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TransUnion fights back against CFPB ‘repeat offender’ action

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Case Law, Dodd-Frank Basics, Financial Stability, Nonbank Financial
Tuesday, August 2, 2022
The Consumer Financial Protection Bureau (CFPB) has brought a renewed enforcement action against TransUnion concerning a previous 2017 order against the credit bureau. TransUnion is not taking the renewed litigation lightly and has made it clear it is willing to fight the action in court.

“No rational regulated entity would ever agree to this type of Groundhog Day enforcement loop,” Valerie Hletko, a partner at Kaplan Hecker & Fink who represents TransUnion, said in a motion earlier this month to dismiss the case.

The CFPB maintains it is completely within its authority to bring this action against TransUnion.

According to the bureau, 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 alleges.

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

Repeat offender law enforcement has become a top priority for the CFPB under Chopra. The CFPB has filed a lawsuit in federal court charging TransUnion and its Executive Vice President of Consumer Interactive John Danaher with multiple violations of law. Specifically, the Bureau’s lawsuit alleges that:

  • TransUnion and Danaher flouted a formal law enforcement 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.

The CFPB’s complaint also alleged that TransUnion has violated additional consumer financial protection laws not originally included in the 2017 complaint.

This case against TransUnion could end up as a warning for either the business community or regulators as the two sides fight over the aggressive regulatory agenda the Biden administration is promoting.

Should the CFPB succeed in its renewed complaint, it will be made clear to the business community that just paying the fines may not be enough anymore. Regulators may come back again and again if practices aren’t changed.

But with recent and upcoming Supreme Court cases, like W. Va. v. EPA, putting limitations on regulators ability to act without clear congressional authority, and new constitutional challenges coming over the CFPB’s funding structure, it might very well end up being the regulator that get a warning about changing its practices.  

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