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Consumer Financial Protection Bureau Sues TransUnion for Deceptive Marketing


— April 12, 2022

The C.F.P.B. claims that TransUnion used deceptive digital marketing practices, called “dark patterns,” to trick consumers into paying for hard-to-cancel subscription services.


The federal Consumer Financial Protection Bureau has filed a lawsuit against TransUnion, claiming the credit reporting agency uses “deceptive marketing practices” and “dark patterns” on its websites to trick people into signing up for recurring subscription payments.

According to National Public Radio, the C.F.P.B. filed its lawsuit in federal court on Tuesday, accusing TransUnion, two of its subsidiaries, and former executive John T. Danaher of violating the provisions of a 2017 settlement over similar claims.

“TransUnion is an out-of-control repeat offender that believes it is above the lawsuit,” C.F.P.B. Director Rohit Chopra said in a statement. “I am concerned that TransUnion’s leadership is either unwilling or incapable of operating its businesses lawfully.”

N.P.R. notes that the 2017 settlement obliged TransUnion to pay $13.9 million in restitution to its victims, along with another $3 million in civil penalties.

TransUnion also agreed to reform its business practices, specifically the ways in which it interacts with consumers.

In the legally binding settlement agreement, TransUnion said that it would obtain informed consent for certain recurring payments and would also make it easier for customers to cancel their service subscriptions.

Despite its pledge, the Consumer Financial Protection Bureau said that TransUnion has repeatedly violated the settlement’s provisions.

Customer presenting credit card; image courtesy of Pxhere.com, CC0.
Customer presenting credit card; image courtesy of Pxhere.com, CC0.

TransUnion, says the C.F.P.B., misled many consumers into believing they were already enrolled in credit-monitoring services. It also misrepresented how other companies would use TransUnion’s compiled creditor scores.

The lawsuit alleges that TransUnion used deceptive digital strategies, called “dark patterns,” to trick consumers into spending extra money.

TransUnion’s “dark patterns” purportedly included practices such as putting critical information in low-contrast fine print, or including disclosures inside images that take longer to load than the rest of a webpage.

However, Chicago-based TransUnion has since called the lawsuit “meritless.”

In a statement issued to N.P.R. and other media outlets, TransUnion said that, if the C.F.P.B. had problems with its alleged business practices, it should have brought them to its attention instead of filing a lawsuit years later.

“We have been in compliance with our obligations and we remain in compliance with the consent order today,” TransUnion said.

“Rather than providing any supervisory guidance on this matter and advising TransUnion of its concerns—like a responsible regulator would—the CFPB stayed silent and saved their claims for inclusion in a lawsuit, including naming a former executive in the complaint,” the statement said.

However, consumer advocates have applauded the C.F.P.B.’s decision to sue, saying credit reporting agencies like TransUnion have long turned a profit off deceptive and exploitative marketing strategies.

“Federal regulators, state attorneys general, consumer advocates, and private attorneys have been battling a culture of impunity and arrogance by the credit bureaus for decades,” National Consumer Law Center staff attorney Chi Chi Wu told N.P.R. “Unfortunately, it’s the American consumer who ultimately pays the price for the credit bureaus’ longstanding habit of flouting the law.”

Sources

CFPB Charges TransUnion and Senior Executive John Danaher with Violating Law Enforcement Order

Credit firm TransUnion used deceptive marketing and ‘dark patterns,’ lawsuit alleges

U.S. consumer agency sues TransUnion, ex-executive for deceptive marketing

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