The Consumer Financial Protection Bureau (CFPB) fined Experian and its subsidiaries $3 million yesterday for deceiving consumers about the use of credit scores it sold to consumers.

Experian claimed the credit scores it marketed and provided to consumers were used by lenders to make credit decisions. In fact, lenders did not use Experian’s scores to make those decisions; no single credit score or credit scoring model is used by every lender. In addition to the fine, the CFPB ordered Experian to truthfully represent how its credit scores are used.

“Experian deceived consumers over how the credit scores it marketed and sold were used by lenders,” CFPB Director Richard Cordray said in a statement. “Consumers deserve and should expect honest and accurate information about their credit scores, which are central to their financial lives.”

Experian developed its own proprietary credit scoring model, referred to as the “PLUS Score,” which it applied to information in consumer credit files to generate a credit score it offered directly to consumers. The PLUS Score is an “educational” credit score and is not used by lenders for credit decisions.

Experian violated the Dodd-Frank Wall Street Reform and Consumer Protection Act from at least 2012 through 2014 by deceiving consumers about the use of the credit scores it sold, according to the CFPB. In its advertising, Experian falsely represented that the credit scores it marketed and provided to consumers were the same scores lenders use to make credit decisions. In fact, lenders did not use the scores Experian sold to consumers.

Experian also violated the Fair Credit Reporting Act, which requires a credit reporting company to provide a free credit report once every 12 months and to operate a central source – AnnualCreditReport.com – where consumers can obtain their report. Until March 2014, consumers getting their report through Experian had to view Experian advertisements before they got to the report. This violates the Fair Credit Reporting Act prohibition of such advertising tactics.

Experian has been ordered to:

• Pay a $3 million penalty.
• Truthfully represent the usefulness of credit scores it sells.
• Put in place an effective compliance management system.

The full text of the consent order is available here.