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CFPB says TransUnion "incapable of operating its businesses lawfully"

CFPB says TransUnion "incapable of operating its businesses lawfully"

The Consumer Financial Protection Bureau has branded TransUnion as an "out-of-control repeat offender that believes it is above the law", after the credit reporting agency violated an order to stop from engaging in deceptive marketing practices.

The 2017 law enforcement order against subsidiary unit TransUnion Interactive regarded the use of an array of 'dark patterns' to trick people into recurring payments and to make it difficult to cancel them.

Dark patterns are 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.

In this instance TransUnion asked consumers to provide credit card information as part of an identity verification process. TransUnion then integrated "deceptive buttons" into the online interface that gave the impression that the consumer could also access a free credit score in addition to viewing their free credit report. In reality, clicking this button signed consumers up for recurring monthly charges using the credit card information they had provided.

As part of the settlement, TransUnion agreed to pay $13.9 million in restitution to victims and $3 million in civil penalties.

The CFPB says that depite it binding 2017 ruling, the firm continued to employ deceitful digital dark patterns to profit from customers.

CFPB Director Rohit Chopra, says: “I am concerned that TransUnion’s leadership is either unwilling or incapable of operating its businesses lawfully.”

In its lawsuit aginst the firm, the federal agency alleges that recently departed TransUnion executive John Danaher determined that using an affirmative selection checkbox, required by the order to limit unintended subscription enrollments, would result in a drop in revenues for the firm's Credit Monitoring service. Danaher instructed TransUnion Interactive to cease using the checkbox, which led to millions of enrollments.

According to filings with the Securities and Exchange Commission, since 2016, Danaher received over $10 million from the sale of TransUnion stock shares that were acquired by him as part of his compensation package.

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.

TransUnion has hit back against the allegations, stating: "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.

"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.

"The CFPB’s unrealistic and unworkable demands have left us with no alternative but to defend ourselves fully."

Comments: (1)

A Finextra member
A Finextra member 16 April, 2022, 18:33Be the first to give this comment the thumbs up 0 likes

Ouch! Transunion competitors will be using these  CFPB comments aganist them in their marketing camaigns.