Class Action Lawsuit Accuses Equifax of Monopolizing Verification of Income, Employment Services

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A proposed class action lawsuit alleges Equifax has illegally monopolized the market for electronic income and/or employment verification services, using its might in the field to deny purchasers access to meaningful, and potentially cheaper, alternatives.

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The 55-page Equifax lawsuit highlights that verification of income and/or employment services are integral to the process of applying for a mortgage, car loan, or apartment rental. While credit checks afford historic details about a consumer’s payment history, employment and income verification provides forward-looking information about a person’s ability to make rent or loan payments, the filing explains.

According to the antitrust complaint, Equifax has come to exclusively control “almost the entire market” for income and/or employment verification services through its TALX Work Number product, which, after Equifax acquired Talx Corporation in 2007, has become essentially the only way that lenders, landlords, employers and individual citizens can electronically check on an applicant’s income and employment.

The filing mentions that Equifax income and employment verification services have become crucial to the company’s bottom line, with profits reportedly approaching $2 billion per year, or “nearly 40 percent of Equifax’s annual profits.” According to the suit, the cost of Equifax’s already pricey verification services increases yearly as a result of the credit reporter’s stranglehold on the market.

“The prices that Equifax charges for Electronic [verification of income and/or employment] Services are far higher than a competitive market would bear,” the lawsuit alleges. “Because it is insulated from competition by its exclusive contracts and other anticompetitive conduct, Equifax raises the prices for access to [TALX Work Number] every year.”

Rather than face off against would-be competitors attempting to enter the market around 2017, Equifax, the case says, responded with “a multifaceted anticompetitive scheme” to maintain its market dominance. 

A component of this alleged scheme was Equifax entering into multiyear exclusive deals with major payroll software providers—ADP, Paychex and Intuit Quickbooks—and large employers so as to deny competitors access to key income and employment data on tens of millions of Americans, the lawsuit claims. Second, Equifax shares a chunk of its “monopoly profits” with these data contributors to “induce them” to provide their data solely to Equifax and impede any competitor, the case says.

Lastly, the suit alleges Equifax has spent billions buying up companies that might pose a risk of competition, eliminating potential rivals by “incorporating them directly into Equifax Workforce Solutions” while at the same time increasing barriers to entry from other potential challengers.

“Equifax’s Scheme has substantially foreclosed competition in the market for [verification of income and/or employment] Services and continues to do so. Through its exclusive agreements with Data Contributors, Equifax has been able to foreclose competitors from at least 40% of the data inputs necessary to make a competing VOIE product viable. That continues to be the case today.”

Equifax executives have stated publicly that the company “faces no meaningful competition” in the market for income and/or employment verification services and that the company uses exclusive contracts to prevent meaningful competition, the lawsuit adds.

The lawsuit looks to cover all persons or entities in the U.S. that purchased electronic verification of income and/or employment services directly from Equifax Workforce Solutions and/or Equifax, Inc. at any time since May 28, 2020.

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