NU Online News Service, Dec. 19, 11:52 a.m.EST

Progressive Direct has agreed to pay a $125,000 fine toMassachusetts because the automobile insurer told consumers it hadused credit information to determine rates.

The state banned the use of credit scores and othersocioeconomic factors several years ago as it looked to implement a“managedcompetition” auto-insurance market under former InsuranceCommissioner Nonnie Burnes, replacing the system at the time wherethe state set rates.

Late last month, Gov. Deval Patrick signed a bill making the practice unlawful.

The state's Office of Consumer Affairs and Business Regulation(OCABR) says Progressive's website included a link that explainedhow credit was used in calculating a customer's rates.

About 3,200 Massachusetts consumers hit the link, which wasremoved from the website on Nov. 16, the office says. Progressivesays credit was not used to calculate rates for drivers in the BayState.

“We accidentally added a link to the quoting section of ourwebsite that directed Massachusetts consumers to a report about theuse of credit in the underwriting process,” says Progressivespokesman Jeff Sibel. “This link is standard in other states wherecredit is a part of the rating and underwriting process. We didn'taccount for Massachusetts-specific requirements, and as a result,we accidentally included the link on those state pages. We're sorrythis happened and apologize for any confusion it may havecaused.”

The Massachusetts Division of Insurance is also requiringProgressive to contact each consumer, explain what happened andoffer each one a free check of their credit report, according tothe OCABR.

“Our regulations make it very clear that carriers cannot usecredit information in insurance rating or underwriting forMassachusetts drivers,” says Joseph G. Murphy, commissioner ofinsurance, in a statement. “This is a serious violation of thoseregulations and the public trust.” Violations of the significantconsumer protections we have in place will not be tolerated.”