CFPB sues TransUnion for duping consumers with “dark patterns”

TransUnion allegedly violated 2017 consent order, implied proprietary scoring model VantageScore widely used by mortgage lenders

The Consumer Financial Protection Bureau (CFPB) on Tuesday sued TransUnion and subsidiaries, as well as a company executive, for allegedly duping consumers seeking a free credit report into signing up for costly credit monitoring — again.

In a lawsuit, the CFPB claims that TransUnion and subsidiary TransUnion Interactive, as well as John Danaher, executive vice president for the division until February 2022, misled consumers and flouted a 2017 consent order with the CFPB for the same practices “the day it went into effect.”

The CFPB alleged TransUnion automatically enrolled consumers into a monthly credit monitoring service, when consumers thought they were only requesting a free one-time credit report. The company tricked consumers into providing their payment information by making it seem as though consumers were providing identification information, the CFPB alleged.

The only sign that consumers were enrolling in a monthly subscription was in low-contrast fine print — rather than the required opt-in button — within an image that took much longer to load than the rest of the page, the CFPB claimed.

The CFPB also claims that Danaher, who oversaw the interactive division, created a plan to skirt implementation of the 2017 consent order. The agency claims that Danaher knew that using a required opt-in button would lead to fewer enrollments to its credit monitoring, and less revenue. Danaher rolled back changes the company made to its marketing, which led to “millions of enrollments” in violation of the 2017 agreement, the CFPB alleges.

TransUnion also allegedly violated the terms of the 2017 consent order — which required TransUnion to pay $17 million in restitution and civil penalties — by misrepresenting the prevalence of its credit scoring model, VantageScore 3.0.

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The CFPB in 2017 had ordered TransUnion to stop implying that the model was widely used. VantageScore’s model does not have widespread adoption among mortgage lenders, although it one model currently under review to be used for federally backed mortgages.

In one example, TransUnion advertised to consumers, “If your score is 580 or better, you can apply for a government-backed loan with the Federal Housing Administration.” In another example, TransUnion’s website offered a mortgage calculator, and if the consumer clicked on a link saying they were “not sure” of their credit score, they would be ushered into the credit monitoring enrollment process.

VantageScore did not return requests to comment.

In a call with reporters, CFPB Director Rohit Chopra said TransUnion used “dark patterns,” manipulative design features that can be harmful to users, to lure consumers into enrolling in credit monitoring.

“TransUnion’s conduct has made it crystal clear that the company is an out-of-control repeat offender that must be held accountable,” Chopra said. “Put simply, TransUnion’s leadership is either unwilling or incapable of operating its businesses lawfully.”

TransUnion, in a public response, said the claims were meritless and do not reflect the ir “consumer-first” approach.

The company also said it complied with the 2017 consent order. The credit score firm said the CFPB did not provide them with guidance on its plan to comply with the 2017 order, and claimed that the agency’s current leadership refused to meet with TransUnion.

“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,” TransUnion said. “The CFPB’s unrealistic and unworkable demands have left us with no alternative but to defend ourselves fully.”

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 court fees and a penalty for unjust enrichment. 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 year-over-year increase of 6.4%.

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

There could be more CFPB enforcement actions directed toward repeat offenders. Chopra said on a call with reporters that the CFPB will be dedicating more resources toward identifying repeat offenders, and will be closely collaborating with federal and state authorities.

When firms violate enforcement orders, Chopra said, the CFPB will scrutinize other business units under their control, to identify “the totality of their wrongdoing,” including actions that fall outside the bounds of any specific orders.

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