Equifax has been sued over the incorrect credit scores it sent this spring to millions of customers.
In a lawsuit filed Wednesday in the Northern District of Georgia, Florida, seeking class-action status, Nydia Jenkins’ attorneys allege that Equifax’s mistake made her obtain a higher-priced auto loan. The suit says the Equifax error, which lasted for nearly three weeks, potentially affected millions of people.
On Tuesday, the Wall Street Journal reported that Equifax sent incorrect credit scores to millions of customers applying for loans to buy homes and cars. The newspaper reported that a coding error at the company affected clients’ scores by as much as 20 points in either direction — enough to turn some potential borrowers down for loans.
As one of the three major credit reporting companies in the United States, Equifax provides financial information and results to consumers, influencing whether people accept products including mortgages, credit cards and auto loans, and what rate of interest they pay. Most credit ratings range from 300 to 850, with consumers with higher scores receiving better loan terms.
In a statement to CBS News, Equifax said very few people were affected by the bug, which it described as a “coding issue.”
“This issue, which was in effect over a period of a few weeks between March 17 and April 6, was resolved on April 6,” the company said.
“As part of our commitment to solving this issue, Equifax has conducted an analysis of the credit scores used for consumers seeking credit over the time period of the issue. Our analysis indicates that for these consumers there was no shift in the majority of scores during the three-week issue time frame. For consumers For those who experienced a score change, preliminary analysis indicates that only a few may have received a different credit decision. While the score may have changed, a score change does not necessarily mean that a consumer credit decision was adversely affected.”
The company said it would respond more aggressively in court filings.
Pre-approved, then rejected
According to the lawsuit, resident Nydia Jenkins was preapproved for a car loan in January, but Jenkins’ loan was denied in early April, because her credit score from Equifax was off 130, according to the complaint.
The lawsuit says that because the loan was refused, Jenkins was forced to buy a car from a different dealership at a much higher interest rate. Under the initial loan, Jenkins would have paid $350 a month, but is now paying $272 every two weeks — or about an additional $2,352 annually, according to the lawsuit.
said John Yanchonis, an attorney at Morgan & Morgan who represents Jenkins.
“This is a huge misstep,” he said.
Yanchonis said damages could run into “millions,” depending on how many other plaintiffs join. The suit asks Equifax to reimburse the defendants for additional costs resulting from faulty credit scores and to compensate them for emotional damage. If the jury finds that Equifax’s error was intentional, the company could be in trouble of up to an additional $1,000 in compensation for each defendant.
Credit score swings
According to a Wall Street Journal report, incorrect results were sent to Ally Financial, JPMorgan Change and Wells Fargo, among other lenders. The report said that a small number of people affected by the Equifax breach went from having no credit score to having one in the 1970s, or vice versa.
This news was previously reported by National Mortgage Professional, a trade publication, in May.
Equifax, in its response, confirmed that basic credit report information had not changed. “[T]The company said there was no shift in the vast majority of scores during the three-week release time frame. Various credit decisions.
Mark Bigor, chief executive of Equifax, admitted the error at a financial conference in June.
He said, according to a transcript from the events.
Bigor added that the company was working with affected consumers, noting, “We think the impact will be very small, and not something that makes sense for Equifax.”
Equifax was previously involved in a filethat exposed sensitive information to nearly 150 million Americans and so on . Equifax paid $700 million in fines and damages after the breach.