The CFPB says TransUnion used deceptive digital marketing practices, called “dark models,” to trick consumers into paying for hard-to-cancel subscription services.
The federal Consumer Financial Protection Bureau has filed a lawsuit against TransUnion, saying the credit reporting agency uses “deceptive marketing practices” and “shady patterns” on its websites to trick people into s sign up for recurring subscription payments.
According to National Public Radio, the CFPB filed its lawsuit in federal court on Tuesday, accusing TransUnion, two of its subsidiaries and former executive John T. Danaher of violating provisions of a 2017 settlement regarding similar claims. .
“TransUnion is an out-of-control repeat offender who believes it is above trial,” CFPB Director Rohit Chopra said in a statement. “I’m concerned that TransUnion’s management is either unwilling or unable to operate its business legally.”
NPR notes that the 2017 settlement required TransUnion to pay $13.9 million in restitution to its victims, along with an additional $3 million in civil penalties.
TransUnion also agreed to reform its business practices, particularly the way it interacts with consumers.
In the legally binding settlement agreement, TransUnion said it would obtain informed consent for certain recurring payments and also make it easier for customers to cancel their subscriptions to the service.
Despite its pledge, the Consumer Financial Protection Bureau said TransUnion repeatedly violated the settlement’s provisions.
TransUnion, says the CFPB, misled many consumers into thinking they were already signed up for credit monitoring services. He also misrepresented how other companies would use TransUnion’s compiled creditor scores.
The lawsuit alleges that TransUnion used deceptive digital strategies, called “dark models,” to trick consumers into spending extra money.
TransUnion’s “dark models” allegedly included practices such as putting critical information in low-contrast fine print or including disclosures in images that take longer to load than the rest of a webpage.
However, Chicago-based TransUnion has since called the lawsuit “baseless.”
In a statement released to NPR and other media outlets, TransUnion said if the CFPB had any issues with its alleged business practices, it should have brought them to its attention instead of taking legal action years earlier. late.
“We have complied with our obligations and remain in compliance with the consent order today,” TransUnion said.
“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 former executive in complaint,” the statement read. .
However, consumer advocates applauded the CFPB’s decision to take legal action, saying credit reporting agencies like TransUnion have long made a profit through deceptive and exploitative marketing strategies.
“Federal regulators, state attorneys general, consumer rights advocates and private attorneys have been fighting a culture of impunity and arrogance at the hands of credit bureaus for decades,” said Chi Chi Wu, attorney for the National Consumer Law Center, to NPR. “Unfortunately, it is the American consumer who ultimately pays the price for the credit bureaus’ longstanding habit of flouting the law.
CFPB accuses TransUnion and senior executive John Danaher of breaching law enforcement order
Credit company TransUnion used deceptive marketing and ‘dark schemes’, lawsuit says
US consumer protection agency sues ex-executive TransUnion for misleading marketing