TransUnion, a "repeat offender," is being sued by CFPB for violating consent orders

TransUnion, two of its subsidiaries, and one of its longtime executives were charged by the Consumer Financial Protection Bureau (CFPB) in federal court on Tuesday with violating a 2017 consent order and other consumer financial protection laws.


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


TransUnion and its subsidiaries were charged by the Consumer Financial Protection Bureau (CFPB) in January 2017 with deceptively marketing credit scores and credit-related products. TransUnion agreed to pay $16.9 million in restitution and civil penalties as part of the settlement, as well as a consent order prohibiting it from engaging in deceptive marketing practices.


The company, its board of directors, and its executive officers were all bound by the order.


The CFPB began an investigation into TransUnion in October 2018 and discovered multiple violations of the order's requirements. "In these instances, companies typically work constructively with the CFPB to make quick fixes and come into compliance," according to the agency. According to the CFPB, TransUnion was still in violation of the order as late as June 2021.

In prepared remarks accompanying the complaint, Chopra stated, "I hope that [TransUnion’s] board of directors will take this action seriously and immediately change its corporate culture when it comes to compliance with consumer protection law.  "


The following is part of the CFPB's complaint against TransUnion:


The consent order was broken by TransUnion. According to the CFPB, the company continued to engage in deceptive practices in the marketing and sale of credit-related products, failed to provide required disclosures to ensure that its marketing was not misleading, and failed to collect and review consumer information and make appropriate improvements to advertisements.


The consent order also applied to John Danaher, a former executive at subsidiary TransUnion Interactive. Danaher "repeatedly failed to ensure that TransUnion took certain required steps and refrained from prohibited conduct," according to the CFPB. He also "determined that complying with the order would reduce the company’s revenue, so he created a plan to delay or avoid having to implement the order," according to the CFPB.


Chopra stated, "I do not take the decision to charge individuals lightlyBased on the evidence uncovered in the investigation, I believe it was appropriate that [Danaher] be named individually and answer our allegations. If, in the course of the legal proceedings, we uncover evidence of wrongdoing by other senior executives, we will amend our complaint accordingly. "


Danaher left TransUnion in February of this year.


TransUnion used digital dark patterns to deceive customers, such as enrolling them in recurring payment subscriptions and making it difficult for them to cancel.


TransUnion defrauded customers by misrepresenting its credit monitoring service as a standalone credit score or credit report during the marketing and sale of credit-related products.


TransUnion is accused of violating the Consumer Financial Protection Act by failing to implement the 2017 consent order requirements and engaging in deceptive acts and practices, according to the CFPB's lawsuit. TransUnion was also accused of violating Regulation V, which oversees the implementation of the Fair Credit Reporting Act and the Electronic Fund Transfer Act.


The Consumer Financial Protection Bureau is seeking monetary relief for consumers.


Chopra discussed how "reining in repeat offenders" is a top priority for the CFPB in remarks made last month.


"We need penalties where the expected financial benefits of an illegal scheme do not outweigh the expected costs,” he said. “And we need an understanding that agency and court orders are not suggestions.”


The agency plans to create dedicated units in its supervision and enforcement divisions "to enhance the detection of repeat offenses and corporate recidivists and to better hold them accountable," according to Chopra."  "


The CFPB's allegations, according to TransUnion, are "meritless" and "iin no way reflect the consumer-first approach we take to managing all our businesses." The company shifted responsibility to the regulator.


"As required by the consent order, TransUnion submitted to the CFPB for approval a plan detailing how it would comply with the order," the company stated. "The CFPB ignored the compliance plan, despite being obligated to respond and trigger deadlines for implementation. In the absence of any sort of guidance from the CFPB, TransUnion took affirmative actions to implement the consent order "


TransUnion stated that it is abiding by the consent order."Rather than providing any supervisory guidance on this matter and advising TransUnion of its concerns, like a responsible regulator would, " TransUnion stated, "he CFPB stayed silent and saved their claims for inclusion in a lawsuit, including naming a former executive in the complaint. [...] The CFPB’s unrealistic and unworkable demands have left us with no alternative but to defend ourselves fully."


"Over the last several years, and under the direction of new leadership, TransUnion has led the credit reporting industry in making significant changes aimed at benefitting consumers and increasing transparency in the credit reporting process."

By fLEXI tEAM