Federal lawsuit accuses TransUnion of deceptive practices | Business

The Consumer Financial Protection Bureau (CFPB), a federal financial watchdog agency, has filed a lawsuit against TransUnion, two of its subsidiaries and a former executive, John Danaher, for violating a 2017 order to stop engaging in deceptive marketing practices.

The lawsuit, filed in U.S. District Court in Northern Illinois earlier this month, alleges that TransUnion used “deceptive digital dark models,” or hidden tricks or trapdoors that companies sometimes build into their websites to trick customers into inadvertently clicking on links, signing up for subscriptions, or purchasing products or services.

Dark patterns can also complicate or obscure information, for example, making it difficult to cancel a subscription service.

“TransUnion is an out-of-control repeat offender who believes it is above the law,” CFPB director Rohit Chopra said in a statement. “I am truly concerned that TransUnion is unwilling or unable to operate its business legally.”

As part of the lawsuit, the CFPB is seeking monetary relief from consumers victimized by these practices, including restitution, compensation for unfair gains, injunctive relief, and civil penalties.

Chicago-based TransUnion collects credit information from about 200 million Americans and claims to have credit profiles on nearly every consumer using credit in the United States. Other credit bureaus are Experian and Equifax.

The information they collect is used by banks, car dealerships, retailers, insurance companies, and even employers to make credit decisions for millions of Americans. It can affect who gets or doesn’t get a credit card, car loan, mortgage, or even a job.

The CFPB enforcement order was issued to prevent TransUnion from engaging in deceptive marketing related to its credit ratings and other credit products. The bureau’s complaints also accuse TransUnion of violating other consumer financial protection laws.

For its part, TransUnion said in a statement: “The allegations made by CFPB against TransUnion and John Danaher, a former executive, are without merit and in no way reflect the consumer-focused approach we take to managing all of our activities.”

On January 3, 2017, CFPB said it had settled charges against TransUnion and its subsidiaries for deceptively marketing credit scores and other credit-related products, such as credit monitoring services. In the settlement, TransUnion agreed to pay $13.9 million in restitution to the victims and an additional $3 million in fines and civil penalties. Additionally, federal law requires companies such as TransUnion, Experian, and Equifax to provide consumers with one free credit report per year. In addition, TransUnion and its subsidiaries have agreed to a formal law enforcement order requiring the credit reporting agency to warn consumers that lenders are unlikely to use credit scores provided by TransUnion, the consent of customers for recurring subscription payments to products and services and provide customers with an easy way to cancel their subscriptions. And that order was binding on TransUnion, its board of directors and its officers.

Subsequently, in October 2018, the CFPB initiated a review of TransUnion. Then in May 2019, CFPB, notified the company that it was in violation of multiple requirements of the order. At this point, the CFPB said most companies generally work constructively with the federal agency to resolve issues and achieve compliance.

But in June 2020, the federal agency informed TransUnion that it was still not in compliance and had in fact violated several other consumer protection laws, such as the Electronic Transfer Act, the Consumer Financial Protection Act of 2010 and the Fair Credit Reporting Act.

In its statement, TransUnion denied that it had failed to comply with the consent order.

“Over the past several years, and under new leadership, TransUnion has led the credit reporting industry in marking significant changes designed to benefit consumers and increase transparency in the credit reporting process. credit,” TransUnion said.

According to the CFPB, anyone, including current or former employees, with information of TransUnion misconduct should report it to the federal agency by email: [email protected] or call the Whistleblower Tip Line at: 855-695-7974.

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