Lenders criticize Equifax’s employment verification “monopoly.”

Two mortgage brokers have sued Equifax, alleging its presence in electronic verification of income and employment business goes against monopoly laws.

The class action lawsuit cites Equifax’s continued acquisition of VOIE competitors and revenue sharing with major employers who exclusively share data with the credit giant. Through subsidiary Equifax Workforce Solutions, the company claims to have data on 126 million unique individuals.

Competitors VOIE and Community Home Lenders of America have raised the alarm in recent years over Equifax’s massive reach. The provider, which signed deals with nearly three dozen payroll processors in the past three years alone, charges $66.45 for individual verifications, up from under $20 a decade ago.

“Equifax’s market power stems not from Equifax’s creative ability to design a superior product, but rather from its use of exclusive agreements, payments to its partners, and the acquisition of fledgling competitors to its rivals,” the lawyers wrote in the lawsuit. . “Equifax has not made its product better, but has worked with its ‘partners’ to hinder competition.”

The complaint was filed last week in a Pennsylvania federal court, and lists five violations of the Sherman Antitrust Act by Equifax. The brokerages are Greystone Mortgage of Wynnewood, Pennsylvania, and First Financial Lending of Cherry Hill, New Jersey.

Equifax said in a statement Monday that it will not comment publicly on pending litigation and will respond as appropriate. He also promoted his work number, his brand for his verification services.

Two attorneys representing the brokerages did not respond to requests for comment Wednesday. Equifax also has not yet retained an attorney in the case.

The lawsuit refers to comments made by company executives in previous earnings calls about Equifax’s auto-renewing multiyear exclusive agreements with both payroll software providers and mass employers. Such partners include ubiquitous payroll providers such as ADP and Intuit Quickbooks, and companies including Walmart and Home Depot.

“Discovery will show that, through its agreements with payroll providers, Equifax enjoys exclusive control over 40% of payroll data,” the complaint states.

CEO Mark Begor, on a first-quarter earnings call, said manual verifications are Equifax’s biggest competitor. Such alternatives, the lawsuit explained, could be payslips or “screen scraping” in which customers share entries or screenshots of their work and financial information.

Some of the lawsuit’s allegations come from confidential witnesses, former Equifax employees whose comments to lawyers for the complaint have been redacted from the lawsuit facing the public. The filing also does not outline the dollar amounts associated with Equifax’s partner agreements.

Brokers cite other backlash against Equifax from both the government and industry players. The Federal Trade Commission entered into a consent order with EWS, then known as TALX, in 2008 for its series of acquisitions; which ended in 2018. Argyll and Certree, two EWS competitors, as well raised concerns with the FTC in 2022 on VOIE market consolidation.

Lawyers also suggested that EWS has produced erroneous results that have harmed mortgage applicants and other borrowers, and refer to prominent history of non-protection of consumer data.

The proposed class includes individuals or companies that purchased VOIE services from Equifax between May 28, 2020 and now. In addition to seeking an end to Equifax’s antitrust behavior, the plaintiffs want unspecified damages that could be tripled after trial.

The company, responding to criticism from CHLA in March, noted that its VOIE fees are less than 1% of the roughly $12,485 it costs to get a home loan.