CFPB Sues TransUnion for Allegedly Deceiving Consumers

The CFPB sued TransUnion and a former executive Tuesday, alleging they violated a 2017 law enforcement order to stop deceptive marketing.

The 106-page lawsuit filed in a federal district court in Chicago named TransUnion, two of its subsidiaries and John Danaher, who was president of one of the subsidiaries. The CFPB claimed TransUnion and Danaher violated a 2017 order was issued to stop the company from engaging in deceptive marketing, regarding its credit scores and other credit-related products.

The Chicago-based company issued a statement Tuesday saying the CFPB’s claims against the company and John Danaher “are meritless and in no way reflect the consumer-first approach we take to managing all our businesses.”

A CFPB news release Tuesday said it warned TransUnion in May 2019 and June 2020 that the company was still violating the order. TransUnion “continued its unlawful behavior, disregarded the order’s requirements, and continued employing deceitful digital dark patterns to profit from customers.”

The CFPB described dark patterns as “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.” The CFPB accused TransUnion of using an array of dark patterns “to trick people into recurring payments and to make it difficult to cancel them.”

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

TransUnion said it responded to the 2017 consent order by submitting a plan that it said detailed how it would comply.

“The CFPB ignored the compliance plan, despite being obligated to respond and trigger deadlines for implementation,” TransUnion said.

So, without a response from the CFPB, TransUnion said it took actions on its own to comply.

“We have been in compliance with our obligations and we remain in compliance with the consent order today,” TransUnion said.

“Rather than providing any supervisory guidance on this matter and advising TransUnion of its concerns — like a responsible regulator would — the CFPB stayed silent and saved their claims for inclusion in a lawsuit, including naming a former executive in the complaint,” TransUnion claimed.

According to the statement from TransUnion, “Despite TransUnion’s months-long, good faith efforts to resolve this matter, (the) CFPB’s current leadership refused to meet with us and were determined to litigate and seek headlines through press releases and tweets. The CFPB’s unrealistic and unworkable demands have left us with no alternative but to defend ourselves fully.”

Danaher’s LinkedIn account and the CFPB showed he was president of the Chicago-based TransUnion Consumer Interactive subsidiary from 2004 to 2021.

“I’m a consumer credit and identity protection expert with more than 30 years of experience in financial services,” the “about” section of Danaher’s LinkedIn profile said. “I served as President of TransUnion Consumer Interactive, leading a global team delivering innovative solutions that help consumers build financial health and protect their personal data.”

The CFPB’s director was Richard Cordray, an appointee of President Barack Obama, on Jan. 3, 2017 when the bureau settled charges with TransUnion. Donald Trump was sworn in as president a few weeks later.

The CFPB charged TransUnion in 2017 with 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 was also required 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. The CFPB said its order was binding on the company, its board of directors and its executive officers.

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,” the CFPB news release said.

The CFPB lawsuit alleged that:

• TransUnion and Danaher “flouted the terms of the CFPB’s 2017 order.”
• TransUnion “deceived customers through digital dark patterns: For its subscription products, TransUnion relied on digital dark patterns from beginning to end of the TransUnion customer experience.”
• TransUnion “cheated customers through the marketing and sale of its credit-related products.”

The lawsuit alleged that TransUnion violated the Consumer Financial Protection Act of 2010 by failing to implement requirements of the CFPB’s 2017 order and by engaging in deceptive acts and practices. The CFPB also alleged that TransUnion violated Regulation V, which implements the Fair Credit Reporting Act, and the Electronic Fund Transfer Act.

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.