Equifax Facing Class Action After ‘Glitch’ Caused Lenders to Receive Inaccurate Credit Scores

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Equifax faces a proposed class action lawsuit after an August 2 Wall Street Journal report revealed that a coding-related “glitch” caused the agency to provide lenders with inaccurate credit scores for millions of consumers. 

The 23-page complaint alleges Equifax ran afoul of the federal Fair Credit Reporting Act (FCRA) by sharing inaccurate credit information for millions of U.S. consumers who applied for credit in a roughly three-week period between mid-March and early April of this year. Among other requirements, the law mandates that consumer reporting agencies adopt and follow reasonable procedures to ensure the confidentiality and accuracy of consumer credit information, the suit states.

According to the lawsuit, nearly 25 million credit reports were requested from the three major credit reporting agencies—Equifax, TransUnion and Experian—during the glitch, and it is likely that “hundreds of thousands, if not millions,” of consumers experienced damage due to Equifax’s actions. 

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The filing also contends that although the apparent glitch stemmed from a “coding issue,” Equifax continued providing inaccurate credit scores and consumer reports when it knew the information was incorrect. 

According to the complaint, the damages experienced by those affected cannot be fixed by merely updating their credit reports. 

Word first began to leak on May 27, 2022 that Equifax, one of the “Big Three” consumer reporting agencies in the country, had informed lenders that it had provided inaccurate credit scores for millions of consumers, the case says. The glitch at the center of the case was allegedly caused by an Equifax employee or agent’s “coding issue” amid a technology change to a “legacy online model platform.” Per the suit, this may have resulted in the miscalculation of certain credit attributes for “about 12% of credit scores.” 

Although the glitch initially appeared to affect only individuals who applied for mortgages, the WSJ’s reporting revealed consumers who applied for auto loans and credit cards to banks and non-bank lenders may have also been affected by the inaccurate reporting, the filing relays. The scores themselves, the suit says, were “sometimes off by 20 points or more in either direction,” which the case argues is a significant enough difference to shake up the interest rates consumers were offered or cause their credit applications to be denied. 

“However, upon information and belief, some scores were inaccurate by as much as 130 points,” the filing adds. 

In a May 27 statement, Equifax acknowledged the situation and the apparent coding issue that sparked it, and, more quietly, informed resellers and lenders that for some transactions, certain attribute values used in model calculations, such as the “number of inquiries in one month” and “age of oldest trade line,” may have been wrong. 

The case stresses that although Equifax stated publicly that consumers’ credit reports themselves were not affected, the items included in those credit reports are just as vital. 

The lawsuit asks the court to order Equifax to conduct a full-system audit to identify and notify the U.S. consumers whose credit scores and reports were affected by the glitch. The case also looks to order Equifax to set aside enough money to provide “quality” credit repair services to all consumers affected by the glitch for the rest of their respective lives, and to establish a fund from which those consumers can apply for reimbursement for time and out-of-pocket expenses linked to damages from the glitch. 

The case seeks to cover all individuals and entities in the U.S. whose credit score or consumer report was inaccurately reported or inaccurately provided to potential lenders due to the glitch Equifax said occurred between at least March 6, 2022 through April 6, 2022. 

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