Last Friday, the Department of Justice opened a civil investigation against the Fair Isaac Corporation. (FICO). The DOJ’s Antitrust Division is looking into FICO’s policies for signs of “potentially exclusionary conduct.” The full extent of the investigation is unknown at this time.
Exclusionary conduct refers to a monopoly over an industry that creates a disadvantage for competitors. FICO has long been a namesake in consumer lending, and is the only credit scoring agency accredited by Fannie Mae and Freddie Mac. Lenders do have the option to choose whichever scoring method they prefer, including VantageScore from Equifax, Experian and TransUnion.
FICO released a response today, saying they will “fully cooperate with the Department of Justice” and they are “confident the Department will conclude that [they have] not engaged in any exclusionary conduct.”
FICO’s response also cites an ongoing private investigation from TransUnion. FICO is confident that the Department will find TransUnion’s antitrust claims “without merit” as part of their investigation. FICO filed a lawsuit against TransUnion in 2017, seeking “millions in unpaid royalties.” TransUnion responded by launching its own antitrust claim against FICO.
FICO is planning to launch a new scoring model known as FICO 10 this summer. In the new model, debt and late payments have more weight, but trended data will also influence scores. Trended data accounts for payment history over the last 24 months, not just month-by-month. The DOJ’s investigation isn’t expected to influence the launch at this time.
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