By Lindsay Wise McClatchy Newspapers
WASHINGTON — One of the nation’s largest credit reporting agencies has agreed to pay $393,000 to settle charges that it improperly sold lists of consumers who were late on their mortgage payments, government regulators announced Wednesday.
Atlanta-based Equifax Information Services LLC and companies that bought and resold the consumer data will pay a total of $1.6 million to settle two separate complaints filed by the Federal Trade Commission.
The complaints state that from 2008 to 2010, Equifax sold more than 17,000 “prescreened” lists of consumers to Direct Lending Source Inc., a Key Largo, Fla., company, and its affiliates, Bailey &Associates Advertising Inc., and Virtual Lending Source LLC.
Those companies then resold more than 2,400 of those lists to third parties, which used the information to market loan modification and debt relief services to consumers in financial distress, according to the FTC.
The lists contained credit report information on millions of Equifax consumers, including their credit scores and whether they were 30, 60 or 90 days behind on their mortgages, according to the FTC complaints.
Federal law prohibits anyone from using such “prescreened” lists for marketing purposes, except to make firm offers of credit or insurance.
The FTC says Equifax took inadequate measures to ensure the lists would only be used “for a permissible purpose.” Equifax also failed to “control access to sensitive consumer financial information,” and it didn’t properly investigate when it learned that Direct Lending might be reselling the lists to numerous third parties, some of which have been under investigation, according to the FTC complaints.
Two of those third parties, Nova Key LLC of Maryland and Mason Capital Group LLC of California, allegedly misled struggling homeowners into paying costly upfront fees to secure loan modifications from their lenders, then failed to deliver the modifications as promised, the complaints state.
In agreeing to the settlement, Equifax does not admit to any wrongdoing or any violations of any laws, said Equifax spokesman Tim Klein.
“We discontinued all business activities with Direct Lending and any of its affiliates the summer of 2011,” Klein said. “We also formally notified all of our customers at the time that we had ceased doing business with them and any of their affiliates, and that was formal notification by direct mail as well as email.”
Klein said consumers can trust Equifax to keep their private information safe.
“Without a doubt, the data that is entrusted to us has the highest level of safeguards, and the protection and integrity of that data is our No. 1 priority and responsibility,” he said.
Equifax is one of three nationwide credit reporting agencies, also known as credit bureaus. The other two are TransUnion and Experian. Together, the three agencies keep files on more than 200 million Americans and produce 3 billion credit reports a year.
Direct Lending could not be reached for comment.