer credit worthiness. For this reason, EX cannot be held accountable to giving these scores to consumers as they technically have no way of knowing what system a particular lender will use (even though we all know that the use of the FICO is all but gauranteed to be used). It is up to the lender to provide the score/criteria they used and the reasons that a particular credit app was denied. Of course this is just my humble opinioin. I am sure you know a lot better than me. I am in no way familiar with the legalities of the situation, and I am no lawyer. Any thoughts?

Re: Experian - Unfair and Deceptive Trade Practices (Potential Class Action Lawsuit?)

soliloquy — Thu, 17 Mar 2011 13:58:23 GMT

I guess my thought is...Why should lenders be able to learn what our scores are before we do? And why is Experian fighting this issue so steadfastly? Can you survive without a FICO score based on your Experian credit report data? Sure you can. Will it be harder to manage and improve your credit score?

You no longer have any idea, before you apply for a mortgage, what kind of interest rate to expect. That's because most mortgage lenders use the middle of your three credit bureau FICO scores to determine rates and terms. Without access to all three FICOs, you can't know what your middle score might be.

You're also at a disadvantage if you are dealing with a lender that subscribes to only one bureau.

U.S. Lenders that use just one bureau tend to use the one that specializes in their region i.e. for Experian, it's the West and Midwest; Equifax dominates the South and TransUnion the Northeast.

It's just unfair AND DECEPTIVE that information gathered specifically about you and used for profit is unavailable to you, yet can affect every area of your life from mortgage to car loan to security system to insurance...

Experian is taking advantage of a loophole in federal law that ensures your access to credit scores but fails to specify which credit scores you should get. The Fair and Accurate Credit Transactions Act acts like all credit scores are the same, when clearly they aren't. They can say all day long that it's up to the lender to pick who they use but they know darn well lenders use FICO scores. If I was a lender, guess which credit report I would pull if I had to pull just one? I'd pull your experian because you probably have no idea what it is and there's a better chance that since you can't pull it, I can make more money off of you.

People who don't know their FICOs are at a distinct disadvantage. They don't know how they're viewed by lenders, so they don't know if they're being quoted appropriate rates or if they have leverage to get a better deal.

Re: Experian - Unfair and Deceptive Trade Practices (Potential Class Action Lawsuit?)

soliloquy — Thu, 17 Mar 2011 13:59:31 GMT

I just had a preliminary conversation with him about it but I will let you know when I find out more. He just wants me to see if there is a real interest before he makes a decision.

Re: Experian - Unfair and Deceptive Trade Practices (Potential Class Action Lawsuit?)

ForceMd — Thu, 17 Mar 2011 15:44:17 GMT

Thanks for the insight.

I just want to say, that I am just playing devil's advocate here in the intrest of trying to see things from the EX perspective. I, like anyone else, would love the right to be able to obtain all three of my FICO scores. Having said that, I still can't help but take the side of the EX rep again.

Why, I believe that EX will continue to argue (and they would be right) that by providing you with your credit report, you are recieving exactly the information that the lender is using to determine your elegibility and terms of a loan. Again it is up to each lender to determine how much weight they will place on each area of that report to detremine elegibility. FICO scores, and any other scores for that matter, are simply tools that allow lenders to do some preliminary catigorization quickly. Simply put, if you have negative information reporting in your credit report, then no matter what scoring algorithm is used, the result is likely not to be in your (the consumer's) favor. If you have a clean report, the results are likely to be in your favor. I think that this is the argument that they will use, and objectively, I can't find a good counter argument to this.

Re: Experian - Unfair and Deceptive Trade Practices (Potential Class Action Lawsuit?)

ForceMd — Thu, 17 Mar 2011 15:48:51 GMT

I just wanted to add that I have far from a prestine report. I have been climbing out from underneath the horrible financial choices I made as a young adult for over 10 years now. I have decent scores now (high 600's - low 700's last I checked) and my last late is 5 yrs old.

Re: Experian - Unfair and Deceptive Trade Practices (Potential Class Action Lawsuit?)

soliloquy — Thu, 17 Mar 2011 16:17:08 GMT

This is only partly true, some lenders do make "preapproval" decisions based on your credit score alone.

