TransUnion an "Out of Control, Repeat Offender," CFPB Charges

TransUnion an "Out of Control, Repeat Offender," CFPB Charges

TransUnion is being sued by the Consumer Financial Protection Bureau (CFPB), which charges it is an “out-of-control repeat offender that believes it is above the law.”

The lawsuit names TransUnion and its chief executive, John Danaher. It alleges the company is violating a 2017 order to stop deceptive marketing of its credit scores and products.

CFPB said that after the order went into effect, TransUnion continued its unlawful behavior, disregarded the order’s requirements, and continued employing deceitful digital dark patterns to profit from customers. The Bureau’s complaint also alleges that TransUnion violated additional consumer financial protection laws.

“TransUnion is an out-of-control repeat offender that believes it is above the law,” said CFPB Director Rohit Chopra in a news release. “I am concerned that TransUnion’s leadership is either unwilling or incapable of operating its businesses lawfully.”

$3 billion in TransUnion revenue

Chicago-based TransUnion (NYSE: TRU) is the parent company of one of the nation’s three largest credit reporting agencies. It collects consumer credit information, including borrowers’ payment histories, debt loads, maximum credit limits, names and addresses of current creditors, and other elements of their credit relationships.

TransUnion collects information on 200 million individuals, and the company claims to profile “nearly every credit-active consumer in the United States.” TransUnion reported $3 billion in revenue for 2021.

Through its subsidiary, TransUnion Interactive, the company also markets, sells, and provides credit-related products directly to the public, such as credit scores, credit reports, and credit monitoring.

2017 Settlement with TransUnion

On January 3, 2017, the CFPB settled charges with TransUnion and its subsidiaries for deceptively marketing credit scores and credit-related products, including credit monitoring services. As part of the settlement, TransUnion agreed to pay $13.9 million in restitution to victims and $3 million in civil penalties.

TransUnion and its subsidiaries also agreed to a formal law enforcement order that, among other things, required the credit reporting giant to warn consumers that lenders are not likely to use the scores they are supplying, obtain the express informed consent of customers for recurring payments for subscription products or services, and provide an easy way for people to cancel subscriptions.

In October 2018, the CFPB opened an examination of TransUnion. In May 2019, CFPB examiners informed TransUnion that it was violating multiple requirements of the order. In these instances, companies typically work constructively with the CFPB to make quick fixes and come into compliance. However, in June 2020, CFPB informed TransUnion that it was still violating the order and engaged in additional violations of law.

Digital dark paterns are hidden tricks or trapdoors

Digital “dark patterns”

Dark patterns are hidden tricks or trapdoors companies build into their websites to get consumers to inadvertently click links, sign up for subscriptions, or purchase products or services. Dark patterns can complicate or hide information, such as making it difficult for consumers to cancel a subscription service.

The complaint alleges that TransUnion used an array of dark patterns to trick people into recurring payments and to make it difficult to cancel them.

For example, under federal law, Americans are entitled to a free credit report from TransUnion through TransUnion asked consumers to provide credit card information that appeared to be part of an identity verification process.

CFPB said TransUnion then integrated deceptive buttons into the online interface that gave the impression that the consumer could also access a free credit score in addition to viewing their free credit report. In reality, clicking this button signed consumers up for recurring monthly charges using the credit card information they had provided.

The only indication in the enrollment process that consumers were making some sort of purchase was through a fine-print, low-contrast disclosure, located off to the side of the enrollment form. The disclosure is inside an image that can take up to 30 seconds longer to load than the rest of the material in the form. This dark pattern triggered thousands of complaints.

For consumers looking for a way out of their subscriptions, TransUnion not only failed to offer a simple mechanism for cancellation, it actively made it arduous for consumers to cancel through clever uses of font and color on its website, CFPB said.