Transunion has repeatedly used fraudulent sales practices, the regulator said

The Consumer Financial Protection Bureau credit-reporting firm Transunion and a former senior executive – John Danahar, who heads the company’s consumer sales unit – have resorted to fraudulent tactics to lure customers into repeat subscription payments in 2017.

Bureau Director Rohit Chopra said, “Transunion is an out-of-control repeat offender who believes it is above the law.”

Following the 2017 order, Transunion used hard-to-spot fine print on its website and enrollment forms to entice customers for recurring charges for its products, the bureau said. For example, TransUnion runs ads on annualcreditreport.com – the official site where consumers can get one free credit report a year from the three major bureaus – which, when clicked, divert people to a sign-up form to review the credit given, according to the bureau.

Hundreds of people have complained that they tried to get their free annual report and instead enrolled in a paid monthly subscription, the bureau said in a lawsuit filed in federal court in Chicago on Tuesday, where transunion-based.

TransUnion said in a written statement that the Bureau’s claims against both it and Mr. Danahar “are unqualified and in no way reflect the consumer-first approach we take to conducting all our business.” Mr Danahar, who recently left Transunion, did not immediately respond to a request for comment from the Consumer Bureau.

Mr Chopra, who has repeatedly called for harsher punishments for companies that violate consumer protection laws, said the bureau had taken the rare step of personally charging a company official because Mr Danahar’s actions were “disgusting.”

Mr Danahar “knew that following the law would reduce corporate revenue” and “devised a plan to circumvent it and work around it,” Mr Chopra said.

The bureau is asking the court for an order from defendants seeking financial compensation for consumers, other fines and restraining the company from violating federal consumer protection laws.

TransUnion is one of the three major credit bureaus, including Equifax and Experian. They make most of their money by selling credit reports to merchants and lenders, but they also sell credit monitoring products directly to customers. On its website, Transunion advertises that it has “200 million files on almost every credit-active consumer profile in the United States.”

In 2017, TransUnion paid consumers about $ 14 million and a $ 3 million citizen fines for claims that lured consumers into recurring payments and made false statements about credit scores sold to customers. Without acknowledging any past wrongdoing, TransUnion has agreed to a five-year superior review by the Bureau to ensure its compliance with federal consumer law.

The Consumer Bureau said in its latest lawsuit that it has repeatedly told Transunion that the company violated the 2017 order, starting in 2019 and continuing until 2021. But the company has not changed its behavior, Mr Chopra told a news conference.

“The leadership of the transunion is either reluctant or unable to conduct its business legally,” said Mr Chopra.

The bureau alleges that Mr. Danahar, who for many years led the company’s consumer sales subsidiary Transunion Interactive, took several steps to cancel the order. This includes closing the rollout of a positive “opt-in” checkbox for the purpose of stopping unintentional subscription listing.

“I did not decide to lightly accuse the person, but based on the evidence uncovered in the investigation, I believe it was appropriate,” Mr Chopra said. He added that if the Bureau’s investigation finds other evidence of wrongdoing by senior leaders, the Bureau will personally correct its allegations to bring charges against them as well.

TransUnion said in a statement that it had tried to comply with the terms of the agreement but had met with silence when asked for guidance from the bureau.

“During the months of transunion, despite the best efforts to resolve this issue, the current leadership of the CFPB has refused to meet with us,” the company said. It added that the bureau’s “unrealistic and invalid claims have no choice but to fully defend us.”

Mr Chopra, who worked on creating consumer bureaus in 2010 and 2011 and rejoined the company as director last year, is known as an aggressive regulator and has openly expressed his frustration with some companies for repeatedly breaking the law. He wants regulators to go beyond fines and impose fines – such as license revocations or increase caps – that really hurt, he said.

“In order to change the behavior of companies, we must deal with forced violators and companies must understand that it is cheaper, and for their bottom line, it is better to obey the law than to break it,” Mr Chopra said in a speech last month.

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