Credit Reporting Agency Settles CFPB Charges for "Freeze and Lock" Violations

A credit reporting agency settled charges with the CFPB for security "freeze and lock" violations related to consumer credit reports.

The CFPB stated that a credit reporting agency and its wholly owned subsidiary:

• failed to timely place or remove (i) "security freezes and locks" in violation of the Consumer Financial Protection Act and (ii) "security freezes" in violation of the requirements of the Fair Credit Reporting Act;
• represented to consumers that the locks had been placed or removed when they had not; and
• failed to exclude from prescreened solicitation lists certain consumers with Extended Fraud Alerts or Active-Duty Alerts.

Under the terms of the settlement, the consumer reporting agency agreed to (i) pay $3 million to consumers in redress, (ii) pay $5 million in civil penalties and (iii) undertake remedial steps to identify and solve technical and systems problems that can affect consumers.

In a related statement, CFPB Enforcement Director Eric Halperin emphasized the responsibility of the reporting agency to ensure the accuracy and security of consumer data and the consequences of inaccuracies in credit reports on consumers' financial well-being, housing opportunities and the broader economy. (See also CFPB-related recent coverage.)