TransUnion Fined $23 Million for Illegal Practices

Violations found in rental background checks, credit freezes

One of America's three major credit bureaus is facing a $23 million fine for its failures with both rental background checks and credit freeze products.

The Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) are taking action against TransUnion for activities the regulators say broke the law and harmed consumers.

In two separate investigations, federal regulators found that TransUnion failed to provide accurate information in rental background checks and failed to properly assist renters seeking to correct inaccurate information.

They also found that TransUnion lied to consumers about security freezes on credit reports, telling them their credit was frozen when in reality, it was placed in a backlog that in some cases took years to complete. All the while, consumer credit information was exposed.

“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.”

As a result of the enforcement action against TransUnion on rental background checks, consumers will receive $11 million in payments (refunds for paying for the background checks and additional compensation that may be owed).

“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,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Protecting consumers looking for housing is critical to a fair economy, and we are proud to partner with the CFPB in obtaining this record-breaking order.”

A recent analysis of tenant screening by the National Consumer Law Center (NCLC) found that the reports often contain inaccuracies that can be difficult to correct. The TransUnion case lends additional credence to this claim.

“Tenant screening scores and recommendations create a misleading veneer of objectivity while concealing underlying racial disparities,” said Ariel Nelson, staff attorney at the National Consumer Law Center. “Landlords frequently make leasing decisions based solely on these tenant screening scores and recommendations, and our research reveals that they are unlikely to hear disputes or to consider mitigating factors.”

Credit freeze backlog

In addition to the violations related to rental background checks, the investigation found that TransUnion had a years long backlog of credit freezes that were unfulfilled.

Specifically, some 40,000 requests for security freezes went unfulfilled.

As a result of this violation, TransUnion will pay $3 million to harmed consumers.

Consumer groups have consistently called for reform of the credit reporting industry.

Photo byDylan GillisonUnsplash