Re: Experian - Unfair and Deceptive Trade Practices (Potential Class Action Lawsuit?)

chasmith — Thu, 17 Mar 2011 16:38:49 GMT

Experian is one of three CRAs that defacto must be used by any mortgage applicant, because of the secondary market practices. FICO scores are the defacto standard. Experian allows FICO score access to mortgage lenders and refuses it to the consumer in an effort to gain market share for Experian's proprietary scoring. This seems unfair to me, the claim that "There is no one credit score that all financial institutions use" is absolutely false, only FICO scores are accepted by Fannie, Freddie, and FHA which account for virtually 100% of the mortgage lending market today.

So even if not unfair and deceptive across all consumers, a stronger case can be made on impact to mortgage applicants and potential mortgage applicants.

Sign me up!

Re: Experian - Unfair and Deceptive Trade Practices (Potential Class Action Lawsuit?)

veracious — Thu, 17 Mar 2011 16:44:07 GMT

I don't mean to sound too far out in left field here but, the underlying issue is the fact that,

Experian is practicing 'unprincipled capitalism'. Any argument you can make would be countered with

an assertion that their main goal is profit. The reason they developed their own score to sell to consumers

is because they did not want to pay royalties to FICO. As usual , the consumer suffers from the lack of

'Corporate Social Resposibility".

IMHO

Re: Experian - Unfair and Deceptive Trade Practices (Potential Class Action Lawsuit?)

chasmith — Thu, 17 Mar 2011 16:47:44 GMT

Experian participates in a defacto monopoly conferred by the essentially government controlled mortgage industry. No consumer can obtain a residential mortgage without an Experian FICO score.

Yes there's a royalty to FICO, but a larger fee from the mortgage lender "pull".

Re: Experian - Unfair and Deceptive Trade Practices (Potential Class Action Lawsuit?)

veracious — Thu, 17 Mar 2011 16:52:56 GMT

@chasmith wrote:
Experian participates in a defacto monopoly conferred by the essentially government controlled mortgage industry. No consumer can obtain a residential mortgage without an Experian FICO score.

Yes there's a royalty to FICO, but a larger fee from the mortgage lender "pull".

chasmith, we are in agreement. Soliquy, best of luck with your endeavor.

Re: Experian - Unfair and Deceptive Trade Practices (Potential Class Action Lawsuit?)

Anonymous — Thu, 17 Mar 2011 17:48:24 GMT

I don't understand why FICO can't give a score for Experian? There are tons of FAKOs out there that give Experian score what is stopping FICO from scoring an Experian report?

Re: Experian - Unfair and Deceptive Trade Practices (Potential Class Action Lawsuit?)

stizzlerizzle — Thu, 17 Mar 2011 18:22:49 GMT

Agree with 92235. What prevents FICO from giving us a score?

EX cannot prevent us from pulling our reports.

EX allows FAKO companies to pull and input the information.

FICO could pull the reports and input the information.

Is it that FICO wanted to pay EX less, to pull the reports, to maximize their profits? Some blame has to be placed on FICO. If they really wanted to provide a score they could find a way.

Quick example that could work (I know this is very inefficient and would reequire an immense amount of work)

We pull our own CR from EX.

Pay FICO a set fee.

Mail CR to FICO.

FICO inputs information (manually or using a scanning device).

Out pops a score.

Re: Experian - Unfair and Deceptive Trade Practices (Potential Class Action Lawsuit?)

veracious — Thu, 17 Mar 2011 19:29:44 GMT

@stizzlerizzle wrote:
Agree with 92235. What prevents FICO from giving us a score?

EX cannot prevent us from pulling our reports.
EX allows FAKO companies to pull and input the information.
FICO could pull the reports and input the information.

Is it that FICO wanted to pay EX less, to pull the reports, to maximize their profits? Some blame has to be placed on FICO. If they really wanted to provide a score they could find a way.

Quick example that could work (I know this is very inefficient and would reequire an immense amount of work)
We pull our own CR from EX.
Pay FICO a set fee.
Mail CR to FICO.
FICO inputs information (manually or using a scanning device).
Out pops a score.

Yours is a good idea that may work. Then again , maybe there is no workaround.

Apparently, the answer lies within this thread posted on the boards by My FICO Barry

http://ficoforums.myfico.com/t5/Experian-has-stopped-offering/FAQ-for-myFICO-customers-about-Experian-based-FICO-scores/td-p/430219

Re: Experian - Unfair and Deceptive Trade Practices (Potential Class Action Lawsuit?)

chasmith — Thu, 17 Mar 2011 19:28:53 GMT

Basically the issue is the contractual agreement between Experian and MyFICO.

