Last week CFPB Director Chopra accused the credit bureaus of being a cartel. This week, the CFPB is singling out TransUnion.
Earlier today the Consumer Financial Protection Bureau (CFPB) issued a press release accusing TransUnion of duping consumers through its product offerings. Although TransUnion has data for over 200 million consumers, the CFPB claims that complaints from 'nearly 150 thousand' consumers establish that TransUnion and its longtime executive John Danaher have engaged in a pattern and practice of using tricks to get consumers to sign up for recurring charges.
The crux of the CFPB's complaint is that TransUnion violated a 2017 consent order which required TransUnion to provide consumers warnings regarding subscription services, obtain informed consent from consumers before charging them recurring payments, and provide an easy way for consumers to cancel subscriptions. In today's announcement, the CFPB alleges that despite repeated warnings, TransUnion continued to violate the consent order.
Specifically, the CFPB alleges that TransUnion violated the 2017 consent order by giving consumers the impression that they could obtain a free credit score along with a free credit report while simultaneously asking consumers for credit card information which appeared to be part of an identity verification process. However, instead of the credit score being free, consumers were signed up for recurring monthly charges using the credit card info they had provided. The CFPB further alleges the disclosures for the recurring charges were insufficient because they took "up to 30 seconds longer" to load than the rest of the page and were difficult to see and read. Per the CFPB, TransUnion did not provide consumers with an easy way to stop these monthly charges. The lawsuit alleges Danaher delayed implementing the 2017 consent order and instructed TransUnion to cease using a checkbox that would have made it easier for consumers to see they were signing up for a subscription service.
The full complaint filed by the CFPB can be found here.
The allegations against TransUnion are serious and scathing. One might point out that there are issues with the data (for example, 150,000 is about one-tenth of one percent of 200 million) and a thorough reading of the complaint raises additional questions. That said, there are a couple of key takeaways for everyone in the ARM industry:
- The CFPB chose to go after an individual in this case. While this has happened before, seeing this move take place against an executive from a company as large as TransUnion should be seen as the CFPB sending a statement to all executives at entities it oversees.
- The CFPB is continuing to craft its narrative using inflammatory language. What was once a civil discourse is continually being reduced to playground name-calling. This certainly sets the tone of how the CFPB views those entities it is tasked with overseeing.