A Florida woman says she’s paying roughly $150 extra each month on a car loan because Equifax’s recently revealed coding error allegedly sunk her credit score — and now she’s suing the credit reporting company to make it pay up.
After Equifax
EFX,
said Tuesday it had a now-fixed “coding issue” between mid-March and early April that may have generated inaccurate credit scores for consumers, a lawsuit says the company needs to figure out the full extent of the problem, contact affected consumers and pay them for their troubles.
That starts with Nydia Jenkins, a Jacksonville, Fla. woman who had to resort to a more expensive car loan, according to a lawsuit filed Wednesday in Atlanta federal court. Jenkins’ lawyers are seeking class-action status for the lawsuit.
Jenkins had a loan pre-approval in January that would have resulted in an estimated $350 monthly car payment. But a Toyota dealership denied her auto loan in early April. In the denial letter, Jenkins “saw that her credit score, reportedly furnished by Equifax, was inaccurate by 130 points,” the lawsuit said.
Jenkins later got financing for a different loan at a different car dealer — but with “much less favorable rates,” the lawsuit said. She’s paying $252 every two weeks. That’s a $504 monthly cost and an extra $154 per month compared to the pre-approval’s terms.
When reached for comment, an Equifax spokesperson pointed to the company’s previous statements this week, which noted there was “no shift in the vast majority of scores during the three-week timeframe of the issue. For those consumers that did experience a score shift, initial analysis indicates that only a small number of them may have received a different credit decision.”
Less than 300,000 people had their credit scores change by over 25 points, according to Equifax, which added that the changes didn’t necessarily result in a lower score.
As for Jenkins’ allegations, “Equifax will respond more fully in its court filings at the appropriate time,” the spokesperson said.
Jenkins’ lawyers say Equifax violated the Fair Credit Reporting Act’s requirements for accuracy. The damages that Jenkins and other potentially affected consumers “bear as a result of the glitch cannot be rectified by merely updating the affected credit reports,” the court papers said.
A person’s credit score is a key determinant of their financial well-being said attorneys at Morgan & Morgan, the law firm representing Jenkins. “Equifax failed to live up to its responsibility as one of America’s major credit reporting agencies by providing inaccurate information on millions of Americans,” said John Morgan and John Yanchunis. “We believe that many of the people impacted — some of whom may still be unaware of what happened — suffered severe financial consequences.”
The coding error, which the Wall Street Journal reported the same day Equifax disclosed a $25 million stock award to CEO Mark Begor, is another challenge for the company.
In 2017, the company disclosed a massive data breach that exposed the personal information of 147 million people. That culminated in court settlements with up to $425 million for people affected by the breach. There are also pending 2020 charges against Chinese military personnel for the cyber attack. China’s government has denied the charges.
Jenkins’ lawsuit faces hurdles, but not impossible ones, said Daniel Zemel, a New Jersey attorney who represents plaintiffs in credit-reporting error cases. In 2019, Zemel represented a woman who settled with Equifax over allegations that the company incorrectly listed her father as dead on his credit report.
Jenkins will have to persuasively trace the loan denial back to the Equifax coding problems that came to light, Zemel said. She’ll also have to demonstrate what the car-loan terms would have been if the score was not allegedly affected, which is something a credit-report expert can estimate, he noted.
“It’s challenging, but it’s possible,” he said.
Whatever happens with Jenkins’ lawsuit, Equifax’s coding glitch came at a challenging time for consumers. Interest rates are rising and the pace of price inflation has been steep, so people can ill afford anything that could nudge their credit score lower and push their borrowing costs higher.
The average rate on a five-year loan for a new car was 4.55% in February and 4.85% in May, Federal Reserve data shows. That rate was 4.91% as of early August, according to Bankrate.com.
There are already signs that Americans are under financial strain. That includes auto loan delinquencies, which started edging up from historically low levels in the second quarter of 2022 and some foreshadowing of more car repossessions to come.
Equifax shares are down more than 27% year to date. The Dow Jones Industrial Average
DJIA,
is off 10% while the S&P 500
SPX,
is down nearly 13% in that same time.
