It wasn't exactly bait and switch, maybe unlawful substitution is closer to the mark.  Whatever, Experian, the credit reporting company, has been handing consumers a line about their credit scoring system and CFPB caught them.

The Consumer Financial Protection Bureau (CFPB) announced on Thursday Experian and its subsidiaries have agreed to a $3 million civil penalty for deceiving consumers about its own proprietary brand of credit scores.  The company claimed the credit scores it marketed and provided to consumers were used by lenders to make credit decision.  CFPB says, in fact, lenders do not use these scores. 

Credit scores are numerical summaries designed to predict consumer payment behavior in using credit. CFPB states that no single credit score or credit scoring model is used by every lender. In addition to the credit scores that are actually used by lenders and several companies have their own "educational" scoring models which, CFPB says are merely intended to inform consumers.

Experian, based in Costa Mesa, California, developed its own proprietary credit scoring model, branded as the "PLUS Score" against which it applied information in its consumer credit files to generate such an educational score.  These were marketed, in violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as the same scores as those Experian provides to lenders.  CFPB maintains that lenders do not use the PLUS scores and in some instances there were significant differences between those scores and the various credit scores lenders actually use.  "As a result," CFPB says, "Experian's credit scores in these instances presented an inaccurate picture of how lenders assessed consumer creditworthiness.' 

CFPB Director Richard Cordray said "Consumers deserve and should expect honest and accurate information about their credit scores, which are central to their financial lives." 

Experian is one of the nation's three largest credit reporting agencies.   It advertises, sells, offers, and provides credit scores, credit reports, credit monitoring, and other related products to consumers and third parties. In addition to violations of Dodd-Frank the consent order maintains Experian violated the Fair Credit Reporting Act, which requires a credit reporting company to provide a free credit report once every twelve months and to operate a central source - AnnualCreditReport.com - where consumers can obtain their report. Until March 2014, consumers getting an Experian report on the site had to view Experian advertisements before they got to the report. This violates the Fair Credit Reporting Act prohibition of such advertising tactics. 

In addition to the civil penalty CFPB ordered Experian to truthfully represent how its credit scores are used and to put in place an effective compliance management system to make sure its advertising practices on AnnualCreditReport.com comply with federal consumer laws and the terms of the CFPB's consent order.