Equifax Caught Improperly Selling Lists Of People With Late Mortgage Payments

When you’re in financial trouble, one of your concerns is that your creditors will report you to the three major credit bureaus — Equifax, Experian, and TransUnion. But maybe you should be concerned that the bureaus are selling your sensitive information.

Today, the Federal Trade Commission announced a settlement with Equifax over allegations that between 2008 and 2010 the consumer reporting agency had improperly sold lists of consumers with late mortgage payments to a company called Direct Lending and its affiliates.

Equifax is alleged to have sold around 17,000 separate lists containing sensitive information — including credit scores and how delinquent the consumer was on their mortgage payment — on millions of U.S. consumers during this time.

According to the Fair Credit Reporting Act, the only permissible purpose for obtaining a pre-screened list from a consumer reporting agency is to make “firm offers of credit or insurance” — offers that will be honored if consumers meet pre-selected criteria.

Instead, the FTC says that Direct Lending was actually buying these lists to sell to third parties for general marketing purposes, which is in violation of the FCRA. In fact, says the FTC, some of the companies that purchased these lists from Direct Lending that have been the subject of law enforcement investigations.

Making matters worse, the FTC claims that when Equifax learned about Direct Lending’s re-selling of these lists, it failed to properly investigate. The FTC also alleges that Equifax knew that that Direct Lending was reselling the lists without telling Equifax about who was buying and using the information. This failure to employ appropriate measures to control access to sensitive consumer information was in violation of the FTC Act.

For its part in the scheme, Equifax will pay $393,000 while Direct Lending will pay a $1.2 million civil penalty,and will be barred from using or selling pre-screened lists without a permissible purpose, or in connection with solicitations for debt relief or mortgage assistance relief products or services.

Additionally, Equifax is barred from furnishing pre-screened lists to anyone that it does not have reason to believe has a permissible purpose to receive them, and selling pre-screened lists in connection with offers for debt relief products or services and mortgage assistance relief products and services, when advance fees are charged, with limited exceptions.