The Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) have taken disciplinary action against a rental screening subsidiary of TransUnion for violations of the Fair Credit Reporting Act. TransUnion failed to take steps to ensure the rental background checks that landlords use to decide who gets housing were accurate. The company also withheld, from renters, the names of third parties that were providing the inaccurate information.
The CFPB and FTC requested a federal court to order TransUnion to pay $15m million for its lawbreaking behaviour. In addition, it must make significant improvements to how it reports evictions.
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$8m penalty for lying to consumers
Separately, the CFPB is ordering TransUnion to pay $8m for lying to consumers. This relates to the timely placing or removing security freezes and locks on credit reports of thousands of consumers. The company told consumers the requests were completed. In reality, the requests were dumped into its yearslong backlog.
TransUnion also failed to keep active-duty members of the military from pre-screened solicitation lists. This is a simple step which protects servicemembers from identity theft. In 2018, Congress enacted legislation to require TransUnion and other credit reporting conglomerates to offer free security freezes to the public, as well as the enhanced protections for active-duty members of the military. The Fair Credit Reporting Act also requires that companies respond timely to consumer requests to place or remove security freezes. This is a tool which, along with credit locks, helps prevent potential identity theft by blocking many third parties from accessing consumers’ credit reports.
“Americans across the country were put at risk of wrongful housing denials because TransUnion failed to follow the law,” said CFPB Director Rohit Chopra. “We are ordering TransUnion to cease its yearslong illegal activity, clean up its broken business practices, redress its victims, and pay penalties.”
Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, added: “Consumers struggling to find housing shouldn’t be shut out by tenant screening reports that are ridden with errors and based on data from secret sources. Protecting consumers looking for housing is critical to a fair economy. We are proud to partner with the CFPB in obtaining this record-breaking order.”
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By GlobalDataTransUnion’s Pattern of Misconduct
In the last seven years, the TransUnion conglomerate has been subject to four CFPB law enforcement actions across various products. In addition to the two actions for rental background check and security freezes failures, the CFPB has taken repeated actions against TransUnion for its subscription plans.
In 2017, the CFPB issued an order against TransUnion for luring consumers into costly subscription plans. TransUnion had deceptively misstated the cost and usefulness of its credit scores and credit-related products. These actions lured in consumers and trapped them in costly recurring payment plans.
In a lawsuit filed in April 2022, the CFPB alleges that, instead of following the order, TransUnion continued to dupe Americans into its costly subscription plans. In that action, the CFPB alleges the company, along with a longtime former executive, violated the order and other federal consumer financial laws by tricking consumers into signing up for subscription products with costly recurring payments.
If entered by the court, the agencies’ proposed order on rental background checks would require the company to pay $11m to consumers. It must also stop illegal tenant screening practices. In addition, it should pay a $4m penalty to be deposited into the CFPB’s victims relief fund.
