Credit Bureau Acted ‘Unconscionably’ With Vulnerable People, ACCC alleges
Equifax has a new problem in Australia, a country that was left unscathed by the credit bureau’s devastating data breach disclosed last September.
The Australian Competition and Consumer Commission has initiated legal proceedings in federal court, alleging the credit bureau deceived vulnerable consumers by misrepresenting its products and charging for services that under the law should have been free.
“We allege that Equifax acted unconscionably in selling its fee-based credit reporting services to vulnerable consumers, who were often in difficult financial circumstances,” ACCC Commissioner Sarah Court said. “We allege that Equifax told people they needed to buy credit reporting services from them in situations when they did not. It is important for consumers to know they have the legal right to obtain their credit report and to correct any wrong information for free.”
The commission filed proceedings on Friday in federal court that allege violations of Australian Consumer Law.
Equifax said it is carefully reviewing the accusation. “We acknowledge that the experience was unsatisfactory for some consumers when dealing with Equifax, and we are carefully reviewing our processes and making changes to improve that,” said Mike Cutter, Equifax’s group managing director for Asia Pacific.
Consumer Law Violations
Equifax didn’t have a presence in Australia until February 2016, when it completed its biggest-ever acquisition, paying $2 billion for the credit bureau Veda. Equifax claims it is now the largest source of business data and credit records in Australia and New Zealand.
The ACCC’s allegations stretch back to before its acquisition of Veda, focusing on a period between June 2013 and March 2017.
ACCC is alleging that Equifax marketed that its paid-for credit reports were more comprehensive than the ones that consumers could obtain for free. As in the U.S., Australian consumers are entitled to one free credit report from the major bureaus per year, or if people have been refused credit within 90 days or if someone has sought to correct bad information.
The ACCC alleges Equifax imposed an unfair contract term. The company allegedly sold a credit report service for a one-off fee, the ACCC says. But that contract renewed annually unless consumers opted out in advance, in violation of the law, the ACCC’s suit says.
Equifax also allegedly violated the law regarding correcting information on a credit report, the ACCC says. It told consumers that they had to buy credit reporting packages in order to either correct the information or accomplish that faster.
“In fact, Equifax was required by law to take reasonable steps to correct the information in response to a consumer’s request for free,” the ACCC alleges.
Australia’s action comes as Equifax has come under intense scrutiny in the U.S., U.K. and Canada. About 148 million U.S consumers were affected by the breach along with consumers in Canada and the U.K.
As a result, regulators are taking a close look at the circumstances that led to the breach and a broader examination of the credit industry.
On Wednesday, the U.S. Senate passed a banking bill that contained provisions related to the credit industry. The bill, which moves to the House, forbids credit bureaus for charging for a credit freeze (see Senate Bill Would Make Credit Freezes Free).
With a freeze, no company or organization is allowed to access a report. Identity theft experts generally recommend freezing credit records because consumers are often unaware when someone applies for credit in their name.
In 42 U.S. states, credit bureaus are now allowed to charge for freezing a record if the person has not been a victim of identity theft. The fees range from $3 to $10.
In other fallout from the breach, the U.S. Securities and Exchange Commission has accused a former CIO of Equifax’s United States Information Systems with insider trading. Jun Ying, 42, is accused of selling off $950,000 worth of stock in late August 2017, a little more than a week before Equifax made a public announcement (see SEC Charges a Former Equifax CIO With Insider Trading).