The Consumer Financial Protection Bureau sued credit reporting firm TransUnion and a former senior executive — John Danaher, who ran the company’s consumer sales unit — for violating a 2017 order to stop using deceptive tactics to lure customers into recurring subscription payments.
“TransUnion is an out-of-control repeat offender who believes it is above the law,” said Rohit Chopra, office manager.
After the 2017 order, TransUnion used hard-to-spot fine print on its website and registration forms to lure customers into recurring charges for its products, the bureau said. For example, TransUnion ran ads on annualcreditreport.com – the official site where consumers can get one free credit report per year from each of the three major bureaus – which, when clicked, redirected people to a credit report form. sign up for paid credit monitoring, according to the bureau.
Hundreds of people have complained that they tried to get their free annual report and ended up signing up for a paid monthly subscription, the bureau said in a lawsuit filed Tuesday in federal court in Chicago, where TransUnion is based.
TransUnion said in a written statement that the bureau’s claims against it and Mr. Danaher “are without merit and in no way reflect the consumer-focused approach we take to running all of our businesses.”
Danaher, who for many years ran TransUnion Interactive, the company’s consumer sales subsidiary, moved into an “advisory role” last April in preparation for his scheduled retirement in February, the company said. in a regulatory report filed last year.
Mr Danaher’s lawyers, Jeff Knox and Brooke Cucinella of Simpson Thacher & Bartlett, said in a written statement: “These allegations are without merit, and this lawsuit demonstrates that the CFPB is more focused on politically expedient headlines than the facts or the law. Mr. Danaher looks forward to his day in court.
Mr Chopra, who has called for tougher penalties for companies that have repeatedly violated consumer protection laws, said the bureau took the rare step of personally charging a company official because that Mr. Danaher’s actions were “egregious”.
Mr. Danaher “knew that following the law would reduce business revenue” and “concocted a plan to dodge and circumvent it,” Mr. Chopra said.
The bureau is asking the court for financial restitution for the defendants’ consumers, other penalty payments and an order restraining 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 records profiling nearly every active credit consumer in the United States.”
In the 2017 case, TransUnion paid nearly $14 million to consumers and a $3 million civil penalty to resolve allegations that it lured consumers into recurring payments and misrepresented ratings. of credit that it sold to consumers. Without admitting to past wrongdoing, TransUnion also agreed to five years of increased scrutiny by the bureau to confirm its compliance with federal consumer laws.
The Consumer Affairs Office said in its latest complaint that it repeatedly told TransUnion, beginning in 2019 and continuing through 2021, that the company violated the 2017 order. But the company has not changed his behavior, Mr. Chopra said at a press conference.
“TransUnion’s management is either unwilling or unable to operate its business legally,” Chopra said.
The bureau said in its complaint that Mr. Danaher took a number of steps to circumvent the order. This included stopping the rollout of an affirmative “opt-in” checkbox intended to stop unintended subscription sign-ups.
“I don’t take the decision to charge individuals lightly, but based on the evidence uncovered in the investigation, I believe it was appropriate,” Chopra said. He added that if the bureau’s investigation uncovers further evidence of wrongdoing by senior leaders, the bureau would amend its complaint to charge them personally as well.
TransUnion said in its prepared statement that it attempted to meet the terms of the agreement, but was met with silence when seeking advice from the bureau.
“Despite months of good faith efforts by TransUnion to resolve this matter, current CFPB management has refused to meet with us,” the company said. He added that the “unrealistic and unachievable demands of the office have left us with no alternative but to fully defend ourselves.”
TransUnion revealed in a regulatory filing in February that it was in talks with the Consumer Affairs Office about its compliance with the 2017 consent order and expected the agency to sue if the company did not. didn’t settle the matter. TransUnion set aside $27 million and said it anticipated a “reasonable possibility” of additional spending.
Mr Chopra, who worked to establish the consumer desk in 2010 and 2011 and joined the agency last year as director, is known as an aggressive regulator and has openly expressed frustration with the way of which some companies break the law again and again. He wants regulators to go beyond fines and impose penalties — like license revocations or growth caps — that really hurt, he said.
“We need to get tough on repeat offenders to change corporate behavior and make companies realize that it’s cheaper, and better for their bottom line, to follow the law than to break it,” he said. Mr. Chopra said in a speech last month.
Ed Mills, a policy analyst at Raymond James, a financial services firm, said the lawsuit was a wake-up call for the financial industry – and a reversal of the agency’s softness under the Trump administration.
“It’s almost like a bad movie title: ‘The CFPB is Back’ – and this time it’s personal,'” Mr Mills said. “Chopra was very clear in that speech that he didn’t believe paying fines or entering consent decrees changed behavior. One of the only ways he was going to change his behavior was to sue individuals for personal liability.