Consumer Financial Protection Bureau Charges TransUnion With Violating Order

Agency alleges repeated violations, deceptions by company

On April 12, 2022, the Consumer Financial Protection Bureau (CFPB) filed a lawsuit against credit reports company TransUnion (TRU) and two of its subsidiaries. The agency's filing alleges that the company violated a 2017 enforcement order requiring it to stop deceptive marketing of its credit scores and credit products. The lawsuit alleges that TransUnion continued to use a "deceitful" practice called "digital dark patterns" to trick customers into signing up for subscription services. John Danaher, a former senior executive at subsidiary TransUnion Interactive, is also named in the lawsuit, allegedly for creating a plan to delay or avoid implementing the 2017 order. The CFPB is seeking monetary relief for consumers.

In a press release issued the same day as the lawsuit, TransUnion called the claims made by the CFPB "meritless."

Key Takeaways

  • The Consumer Financial Protection Bureau has filed a lawsuit against credit reporting company TransUnion, alleging it has violated a 2017 order against deceptive marketing.
  • John Danaher, a former senior executive at subsidiary TransUnion Interactive, is also named.
  • The CFPB alleges that TransUnion used digital dark patterns to trick consumers into signing up for recurring monthly subscription plans.
  • TransUnion says the CFPB lawsuit is "meritless" and that the company is in compliance with the 2017 order.

TransUnion and the 2017 Law Enforcement Order

TransUnion collects information on about 200 million individuals and reported $3 billion in revenue in 2021. It collects credit data, including on borrowers' credit history, such as how much debt they owe, creditors, and credit limits. The main focus of subsidiary TransUnion Interactive is marketing and selling credit-related products, including credit reports, credit scores and credit monitoring.

In January 2017, the CFPB settled charges with TransUnion over deceptive marketing practices. TransUnion agreed to pay $13.9 million in restitution and $3 million in civil penalties. The company also agreed to a formal law enforcement order requiring it to issue warnings to consumers that lenders were not likely to use TransUnion's scores. As part of the order, the company also agreed to obtain express informed consent from customers for recurring payments for subscription services, and other related requirements.

Alleged Violations From 2018 to 2021

Despite the 2017 settlement, TransUnion has continued to run into problems with consumers and the CFPB. In 2018, the agency examined TransUnion's practices and informed the company in 2019 that it was violating multiple requirements of the original enforcement order. In 2020, the CFPB informed TransUnion that it was still in violation and was making "additional violations."

And in 2021 the CFPB received 150,000 complaints about TransUnion.

Among other violations, the CFPB in its 2022 lawsuit now says that TransUnion has employed digital dark patterns to trick customers into signing up for subscriptions and recurring payments. Dark patterns refer to tools used to hide or complicate website information. The CFPB alleges that TransUnion has asked customers to provide credit card information that appeared to be used for identity verification for a free credit report. However, through the use of deceptive buttons, TransUnion allegedly tricked customers into signing up for recurring monthly charges. The CFPB says that this issue alone led to thousands of consumer complaints.

TransUnion Responds

In its response, TransUnion claims that it gave the CFPB a plan detailing how it would comply with the 2017 order, but that the CFPB ignored the plan. The company said that it has made a "good faith effort" to resolve all issues with the agency. The company says it has been in compliance with the obligations of the plan since implementing it.

Article Sources
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  1. Consumer Financial Protection Bureau. "CFPB Charges TransUnion and Senior Executive John Danaher with Violating Law Enforcement Order."

  2. TransUnion. "TransUnion Responds to Litigation Filed by CFPB."

  3. Consumer Financial Protection Bureau. "Annual report of credit and consumer reporting complaints."