Magazine article American Banker

Equifax Outlines Plans (and Price of Free Reports)

Magazine article American Banker

Equifax Outlines Plans (and Price of Free Reports)

Article excerpt

Shedding some light on the effects of the Fair and Accurate Credit Transactions Act, Equifax Inc. said it has yet to recover $4.8 million it lost by providing free credit reports to consumers.

Those costs come largely from an increase in the number of consumers disputing items on their credit reports once they obtained their free copies, Rick Smith, who became Equifax's chief executive in September, said Thursday in an interview. (To make up for the revenue lost from providing the reports, the Atlanta credit bureau has been charging lenders a regulatory recovery fee of 11 cents for each report they order; last quarter it took in $25.7 million of such fees.)

He also said Equifax had hired the consulting firm Bain & Co. to help with a "strategic evaluation" that could result in hiring, firing, or both.

Though his company is "capitalizing on the awareness" of consumers by advertising products for them to buy when they get their free reports, he said it is too early to say what percentage of these consumers become customers.

That said, fourth-quarter visits to Equifax's Web site rose 28% from a year earlier, and 53% of the people who bought something from the bureau bought more than one product, the company said.

In addition, subscription-based credit monitoring products drove a 15% increase in fourth-quarter revenue at the bureau's "personal solutions" unit, which sells consumer products.

According to Mr. Smith, consumers, not companies that were breached, purchased the majority of such subscription services. However, corporate subscriptions are a "growth area" for Equifax.

The bureau's fourth-quarter net income increased 9%, to $62.8 million, or 48 cents a share, which beat the average estimate of analysts by a penny. Revenue rose 10%, to $361.3 million.

Mr. Smith said he expects the evaluation, which began two weeks ago, to finish in early June with the unveiling of a three-year strategic plan. …

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