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Equifax Accused of Monopolizing Employment Verification Market in New Suit

 |  May 29, 2024

Equifax, a leading data analytics company, has been hit with a proposed class action lawsuit accusing it of monopolizing the market for electronic income and employment verification services. The suit, filed by home mortgage lenders Greystone Mortgage and First Financial Lending, was brought before the federal court in Philadelphia on Tuesday.

The lawsuit alleges that Equifax, through its Equifax Workforce Solutions unit, has created a “stranglehold” on a critical verification process used widely in consumer finance, per Reuters. Lenders, property managers, and other entities depend on quick, electronic verification of an applicant’s income and employment status for various financial transactions such as mortgages, car loans, and rental agreements. The manual alternative — calling employers directly — is notably slower.

According to the plaintiffs, Equifax has violated antitrust laws by securing exclusive contracts and acquiring potential competitors, thus stifling competition. This market control purportedly enables Equifax to charge prices significantly higher than what would prevail in a competitive market. The lawsuit represents a proposed class comprising tens of thousands of purchasers of Equifax’s verification services.

Related: Equifax Says 85% of Its New Models Built With AI

The complaint highlights that Equifax’s verification business, though less known compared to its credit reporting services, has become a substantial revenue generator, bringing in nearly $2 billion annually. The plaintiffs argue that Equifax’s long-term, exclusive agreements with payroll software providers and major employers have effectively blocked competitors from accessing crucial data, preventing them from building comparable verification databases.

“Equifax has spent billions of dollars acquiring companies that might present a risk of competition to its monopoly,” the plaintiffs stated in the lawsuit. They are seeking unspecified monetary damages and an injunction to halt Equifax’s allegedly anti-competitive practices.

Equifax has yet to comment on the lawsuit.

Source: Reuters