CFPB sues TransUnion for misleading consumers with ‘dark patterns’

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the Consumer Financial Protection Bureau (CFPB) tuesday continued Trans Union and affiliates, as well as a company executive, for allegedly deceiving consumers seeking a free credit report into signing up for expensive credit monitoring – again.

In a lawsuit, the CFPB alleges that TransUnion and its subsidiary TransUnion Interactive, along with John Danaher, the division’s executive vice president until February 2022, misled consumers and flouted a 2017 consent order with the CFPB for the same practices “the day it happened in effect.”

The CFPB alleged that TransUnion automatically signed up consumers for a monthly credit monitoring service, when consumers believed they were only requesting a free, one-time credit report. The company tricked consumers into providing their payment information by making it look like consumers were providing identifying information, the CFPB alleged.

The only sign that consumers were signing up for a monthly subscription was in small, low-contrast type — rather than the required activation button — in an image that took significantly longer to load than the rest of the page, claimed the CFPB.

The CFPB also claims that Danaher, who oversaw the interactive division, created a plan to circumvent the implementation of the 2017 consent order. The agency claims that Danaher knew that using a button of Mandatory registration would result in fewer credit monitoring registrations and less revenue. Danaher reversed changes the company made to its marketing, which led to “millions of sign-ups” in violation of the 2017 agreement, according to the CFPB.

TransUnion also allegedly violated the terms of the 2017 Consent Order – which required TransUnion to pay $17 million in damages and civil penalties – by misrepresenting the prevalence of its credit scoring model, VantageScore 3.0.

The CFPB in 2017 had ordered TransUnion to stop implying that the model was widely used. VantageScore’s model is not widely adopted by mortgage lenders, although it is a model currently under review for use for federally backed mortgages.

In one example, TransUnion announced to consumers: “If your score is 580 or higher, you can apply for a government-backed loan from the Federal Housing Administration.” In another example, TransUnion’s website offered a mortgage calculator, and if the consumer clicked on a link that said they were “not sure” about their credit score, they would be taken through the sign-up process at credit monitoring.

VantageScore did not return requests for comment.

In a call with reporters, CFPB director Rohit Chopra said TransUnion uses “dark patterns,” manipulative design features that can be harmful to users, to trick consumers into signing up for credit monitoring.

“TransUnion’s conduct has made it clear that the company is an out-of-control repeat offender who must be held accountable,” Chopra said. “Put simply, TransUnion’s management is either unwilling or unable to operate its business legally.”

TransUnion, in a public response, said the allegations were baseless and did not reflect its “consumer-first” approach.

The company also said it had complied with the 2017 consent order. The rating company said the CFPB had not provided them with advice on its plan to comply with the 2017 order and claimed that the agency’s current leadership had refused to meet with TransUnion.

“Rather than provide supervisory advice on this matter and advise TransUnion of its concerns – as a responsible regulator would – the CFPB has remained silent and registered its requests for inclusion in a lawsuit, including the naming of a former executive in the complaint,” TransUnion said. “The CFPB’s unrealistic and unworkable demands have left us with no alternative but to fully defend ourselves.”

The lawsuit seeks damages, monetary relief, refunds for customers and restitution for consumers harmed by their conduct. The CFPB also wants TransUnion to pay its legal costs and an unjust enrichment penalty. According to TransUnion’s latest annual filing with the Securities and Exchanges Commission, its credit monitoring division brought in $546 million in gross revenue in 2021, a 6.4% year-over-year increase.

TransUnion has already spent $26.5 million resolving claims since the 2017 consent order, it said in its annual financial report.

There could be more CFPB enforcement actions directed at repeat offenders. Chopra said on a call with reporters that the CFPB will devote more resources to identifying repeat offenders and will work closely with federal and state authorities.

When companies violate enforcement orders, Chopra said, the CFPB will review other business units under their control, to identify “all of their wrongdoings,” including actions that fall outside the limits of any specific order. .

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