Consumerinfo.com's 'Credit Scores' are Misrepresented, Suit Charges

A federal class action claims Consumerinfo.com defrauds customers by misrepresenting its in-house method of calculating credit scores. 

The complaint, filed in federal court in San Diego charges that the site does not tell consumers that the credit score it sells is based on a proprietary, in-house method of calculation – Experian's Plus Score – that is not sold to lenders and not used by lenders to determine consumers' creditworthiness.

The suit charges that the credit scores are sold through Consumerinfo.com's network of websites, including www.freecreditreport.com, www.freecreditscore.com and www.consumerinfo.com.

The named plaintiff in the suit, David Waring of San Diego, said he purchased a credit score from Consumerinfo.com after visiting www.freecreditreport.com, enrolling in a monthly credit monitoring service for $14.95 per month, thinking he was buying information that give him guidance on how creditors viewed his creditworthiness.

Waring said Consumerinfo.com “failed to disclose clearly and conspicuously” that its credit score is not used by lenders.

20 million reports

Consumerinfo.com, based in Costa Mesa, Calif., claims to have delivered more than 20 million credit reports through its Internet sites. It is owned by Experian plc, whose corporate headquarters are in Dublin, Ireland.

The suit alleges that more than 90 percent of lenders use credit scores developed by Fair Isaac Corp., known as FICO scores.

Historically, Experian and the other two major U.S. credit bureaus – Equifax and TransUnion – have distributed FICO credit scores to lenders, under a licensing agreement with Fair Isaac. But in February 2009, Experian ended its relationship with FICO and no longer sells FICO-based scores to consumers, the suit charged.

“The 'credit scores' advertised by Defendant and provided to consumers are not credit scores sold to or used by lenders in determining consumers' creditworthiness and are not FICO scores … and [are] not therefore used by lenders in determining a consumer's creditworthiness,” the complaint charges.

Automatic enrollment

Consumers who place an order for their credit report and credit score are automatically enrolled in Consumerinfo.com's “Triple Advantage” credit reporting monitoring service, the suit alleges, results in a monthly charge of $14.95 or, in some instances, $19.95.

Experian plc had total revenue of $3.9 billion in 2010, according to its annual report, and cites its “interactive” business unit as contributing 27 percent of that revenue.

Previous challenges

It's not the first time Consumerinfo.com's claims have been challenged. In August 2005, the Federal Trade Commission (FTC) reached a settlement in a case in which it charged the company had engaged in unfair and deceptive trade practices by failing to adequately disclose that consumers would be charged $79.95 if they did not cancel their credit report monitoring service within a trial period.

The company paid $950,000 in refunds to consumers as part of the settlement.

In January 2007, the FTC filed for an injunction, charged that Consumerinfo.com was violating the terms of the earlier settlement. The company was required to pay $300,000 in ill-gotten gains and enjoined from further violations.

The suit seeks damanges for all persons in the United States who purchased a credit score from Consumerinfo.com after March 22, 2007.