The Consumer Financial Protection Bureau (CFPB) sued TransUnion, one of the country’s largest credit reporting agencies. The CFPB alleged the company of deceptive marketing practices.
It also charged the company for using “dark patterns” on its website that deceive consumers into signing up for recurring charges.
CFPB Sues TransUnion for Deceptive Marketing Practices
Last Tuesday, the CFPB filed a complaint against the credit score firm in federal court. The agency accused the credit score company and two subsidiaries of violating a 2017 settlement agreement.
The complaint also includes former executive John T. Danaher as a respondent in its lawsuit.
CFPB Director Rohit Chopra condemned the company for repeatedly violating the law. “TransUnion is an out-of-control repeat offender that believes it is above the law.
I am concerned that TransUnion’s leadership is either unwilling or incapable of operating its businesses lawfully,” he remarked.
TransUnion Violated Terms of 2017 Settlement
The 2017 settlement stemmed from TransUnion’s deceptive marketing practices. As a result, the credit score company agreed to pay $13.9 million in restitution to the victims.
It also paid another $3 million in civil penalties, the CFPB said. In addition, the company agreed to take other action regarding its interactions with customers.
As part of a binding law enforcement order, the company will need informed consent before charging recurring fees to customers. The order also requires the company to give customers an easy way to cancel their subscription.
However, the CFPB charged TransUnion for violating the terms of the 2017 agreement. The agency accused the company of making customers believe that they already are enrolled in its credit monitoring service.
It also misrepresented how other companies used the credit scores compiled by the credit score firm.
TransUnion Used Dark Patterns to Deceive Customers
To trick customers into spending extra money on their services, TransUnion also used sneaky digital tricks called dark patterns.
The company notoriously puts important information on its website in the low-contrast fine print. It also displays its disclosure embedded in an image that took a long time to load on its webpage.
In addition, the CFPB alleged that Danaher, a top subsidiary executive, personally failed to comply with the 2017 order.
However, TransUnion denied the charges. It called the CFPB’s lawsuit “meritless,” as the claims don’t reflect its consumer-first approach.
The company claimed that it submitted a plan to the CFPB outlining its compliance with the 2017 settlement. However, the firm said that the CFPB never got back to discuss their proposal.
“We have been in compliance with our obligations and we remain in compliance with the consent order today,” it said. Instead of providing regulatory guidance as it should, the CFPB instead saved its claims for a lawsuit.
Consumer Advocates Applaud Move
However, consumer advocates have applauded the CFPB for filing the lawsuit. Advocates say that the credit score company’s behavior is typical of credit-reporting agencies.
Chi Chi Wu, staff attorney for the National Consumer Law Center reacted to the lawsuit. Federal regulators and other government officials continue to battle the credit bureaus’ “culture of impunity”.
Wu added that ultimately, this battle leads to the American consumer being the one paying the price.
Watch The Credit Repair Shop video reporting that the CFPB charges TransUnion with violating law enforcement order:
What do you think of credit bureaus in general? Also, do you use credit score agencies to measure your creditworthiness? Finally, do you support the CFPB’s lawsuit?
Tell us what you think. Share your thoughts in the comment section below.