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CFPB Sues TransUnion Alleging Violation of Order on 'Deceptive Practices'

credit reporting agency

The Consumer Financial Protection Bureau sued TransUnion, one of the nation’s largest credit bureaus, claiming it continued to employ deceptive sales and marketing tactics after a 2017 order banning the practices.

The lawsuit, filed Tuesday by the regulator in federal court in Illinois, accuses TransUnion and John Danaher, a former executive who headed one of TransUnion's subsidiaries, of using “hidden tricks” on its website to get consumers to unwittingly sign up for recurring payments. The CFPB’s lawsuit claims the company then made it “arduous” for consumers to cancel the payments.

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

TransUnion said the regulator’s claims were baseless.

“The claims made by the CFPB against TransUnion and John Danaher, a former executive, are meritless and in no way reflect the consumer-first approach we take to managing all our businesses,” the company said in a statement.

Danaher retired from TransUnion in 2021, according to a company filing. Attorneys for Danaher told Reuters the claims were groundless and said in a statement that "the CFPB is focused more on politically expedient headlines than the facts or the law."

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

Credit reporting agencies are entrusted with generating accurate credit reports to help banks and other lenders determine an applicant’s creditworthiness,” the CFPB statement said. “However, based on the nearly 150,000 consumer complaints about TransUnion that the bureau received in 2021 alone, TransUnion has struggled to maintain that trust.”

In 2017, the CFPB settled charges with TransUnion and its subsidiaries for deceptively marketing credit scores and credit-related products, including credit monitoring services, according to the consent order filed in federal court. As part of the settlement, TransUnion paid $13.9 million in restitution to consumers and $3 million in civil penalties.

TransUnion and its subsidiaries also agreed to obtain the informed consent of customers for recurring payments for subscription products or services and to provide an easy way for people to cancel subscriptions.

In 2019 and 2020, the CFPB warned the credit giant that it was in violation of the agreement.

“The CFPB is seeking monetary relief for consumers, such as restitution or return of funds, disgorgement or compensation for unjust gains, injunctive relief, and civil money penalties,” the regulator said in Tuesday's statement.

About The Author:

Kathleen Howley has more than 20 years of experience reporting on the housing and mortgage markets for Bloomberg, Forbes and HousingWire. She earned the Gerald Loeb Award for Distinguished Business and Financial Journalism in 2008 for coverage of the financial crisis, plus awards from the New York Press Club and National Association of Real Estate Editors. She holds a degree in journalism from the University of Massachusetts, Amherst.

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