By John Zasada, JD, CAMS, Shareholder, Financial Institutions Group

On April 12, 2022, the Consumer Financial Protection Bureau (CFPB) filed a lawsuit against TransUnion, two of its subsidiaries, as well as longtime executive John Danaher for continuing to violate a previous enforcement order and committing new types of violations.

Back in 2017, the CFPB settled charges with TransUnion and its subsidiaries for deceptively marketing credit scores and credit-related products, including credit monitoring services. At the time, TransUnion agreed to pay $13.9 million in restitution to victims and $3 million in civil penalties. They also agreed to a formal law enforcement order requiring them 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
  • Provide an easy way for people to cancel subscriptions.

In May 2019 and June 2020, the CFPB informed TransUnion it was violating the law enforcement order and engaged in additional violations. Allegedly, TransUnion used an array of dark patterns to trick people into recurring payments and to make it difficult to cancel them.

Since 2004, Danaher served as a top executive of TransUnion Interactive, a business unit that sold products and services directly to consumers. The unit contributed roughly 18% of TransUnion’s overall revenue. Danaher was bound by the 2017 order, but he allegedly failed to ensure certain required steps were taken to refrain from prohibited conduct. According to the CFPB, Danaher determined complying with the order would reduce the company’s revenue, so he created a plan to delay or avoid having to implement the order.

The CFPB stated repeat offender law enforcement is a top priority for the CFPB. According to the CFPB, TransUnion and Danaher flouted the terms of the CFPB’s 2017 order. Instead of complying with the terms, TransUnion continued to:

  • Engage in deceptive conduct in its marketing and sale of credit-related products.
  • Failed to provide required disclosures to make its marketing not misleading.
  • Failed to assemble and review consumer information.
  • Implement appropriate improvements to advertisements.

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

For more information on deceptive marketing practices and how they can impact your institution, contact Doeren Mayhew’s regulatory compliance specialists.