Re: Experian - Unfair and Deceptive Trade Practices (Potential Class Action Lawsuit?)

stizzlerizzle — Fri, 18 Mar 2011 05:48:36 GMT

I know that Experian cut off there business with FICO. It just seems fishy to me that they would not cut off business with any other company that provides FAKO scores. The only thing that I can think of for that happening is that somewhere along the line the companies could not agree on the money side of the equation.

It also isn't a huge deal to me because I get mine for free from PSECU. I'm also sure that FICO would love to provide EX scores for the consumers because they lost out on 1/3 of their business/profit on the consumer end (estimated due to lack of actual knowledge). I'm just saying that maybe the fault doesn't completely lie with EX.

(Disclaimer: This is speculation)

Maybe FICO didn't want to pay higher than a certain amount to access the CRs, and neither side was willing to come to a suitable outcome. Therefore the business relationship was terminated.

Back to the original poster, it seems ridiculous to try and force EX to provide access to their scores. It was stated that consumers have a right to their scores. Is this correct? I thought it was just that the companies were obligated to supply us with copies of our CRs.

And in response to lenders deciding to only pull your EX score, it seems ridiculous to me. Who cares if the consumer cannot see their specific score. They can see what is on the CR and any inaccurate information can be disputed still. If your information is correct the scores will all be in the same ballpark. The score isn't going to be lower just because you do not know your score. My TU score is actually my lowest. If I were a company I would pull whichever CRA gave me the best deal because it would save me money.

Also everytime a lender has pulled my report they have informed me of the credit score they were given. Therefore I could use that information to determine if the rate I was quoted was an appropriate rate. I just don't see how this is an unfair or deceptive practice.

Re: Experian - Unfair and Deceptive Trade Practices (Potential Class Action Lawsuit?)

Anonymous — Fri, 18 Mar 2011 05:51:20 GMT

@chasmith wrote:
Experian is one of three CRAs that defacto must be used by any mortgage applicant, because of the secondary market practices. FICO scores are the defacto standard. Experian allows FICO score access to mortgage lenders and refuses it to the consumer in an effort to gain market share for Experian's proprietary scoring. This seems unfair to me, the claim that "There is no one credit score that all financial institutions use" is absolutely false, only FICO scores are accepted by Fannie, Freddie, and FHA which account for virtually 100% of the mortgage lending market today.

So even if not unfair and deceptive across all consumers, a stronger case can be made on impact to mortgage applicants and potential mortgage applicants.

Sign me up!

Agreed!

Class actions are notoriously difficult to defend and the vast majority of class action defendants eventually settle. Would Experian settle? I'd like to find out.

Sign me up, too!

Re: Experian - Unfair and Deceptive Trade Practices (Potential Class Action Lawsuit?)

corkyduckfan — Fri, 18 Mar 2011 10:53:38 GMT

Sign me up!! To me, it is very suprising that this has not happened already. It seems kind of like a no brainer to me. One of the three big bureaus changes the rules right in the middle of the game. It is kind of like good vs. evil, poor vs. rich etc, etc. Experian is acting like the people that say, "Hey, living in poverty and having a single parent making minimum wage, substandard education, dangerous neighborhood with drugs has nothing to do with the fact that you might be poor, on welfare or disadvataged. It seems to me as if some of the credit reporting agencies could care less if people are actually educated about a healthy FICO score and it is dangerous for the public to have access and knowledge to gain positive traction on their score. I think the big businesses like a certain number of low acheiving FICO scorers to make for nice balanced credit files and they know there are a certain number of poor people that will never even know to check their free or FICO score. If credit scores didn't make such a huge impact on us and our financial lives and how we live and spend, then and only then could it be argued that Experian could do what they want. But the reality is that it is one-third of the puzzle to our collective financial potential and rights to a certain extent. Experian's attitude toward our right to know our FICO's is akin to being in high school and one-third of your teachers just decide on their own to just give you a pass or fail instead of giving you your actual grade. We don't need to know our real grade, just shup up and be happy with a pass or fail grade and deal with it. We don't owe you our best effort. Experian is a pathetic joke that lacks moral terpitude.