In what looks to be a battle of Goliaths, Fair Issac’s FICO.com brought suit against Experian, TransUnion, Equifax and VantageScore for trademark infringement, anti-trust unfair competition, passing-off claims and false advertising.

Recently, United States District Court in Minneapolis dismissed the antitrust and false advertising claims asserted by FICO against Experian, Trans Union, Equifax and VantageScore. However, the court order did allow the issues of trademark infringement, unfair competition and passing off claims to go forward. I guess it’s just a matter of throwing everything up against the wall and seeing what sticks.

Both companies issued a press release proclaiming their victories in the case. The differences are amusing.

From Experian:

Court Rules that VantageScore has Brought Competition to Credit Scoring Marketplace
On July 24, the United States District Court in Minneapolis dismissed the antitrust and false advertising claims asserted by FICO against Experian, Trans Union, and VantageScore Solutions LLC in connection with the introduction and sale of the VantageScore scoring system. These claims had constituted the substantial majority of FICO’s claims in the lawsuit.

Although the Court will allow FICO’s claim for trademark infringement to go to trial, it ruled in the defendants’ favor on a crucial legal issue with respect to that claim. In addition, at the trial, Experian will present its counterclaim (which was not affected by the Court’s ruling) that FICO committed fraud in applying for its trademark.

From FICO.com:

Court Order Clears Way for Consumer Credit Scoring Trial
MINNEAPOLIS, July 27, 2009 – Court denies motions by Experian, TransUnion and VantageScore Solutions to dismiss claims of Trademark Infringement and Unfair Competition

FICO has long maintained that advertising and other methods used by Experian, TransUnion and VantageScore Solutions deliberately confuse consumers into purchasing other, little-used credit scores under the false belief that they are FICO® scores, or that the scores they buy from these companies are used by their lenders to make credit decisions – neither of which is the case.

While it’s true the FICO score is the closest thing to the scoring model that lenders use to evaluate the consumer, the FICO number is not the exact score lenders use to evaluate you. Lenders add their own risk factors into the FICO scoring model to customize it for their business needs. The customization can alter the basic FICO score.

Among our discussion forum community, we refer to the Big 3’s VantageScore as a FAKO score as it is absolutely not used by the majority of lenders, even in a “customized” way. FICO.com calls the VantageScore an “educational score”. In my opinion, I don’t even know how the VantageScore is “educational” if it doesn’t mean anything. Here’s an MSN article extolling the importance of the FICO score over the VantageScore.

Selling credit scores to consumers is big business and neither party wants to lose. In my opinion, the results of the trial will only benefit the consumer – hopefully exposing a little more of the black box that is the credit scoring model upon which Americans are so dependent. The case will be brought to trial later this year.

Have some thoughts about the upcoming case? Leave a comment!

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