The Consumer Financial Protection Bureau has sued credit reporting agency TransUnion and a former senior executive — John Danaher, who headed the company’s consumer sales division — for violating a 2017 order to stop using deceptive tactics to target customers. entice recurring subscription payments.
“TransUnion is an out-of-control repeat offender who believes he is above the law,” said Rohit Chopra, the agency’s director.
After the 2017 order, TransUnion used hard-to-recognize fine print on its website and registration forms to entice customers into recurring charges for its products, the agency said. For example, TransUnion ran ads on yearcreditreport.com — the official site where consumers can get one free credit report per year from each of the three major agencies — which, when clicked, redirected people to a paid credit monitoring signup form, according to the agency.
Hundreds of people complained that they had tried to get their free annual report and were instead subscribed to a paid monthly subscription, the agency said in a lawsuit filed Tuesday in federal court in Chicago, where TransUnion is headquartered.
TransUnion said in a written statement that the agency’s claims against both the agency and Mr. Danaher “are without merit and in no way reflect the consumer-first approach we take in managing all of our businesses.” Mr Danaher, who recently left TransUnion, did not immediately respond to questions about the consumer agency’s allegations.
Mr Chopra, who has called for tougher penalties for companies that have repeatedly violated consumer protection laws, said the agency had taken the rare step to personally indict a company official because Mr Danaher’s actions were “outrageous” .
Mr. Danaher “knew that following the law would reduce company revenues” and “made up a plan to dodge it and work around it,” said Mr. Chopra.
The agency is asking the court for consumer financial refunds from the defendants, other penalties and an injunction prohibiting the company from violating federal consumer protection laws.
TransUnion is one of the three major credit bureaus, along with Equifax and Experian. They make most of their money selling credit reports to merchants and lenders, but also sell credit monitoring products directly to consumers. On its website, TransUnion advertises that it has “200 million files profiling nearly every credit active consumer in the United States.”
In the 2017 case, TransUnion paid nearly $14 million to consumers and a $3 million civil fine to resolve claims that it lured consumers into recurring payments and made false statements about the credit scores it sold to consumers. Without admitting anything was wrong in the past, TransUnion also agreed to five years of enhanced surveillance by the agency to confirm compliance with federal consumer laws.
The consumer agency said in its latest lawsuit it had told TransUnion multiple times, starting in 2019 and continuing through 2021, that the company had violated its 2017 injunction. But the company did not change its behavior, Mr Chopra said at a news conference.
“TransUnion’s leadership is unwilling or unable to legally operate its business,” said Mr. Chopra.
The agency said in its complaint that Mr. Danaher, who headed TransUnion Interactive, the consumer sales company’s subsidiary for many years, took a number of steps to circumvent the order. That included stopping the rollout of an affirmative “opt-in” checkbox intended to stop accidental subscription subscriptions.
“I am not making the decision to charge individuals lightly, but based on the evidence that has emerged in the investigation, I think it was appropriate,” said Mr Chopra. He added that if the agency’s investigation revealed other evidence of misconduct by senior leaders, the agency would amend its complaint to indict them personally as well.
TransUnion said in its prepared statement that it had tried to abide by the terms of the agreement, but was met with silence when the agency sought advice.
“Despite TransUnion’s months of efforts to resolve this issue, the current CFPB leadership declined to meet with us,” the company said. It added that the agency’s “unrealistic and unworkable demands have left us no choice but to fully defend ourselves”.
Mr Chopra, who helped found the consumer agency in 2010 and 2011 and rejoined the agency last year as director, is known as an aggressive regulator and has spoken openly about his frustration at how some companies break the law time and again. . He wants regulators to go beyond fines and impose fines — such as license revocations or growth limits — that really hurt, he has said.
“We need to take strong action against repeat offenders to change business behavior and make sure companies realize that it is cheaper and better for their bottom line to obey the law than break it,” said Mr Chopra in a speech last month.
