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Credit reporting agency fined for misleading consumers

Consumer credit reporting agency Equifax has been ordered to pay a $3.5 million penalty for misleading and deceptive conduct and unconscionable conduct in relation to credit reporting services.

In a joint submission to the Federal Court by Equifax and the Australian Competition and Consumer Commission, the credit reporting agency admitted that it breached the Australian Consumer Law in 2016 and 2017.

Credit reporting was the single biggest issue raised by consumers in complaints to the Credit & Investments Ombudsman in the year to June, accounting for 27.3 per cent of all complaints.

It told consumers that its paid credit reports were more comprehensive than the free reports it was required to provide under law, when in fact they contained the same information.

Equifax also admitted that it told consumers they would be charged a single “on-off” or “one-time” payment but it failed to disclose that payments for its paid credit report packages would automatically renew unless consumers opted out.

ACCC Commissioner Sarah Court says: “Equifax’s conduct caused people to buy credit reporting services in situations when they did not have to. Consumers have the legal right to obtain a free credit report under the law.”

Equifax also told consumers that the credit score provided in its paid credit reports was the same credit score used by credit providers, when that was not always the case.

The court ordered Equifax to establish a consumer redress scheme to allow affected consumers to seek refunds for a 180-day period.

Equifax has been in the Australian credit reporting market since 2016, when it acquired Veda, the country’s largest consumer credit reporting agency.

Equifax/Veda has been a serial offender. In 2016, the Privacy Commissioner ordered Veda to refund consumers who paid for credit reports after Veda was found to have breached privacy rules in its marketing of reports.

The Privacy Commissioner found that Veda breached the Credit Reporting Code when it failed to prominently state that individuals have the right to obtain a free credit report in certain circumstances and also when it failed to take reasonable steps to ensure that free access to credit reports was as available and as easy to identify as paid access to reports.

Veda also disclosed personal information it held about individuals seeking free access to credit reports for the purpose of direct marketing, in breach of Australian Privacy Principle 7.

And in the same year, Veda was ordered to apologise to a consumer and pay compensation for using false credit reporting information and failing to check its accuracy. The Office of the Australian Information Commissioner found that Veda’s correction process placed an “undue burden” on individuals to identify errors.

This case goes back to 2014, when Veda recorded a judgment debt worth about $7000 on the complainant’s credit file. The complainant was not the defendant in the case and had no relationship with the defendant.

The only connection was that the complainant and the defendant had similar names (but not first names) and lived in the same apartment building.

Veda’s automatic matching system drew a connection between the judgment and the complainant and recorded the judgment on the complainant’s credit file.

Veda’s system then sent out an automated alert to registered creditors of the complainant.

The complainant, a business owner, became aware of all this when he travelled overseas later the same month and had a credit card payment declined at a foreign airport. American Express had suspended his account after receiving Veda’s notification.

The complainant received notification from two suppliers to his business that they had tried to charge his Citibank credit card for payment but the payments were declined.

Citibank and NAB, another of the complainant’s credit card providers, reduced his credit limits.

When he returned to Australian the complainant obtained a copy of his credit file and identified the error. He advised Veda of the incorrect listing but was told he would need to approach the court for correction. He was told Veda would not take action until it heard from the court.

The complainant had to engage a lawyer to correspond with the court. It was only when Veda received information from the court that it removed the listing and notified the complainant’s credit providers.