The regulator says TransUnion has repeatedly used deceptive selling practices

The Consumer Financial Protection Bureau is suing credit reporting company TransUnion and its former CEO — John Danaher, who led 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 a repeat offender that is out of control and you think is above the law,” said Rohit Chopra, director of the office.

After the 2017 order, TransUnion used hard-to-identify fine print on its website and registration forms to lure customers into recurring fees for its products, the bureau said. For example, TransUnion ran ads on Annualcreditreport.com — the official website where consumers can get one free credit report per year from each of the three major offices — which, when clicked, turned people into a registration form to monitor paid credit, according to the bureau.

Hundreds of people complained that they tried to get a free annual report and ended up signing up for a paid monthly subscription, the office 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 allegations against it and Mr. Danaher are “unfounded and in no way reflective of our consumer first approach to managing all of our businesses.”

Danaher, who for many years headed TransUnion Interactive, the company’s consumer sales subsidiary, moved into an “advisory role” last April in preparation for his planned retirement in February, the company said in a regulatory report filed last year.

Mr Danaher’s attorneys, Jeff Knox and Brooke Cochinella of Simpson Thacher & Bartlett, said in a written statement: “These allegations are unfounded, and this lawsuit demonstrates that the CFPB focuses more on relevant political headlines than 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 charging a company official personally because Mr Danaher’s actions were “outrageous”.

Mr. Danaher said he “knew that following the law would reduce the company’s revenue” and “made a plan to avoid it and work to resolve it,” Mr. Chopra said.

The office is asking the court for consumer financial compensation from the accused, another fine and an order to prevent 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 they also sell credit monitoring products directly to consumers. TransUnion declares on its website that it has “200 million files identifying nearly every active consumer credit in the United States.”

In a 2017 case, TransUnion paid nearly $14 million to consumers and $3 million in civil fines to resolve claims that lured consumers into recurring payments and made false statements about the credit scores it sold to consumers. Without acknowledging any previous wrongdoing, TransUnion has also agreed to five years of heightened monitoring by the bureau to confirm its compliance with federal consumer laws.

In the latest lawsuit, the Consumer Bureau said it told TransUnion several times, beginning in 2019 and continuing through 2021, that the company had violated the 2017 order. But Mr. Chopra said at a news conference that the company had not changed its behavior.

“The TransUnion leadership is either unwilling or unable to operate its business legally,” Mr. Chopra said.

In its complaint, the office said Mr. Danaher had taken a number of steps to get around the matter. This included stopping a confirmed ‘Activate’ checkbox intended to stop unintended registration of subscriptions.

“I do not take the decision to indict individuals lightly, but based on the evidence revealed in the investigation, I believe it was appropriate,” Mr. Chopra said. He added that if the bureau’s investigation uncovers further evidence of wrongdoing by senior leaders, the bureau will amend its complaint to bring personal charges against them as well.

TransUnion said in its prepared statement that it tried to abide by the terms of the agreement but was met with silence when it sought guidance from the office.

“Despite months of good-faith efforts by TransUnion to resolve this matter, the current leadership of the CFPB declined to meet with us,” the company said. She added that the office’s “unrealistic and impractical demands left us with no alternative but to fully defend ourselves.”

TransUnion revealed in a regulatory filing in February that it had been in discussions with the Consumer Bureau about its compliance with the 2017 consent order, and expected the agency would sue if the company did not settle the case. TransUnion set aside $27 million and said it expected a “reasonable possibility” of more expenses.

Mr. Chopra, who worked on the Consumer Bureau in 2010 and 2011 and returned to the agency last year as its director, is known as a strict regulator and has spoken publicly about his frustration with some companies breaking the law time and time again. He said he wanted regulators to bypass the fines and impose penalties – such as revoking the license or capping growth – and that was really painful.

“We must aggressively engage with repeat lawbreakers to change company behavior and ensure that companies realize that it is cheaper, and better for their bottom line, to comply with the law than to break it,” Mr. Chopra said in a speech last month.

Ed Mills, a political analyst at Raymond James Financial Services, said the lawsuit was a warning to the financial sector — and a reflection of the agency’s meekness during the Trump administration.

“It’s like the title of a bad movie: ‘The CFPB is back — and this time, it’s a character,’” Mr. Mills said. “Chopra was very clear in that speech that he didn’t think paying fines or entering into consent decisions changed behaviour. One of the only ways he would change his behavior would be to pursue individuals for personal responsibility.”

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