WASHINGTON -- Credit rating company Equifax Information Services has agreed to pay $393,000 to settle federal allegations that it improperly sold information about millions of homeowners who were behind on their mortgage payments, the Federal Trade Commission said Wednesday.
Some of the information was sold to Direct Lending Source Inc., a Florida company, which resold the data to third parties that used it to pitch mortgage modification and debt relief services to the people, the FTC said.
Some of those third-party firms "have been the subject of law enforcement investigations," the FTC said. Direct Lending Source agreed to pay $1.2 million to settle the allegations.
From 2008 to early 2010, Equifax, one of the three leading credit rating firms, produced 17,000 pre-screened lists containing information about millions of delinquent homeowners. The lists included sensitive information, such as people's credit scores, and whether they were 30, 60, or 90 days late on their mortgage payments, the FTC said.
Under federal law, such information only is supposed to be used to make "firm offers of credit or insurance" to consumers who meet certain pre-selected criteria -- not for general marketing.
But the FTC said Equifax sold the lists to Direct Lending Source and two affiliates, Bailey & Associates Advertising, Inc., and Virtual Lending Source, which did not obtain them for permissible purposes.
The FTC alleged that that Equifax failed to control access to sensitive consumer information. The company improperly provided the lists and failed to properly investigate when it learned that Direct Lending Source was violating Equifax's own policies on the sale of pre-screened lists, the FTC said.
Equifax, which did not admit or deny any wrongdoing, said Wednesday that it "discontinued all business interactions with Direct Lending and its affiliates during the summer of 2011."
"At that time, we also notified our customers that we had ceased doing business with Direct Lending and its affiliates," Equifax said.
Direct Lending Source, Inc., which also did not admit or deny wrongdoing, did not immediately respond to a request for comment.
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