Lawsuit Claims Businesses Deprived Of Competitive Pricing For B2B Credit Scores – Fair Isaac Allegedly Has Maintained A 90% Monopoly Over The B2B Credit Score Market – Fair Isaac Accused Of Using Its Monopoly Power To Coordinate A Campaign To Eliminate Credit Score Competition
Kehoe Law Firm, P.C. is making U.S. lenders, financial institutions, and other businesses who purchased FICO Credit Scores from Fair Isaac and/or a Credit Bureau aware that on April 23, 2020, a class action lawsuit was filed against Fair Isaac Corporation (“Fair Isaac”) in United States District Court, Northern District of Illinois, asserting claims under the Sherman Act, as a result of Fair Isaac’s alleged anticompetitive conduct.
Fair Isaac, according to the complaint, ” . . . has abused its monopoly power by engaging in anticompetitive and exclusionary conduct and agreements. Fair Isaac has suppressed competition, stymied innovation, and limited access to credit for millions of Americans – all in violation of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2.”
The complaint alleges that Credit Bureaus
TransUnion, Experian, and Equifax are credit reporting agencies that collect, standardize, and distribute information on consumer credit activity . . .. Credit Bureaus sell lenders, financial institutions, and other businesses credit reports and Credit Scores – including Fair Isaac’s FICO Scores – that are used to make decisions about whether and on what terms to evaluate and extend credit. Credit Bureaus sell those credit reports and Credit Scores to businesses in every state. For decades, Credit Bureaus have acted as Fair Isaac’s agents and co-conspirators to broker sales between businesses and Fair Isaac of the dominant FICO Scores. Fair Isaac has used these distribution agreements to place anticompetitive restrictions on the three dominant Credit Bureaus’ ability to develop or distribute competitive Credit Scores; prohibited Credit Bureaus from individually negotiating royalty prices for access to FICO Scores; charged discriminatory and prohibitively high royalty prices for FICO Scores if a Credit Bureau customer purchases a FICO Score while providing the consumer with a competing score; and increased the royalty prices that must be paid by Credit Bureaus. Nevertheless, the Credit Bureaus have agreed to, and acquiesced in, these restrictions. [Emphasis added.]
The complaint also alleges that
[t]hrough its exclusionary conduct, Fair Isaac has succeeded in preventing the substantial sales growth that VantageScore or a competing credit scoring system would have achieved though competition on the merits. Having suppressed competition, Fair Isaac has been able to significantly increase prices, including most recently in September 2019, for its FICO Scores. But for Fair Isaac’s suppression of competition and the resulting contractual agreements not to compete, VantageScore or another competitive credit scoring system would have thrived and won substantial market share through its innovative product and would have reduced the prices paid for B2B Credit Scores by Plaintiff and members of the Class. [Emphasis added.]