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/ Newsroom


CFPB CHARGES TRANSUNION AND SENIOR EXECUTIVE JOHN DANAHER WITH VIOLATING LAW
ENFORCEMENT ORDER

TransUnion deployed digital dark patterns to dupe Americans into subscription
plans

APR 12, 2022
Share & print
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Today, the Consumer Financial Protection Bureau (CFPB) is filing a lawsuit
against TransUnion, two of its subsidiaries, and longtime executive John Danaher
for violating a 2017 law enforcement order. The order was issued to stop the
company from engaging in deceptive marketing, regarding its credit scores and
other credit-related products. After the order went into effect, TransUnion
continued its unlawful behavior, disregarded the order’s requirements, and
continued employing deceitful digital dark patterns to profit from customers.
The Bureau’s complaint also alleges that TransUnion violated additional consumer
financial protection laws.

“TransUnion is an out-of-control repeat offender that believes it is above the
law,” said CFPB Director Rohit Chopra. “I am concerned that TransUnion’s
leadership is either unwilling or incapable of operating its businesses
lawfully.”

Chicago-based TransUnion (NYSE: TRU) is the parent company of one of the
nation’s three largest credit reporting agencies. It is led by President and CEO
Christopher A. Cartwright. TransUnion collects consumer credit information,
including borrowers’ payment histories, debt loads, maximum credit limits, names
and addresses of current creditors, and other elements of their credit
relationships.

TransUnion collects information on 200 million individuals, and the company
claims to profile “nearly every credit-active consumer in the United States .”
TransUnion reported $3 billion in revenue for 2021.

Through its subsidiary, TransUnion Interactive, the company also markets, sells,
and provides credit-related products directly to the public, such as credit
scores, credit reports, and credit monitoring.

Credit reporting agencies are entrusted with generating accurate credit reports
to help banks and other lenders determine an applicant’s creditworthiness.
However, based on the nearly 150,000 consumer complaints about TransUnion that
the Bureau received in 2021 alone, TransUnion has struggled to maintain that
trust.


2017 LAW ENFORCEMENT ORDER

On January 3, 2017, the CFPB settled charges with TransUnion and its
subsidiaries for deceptively marketing credit scores and credit-related
products, including credit monitoring services. As part of the settlement,
TransUnion agreed to pay $13.9 million in restitution to victims and $3 million
in civil penalties. TransUnion and its subsidiaries also agreed to a formal law
enforcement order that, among other things, required the credit reporting giant
to warn consumers that lenders are not likely to use the scores they are
supplying, obtain the express informed consent of customers for recurring
payments for subscription products or services, and provide an easy way for
people to cancel subscriptions. The order was binding on the company, its board
of directors, and its executive officers.

In October 2018, the CFPB commenced an examination of TransUnion. In May 2019,
CFPB examiners informed TransUnion that it was violating multiple requirements
of the order. In these instances, companies typically work constructively with
the CFPB to make quick fixes and come into compliance. However, in June 2020,
CFPB informed TransUnion that it was still violating the order and engaged in
additional violations of law.


DIGITAL DARK PATTERNS

Dark patterns are hidden tricks or trapdoors companies build into their websites
to get consumers to inadvertently click links, sign up for subscriptions, or
purchase products or services. Dark patterns can complicate or hide information,
such as making it difficult for consumers to cancel a subscription service.

As alleged in the complaint, TransUnion used an array of dark patterns to trick
people into recurring payments and to make it difficult to cancel them. For
example, under federal law, Americans are entitled to a free credit report from
TransUnion through annualcreditreport.com. TransUnion asked consumers to provide
credit card information that appeared to be part of an identity verification
process. TransUnion then integrated deceptive buttons into the online interface
that gave the impression that the consumer could also access a free credit score
in addition to viewing their free credit report. In reality, clicking this
button signed consumers up for recurring monthly charges using the credit card
information they had provided.

