It’s no secret that inflation is on the rise across the U.S. economy. American consumers are emptying their wallets to afford gas, groceries, and clothing. The housing market, which plays a central role in our economy, is even worse, with prices rising nearly 19 percent in 2021.
The ravages of inflation, however, are not the only costs currently affecting prospective homeowners. There are rising interest rates, efforts to diminish competition in the mortgage market, and loads of other fees. One such fee is The Work Number, a little-known company that verifies employment and wages of would-be home buyers. The Work Number began in 1994 under TALX, before eventually being acquired by Equifax Inc. in 2007.
Despite its relative anonymity among consumers, The Work Number is widely used by many American corporations including Facebook, Amazon and the Home Depot, all of which share their own employee data, such as income.
But consumers, whose personal information The Work Number sells to its customers, are likely to get stuck with higher fees due to the company’s price hikes.
The Work Number has increased the price of employment verification by 31 percent from $41.95 in August 2020 to $54.95 today. Mortgage lenders must pay The Work Number for access to this data to verify prospective home buyers’ employment status and to confirm their income. Because this information is needed twice – once at the beginning of the lending process and once at closing – lenders are forced to pass on this cost to consumers.
Perhaps given the skyrocketing costs of housing, The Work Number hopes that no one will notice their egregious fee hikes. Regardless, these obstacles present an additional and unwanted barrier for mortgage applicants – especially first-time home buyers – at a time when most Americans are already suffering from spiking inflation.
Federal regulators have previously investigated The Work Number over acquisitions leading to reduced competition as well as neglecting to provide disclosures. And in 2017, Equifax was cited by the Federal Trade Commission and forced to pay more than $575 million because it did not take the necessary steps to prevent a data leak affecting 147 million people. That’s nearly every adult in America.
The Work Number is raising prices on their service by up to 31 percent, yet as Fast Company noted, the company is prone to data leaks and selling inaccurate consumer information. This has raised questions about transparency, but The Work Number has provided few answers, leaving consumers in the dark.
Policymakers who want to protect home buyers and increase access to homeownership should be looking to communicate the consumer harm that comes from The Work Number’s price increases. Policymakers and regulators should also consider how the costs resulting from The Work Number’s price hikes will have outsized harm on low-income consumers and people of color.
As potential home buyers struggle to keep their heads above water, consumers and future home buyers should be asking why The Work Number is unnecessarily increasing the costs of their services, and what the company is doing to protect consumer data.
With increasing barriers to homeownership, companies such as The Work Number must increase transparency about the origination of any hidden fees and who plans to foot the bill. The Work Number should recognize the additional obstacle it places on first-time home buyers attempting to secure a new future for themselves and their families by passing on unjust and unnecessary fees.
Donnetta Wells is the principal of Wellsons Financial Group and a member of the Financial Services Innovation Coalition’s Housing Task Force. She is a HUD-certified mortgage counselor, and previously ensured compliance for federal laws designed to ensure fair lending in underserved communities.