Equifax Class Action Lawsuit: Mortgage Lenders Fight Income Verification Monopoly

Is Equifax squeezing consumers by controlling income verification? Two mortgage lenders have filed a proposed class action lawsuit against Equifax, accusing the credit bureau giant of wielding a monopoly in the income verification service market. This alleged monopoly, they claim, is driving up prices for lenders and ultimately, consumers.

Greystone Mortgage and First Financial Lending brought the antitrust lawsuit against Equifax on May 28, claiming Equifax has “willfully acquired and maintained monopoly power in the market for electronic verification of income and employment through a three-pronged strategy, to the detriment of its customers.” 

Lenders Reliant on Electronic Verification for Approvals

The lawsuit, filed in a Philadelphia federal court, alleges Equifax has been abusing its dominant position for financial gain. Mortgage lenders, along with many other businesses, rely heavily on Equifax's electronic income and employment verification services to approve loans and rentals. This is especially crucial for borrowers with limited credit history, as payroll data offers a reliable form of verification.

“Without the employment and income verification, many consumers would be unable to obtain mortgages, car loans, or rent apartments,” the lawsuit states. It says calling employers is slower and more expensive than using an electronic verification service. 

However, Equifax has abused its monopoly and is charging too much for the essential services, the lawsuit states. 

Lawsuit Claims Equifax Exploiting Monopoly for Excessive Profits

The lawsuit argues that Equifax is leveraging its alleged monopoly to charge exorbitant fees for these essential verification services. According to the filing, Equifax's verification services generate nearly $2 billion annually, accounting for almost 40% of their total profits. The inflated pricing, the lawsuit contends, stems from a lack of competition in the market.

“The prices that Equifax charges for Electronic [Verification] Services are far higher than a competitive market would bear,” it says. “Because it is insulated from competition by its exclusive contracts and other anticompetitive conduct, Equifax raises the prices for access every year.”

The plaintiffs detail a multi-pronged strategy employed by Equifax to maintain its market dominance. This includes securing exclusive, multi-year contracts with payroll providers and strategically acquiring potential competitors. These tactics allegedly limit access to essential data for competing verification services.

Equifax's Past Legal Troubles

This isn't the first time Equifax has faced legal challenges. In 2022, the company settled a massive data breach lawsuit for $425 million. This breach exposed the personal information of  147 million people. The company agreed to the settlement with the Federal Trade Commission, the Consumer Financial Protection Bureau, and 50 U.S. states and territories. 

In the Equifax antitrust class action lawsuit, the plaintiffs are looking to represent a class of potentially tens of thousands of past and present customers of Equifax's verification services. It seeks unspecified monetary damages to compensate for inflated fees and an injunction to prevent Equifax from continuing its alleged anti-competitive practices.

Case Details

• Lawsuit: Greystone Mortgage Inc et al v. Equifax Workforce Solutions LLC et al
• Case Number: 2:24-cv-02260
• Court: U.S. District Court for the Eastern District of Pennsylvania

Plaintiffs' Attorneys

• Katie R. Beran, Jeannine M. Kenney, Sarah R. LaFreniere, and Brian A. Ratner (Hausfeld LLP)
• Bruce E. Gerstein, David Rochelson, Jon Gerstein, and Kimberly Hennings (Garwin Gerstein & Fisher LLP)
• Joshua H. Grabar (Grabar Law Office)