Equifax to pay $725,000 to state AG over inaccurate credit scores 

Equifax, one of the nation’s “big three” credit score reporting agencies, must pay $725,000 as part of a settlement with the state after a coding error mistakenly lowered the credit scores of tens of thousands of New Yorkers.

The error lowered the credit scores of more than 76,000 New Yorkers, inflating loan costs and the price of other credit-dependent products during a three-week period between March and April 2022, state Attorney General Letitia James announced Tuesday morning. 

In its settlement with Equifax, the attorney general's office said the total payment includes both penalties as well as restitution for a subset of New Yorkers impacted by the coding error. The exact amount to be paid out in restitution has yet to be determined, according to the attorney general's office. 

"We recognize the important role our company plays in supporting businesses and in the financial lives of consumers," an Equifax spokesperson said in a statement. "We take this responsibility very seriously and have stood behind our customers and consumers since informing them of this issue in 2022." 

While the agency admitted no negligence or wrongdoing as part of the settlement, Equifax said it "has invested more than $1.5 billion over the last few years to undertake a complete technology transformation." 

On March 17, 2022, Equifax implemented a new code into its credit scoring system, which caused consumers' information to become out of date, resulting in lowered credit scores for some New Yorkers, the settlement said. Days later, on March 22, the company began investigating the issue before resolving it on April 8, according to the settlement. 

During the summer of 2022, Equifax notified insurers and companies that had provided loans to those affected by the error, according to the state. The credit rating agency offered to reimburse lenders for any adjustments they had to make in interest rates to give customers the appropriate premium rates they should have qualified for. 

In court documents, the attorney general said the credit score error may have caused some state residents “to be denied credit or offered credit on less favorable terms than they otherwise would have qualified for as a result.”

“Consumers depend on credit bureaus like Equifax to report their credit history accurately,” James said in a statement announcing the settlement. “Equifax’s failure to do its most basic job inflated costs for consumers across New York.”

"Dozens of New York consumers" who paid for Equifax services during the three-week period are eligible for restitution from the state. The attorney general's office will be contacting those eligible state residents.  

As part of the settlement with the state, the credit rating agency will also put in place safeguards to prevent similar coding issues in the future, including monitoring incident reports filed by customers at least once a week, the attorney general’s office said.

The company must also review and update, if necessary, its policies regarding implementing new technology changes that could impact consumers, the settlement said. 

For those seeking a free credit report, the attorney general's office has previously recommended visiting AnnualCreditReport.com, or calling 877-322-8228.