Credit Scores Sold More Often Than McDonald's Hamburgers
May 20, 2020
A Pennsylvania credit union is one of three nationwide suing the Fair Isaac Corporation, commonly known as FICO. The institutions are suing over claims the company has been suppressing competition since 2006.
The Credit Union Times reports the $48.2 million First Choice Federal Credit Union in New Castle, Pennsylvania, filed suit because the ubiquitous FICO score provider has used its monopoly to charge higher prices. The credit unions claimed FICO has unlawfully maintained a 90% monopoly of the business-to-business Credit Score Market for many years, allegedly the violation of federal and state antitrust laws.
The article says to illustrate the scope of FICO’s market dominance, Sky’s lawsuit noted that 10 billion FICO scores are sold every year, which is four times the number of hamburgers McDonald’s sells worldwide annually. What’s more, with 27.4 million FICO scores sold daily, it is more than twice the number of cups of coffee Starbucks sells around the world every day.
The credit unions claimed FICO placed anticompetitive restrictions on the credit bureaus’ ability to develop or distribute competitive credit scores, prohibited the credit bureaus from negotiating royalty prices for access to FICO scores, charged discriminatory and prohibitively high royalty prices and increased the royalty prices that must be paid by the credit bureaus.
Nevertheless, the credit bureaus did agree to these restrictions, according to the lawsuit.
These lawsuits followed a March 13 FICO statement after it was notified that the U.S. Department of Justice’s antitrust division opened a civil investigation into “potential exclusionary conduct by FICO.”
FICO said it intends to fully cooperate with the DOJ.