The only indication in the enrollment process that consumers were making some
sort of purchase was through a fine print, low contrast disclosure, located off
to the side of the enrollment form. The disclosure is inside an image that can
take up to 30 seconds longer to load than the rest of the material in the form.
This dark pattern triggered thousands of complaints.

For consumers looking for a way out of their subscriptions, TransUnion not only
failed to offer a simple mechanism for cancellation, it actively made it arduous
for consumers to cancel through clever uses of font and color on its website.


JOHN DANAHER

Since 2004, John T. Danaher served as a top executive of TransUnion Interactive,
TransUnion’s unit that sold products and services directly to consumers and
contributes roughly 18% of TransUnion’s overall revenue. According to filings
with the Securities and Exchange Commission, since 2016, Danaher received over
$10 million from the sale of TransUnion stock shares that were acquired by him
as part of his compensation package.

Danaher was bound by the 2017 order, but he repeatedly failed to ensure that
TransUnion took certain required steps and refrained from prohibited conduct. In
fact, Danaher determined that complying with the order would reduce the
company’s revenue, so he created a plan to delay or avoid having to implement
the order.

Among other things, Danaher determined that using an affirmative selection
checkbox, required by the order to limit unintended subscription enrollments,
would result in fewer enrollments into TransUnion’s Credit Monitoring service.
Danaher instructed TransUnion Interactive to cease using the checkbox, which led
to millions of enrollments.

Danaher recently separated from TransUnion.


TODAY’S ENFORCEMENT ACTION

Repeat offender law enforcement is a top priority for the CFPB. The CFPB is
filing a lawsuit in federal court charging TransUnion and John Danaher with
multiple violations of law. Specifically, the Bureau’s lawsuit alleges that:

 * TransUnion and John Danaher flouted a formal law enforcement order:
   TransUnion and Danaher flouted the terms of the CFPB’s 2017 order. Rather
   than comply with the terms, the company continued to engage in deceptive
   conduct in its marketing and sale of credit-related products, it failed to
   provide required disclosures to make its marketing not misleading, and it
   failed to assemble and review consumer information and implement appropriate
   improvements to advertisements. Danaher’s actions also make him liable under
   the law.
 * TransUnion deceived customers through digital dark patterns: For its
   subscription products, TransUnion relied on digital dark patterns from
   beginning to end of the TransUnion customer experience.
 * TransUnion cheated customers through the marketing and sale of its
   credit-related products: TransUnion misrepresented numerous aspects of its
   products, services, and subscription plans, including that its credit
   monitoring service was a standalone credit score or credit report.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB
has the authority to take action against institutions violating consumer
financial laws, including engaging in deceptive acts or practices or violating
the Electronic Fund Transfer Act, which establishes a basic framework of the
rights, liabilities, and responsibilities as to electronic fund transfers.

Today’s lawsuit alleges that TransUnion violated the Consumer Financial
Protection Act of 2010 by failing to implement requirements of the Bureau’s 2017
order and by engaging in deceptive acts and practices. The CFPB also alleges
that TransUnion violated Regulation V, which implements the Fair Credit
Reporting Act, and the Electronic Fund Transfer Act.

The CFPB is seeking monetary relief for consumers, such as restitution or return
of funds, disgorgement or compensation for unjust gains, injunctive relief, and
civil money penalties. The complaint is not a final finding or ruling that the
defendants have violated the law.

Individuals, including current or former employees, with information related to
any misconduct by TransUnion can report it to the CFPB by e-mailing
whistleblower@cfpb.gov or calling the Whistleblower Tip Line at (855) 695-7974.
Learn more about being a whistleblower here.

Read the complaint.

Read the CFPB’s 2017 Order.

--------------------------------------------------------------------------------



The Consumer Financial Protection Bureau is a 21st century agency that
implements and enforces Federal consumer financial law and ensures that markets
for consumer financial products are fair, transparent, and competitive. For more
information, visit consumerfinance.gov.


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