A group of borrowers have hit Equifax with a class action lawsuit, accusing the credit bureau of misrepresenting their credit scores to lenders through a “glitch” in their system, resulting in loan denials and other problems for credit applicants.
The lawsuit was filed on behalf of named plaintiffs Evan Ineichen and Quachee Parson, identified only as residents of Illinois.
The lawsuit seeks to expand the action to include potentially millions of Americans who may have been denied loans or suffered other adverse credit actions this spring.
Equifax is one of the three major credit bureaus. Like the other two bureaus, Transunion and Experian, Equifax calculates credit scores for consumers that are used, in part, by banks and a host of other industries to determine whether consumers can qualify for home mortgages, construction loans, credit cards, home leases, mobile phone contracts, and other loans, products and services.
The lawsuit centers on claims that from mid-March to early April 2022, an error in Equifax’s computer systems may have resulted in the bureau miscalculating consumer credit scores. According to the complaint, the miscalculations may have resulted in consumers being docked as much as 130 points off their credit score.
The complaint points to public reports indicating the credit score miscalculations resulted in consumers facing higher interest rates for their loans and credit cards, or having “their applications … rejected altogether.”
The complaint noted Equifax acknowledged the miscalculations in a statement issued in May. At that time, the credit bureau blamed the errors on a “coding issue within a program slated for replacement.” According to a report published at NationalMortgageProfessional.com, the error occurred when Equifax was conducting a “technology change to its legacy online model platform.”
The report estimated the error may have affected as much as 12% of consumer credit scores.
In May, Equifax said it had corrected the problem and said they believed “the impact is going to be quite small.”
However, the complaint said the credit score miscalculation still allegedly harmed potentially millions of Americans.
The complaint noted the two named plaintiffs allege they were harmed by the “glitch.” According to the complaint, Ineichen was denied a home construction loan for which “he thought had been approved,” while Parson allegedly “experienced an otherwise inexplicable 51-point drop in credit score in 2022.”
The complaint asserts such alleged injuries “cannot be rectified by merely updating the affected credit reports.”
The plaintiffs argue the full scope of the impact of Equifax’s alleged errors is not yet known.
The plaintiffs claim the errors amounted to violations of Equifax’s obligations under the federal Fair Credit Reporting Act, because the credit bureau allegedly “willfully” shared incorrect credit information with lenders.
They are asking a court to award unspecified statutory damages, compensatory damages, and punitive damages, plus attorney fees.
Further, they are asking the court to order Equifax to repay “all … profits that were derived, in whole or in part, from Equifax’s furnishment of inaccurate consumer reports” and to “disgorge revenues and profits wrongfully obtained.”
Plaintiffs are represented in the action by attorneys Brandon M. Wise and Adam Florek, of the Peiffer Wolf firm, and James Bilsborrow, of Weitz & Luxenburg.