The Consumer Financial Protection Bureau (CFPB) along with the Federal Trade Commission (FTC) have taken action against a rental screening subsidiary [1] of TransUnion—TransUnion Rental Screening Solutions [2]—for violations of the Fair Credit Reporting Act [3].
The CFPB and FTC stated that the TransUnion company 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 the TransUnion company to pay $15 million for its actions, and to make significant improvements on how it reports evictions.
Separately, the CFPB is ordering TransUnion to pay $8 million for lying to consumers about timely placing or removing security freezes and locks on the credit reports of tens of thousands of consumers. The company told consumers the requests were completed when the requests were dumped into its yearslong backlog.
“Today’s enforcement action makes it crystal clear that companies can’t get away with producing shoddy reports that harm renters and their families,” said Ariel Nelson, Staff Attorney at the National Consumer Law Center (NCLC) [4]. “Too many people are shut out of housing because of inaccurate tenant screening reports that use unreliable data obtained from third-party vendors that tenant screening companies keep secret.”
TransUnion was also accused of keeping active-duty members of the military from pre-screened solicitation lists–a 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 [3] also now requires that companies respond timely to consumer requests to place or remove security freezes–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 [5]. “We are ordering TransUnion to cease its yearslong illegal activity, clean up its broken business practices, redress its victims, and pay penalties.”
TransUnion is a Delaware company with its principal places of business in Chicago, and operates one of the three nationwide consumer reporting companies. TransUnion had annual revenue in excess of $3.7 billion in 2022, and collects information on more than 200 million Americans, including information on their payment histories, debt loads, maximum credit limits, names and addresses of current creditors, and other elements of their credit relationships. As a nationwide consumer reporting company, it provides security freezes and security locks of individuals’ consumer reports. TransUnion also provides rental background check reports that may include information about individuals’ credit, criminal, and eviction histories through its subsidiary TransUnion Rental Screening Solutions.
“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 [6]. “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.”
In the last seven years, the TransUnion conglomerate has been subject to four CFPB law enforcement actions across various products. In addition to today’s 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 [7] 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 [8]. 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.
The CFPB has previously highlighted widespread problems [9] in the use of rental background check reports. These reports increasingly use black box algorithms, relying too often on inaccurate or misleading information, to produce a renter’s “risk score” or to make a recommendation to landlords. This score or recommendation can conceal false information from scrutiny by either landlords or renters and make it difficult to impossible to correct inaccurate information. As a result, people are denied housing, charged more for housing, spend longer finding housing, and incur more housing search costs.
In the joint complaint, the CFPB and the FTC allege that the company:
- Failed to take steps to produce accurate reports: The company violated the Fair Credit Reporting Act by failing in numerous instances to take steps to assure the maximum possible accuracy of eviction records in its rental background check reports. For example, the company failed to assure that its reports reflected the current status of public records. This included failing to share information showing that an eviction was dismissed and not preventing the inclusion of sealed records or multiple entries about the same eviction case. As eviction data is often weighed heavily in assessing rental risk, inclusion of inaccurate and duplicative eviction information is particularly harmful to renters and their families.
- Failed to identify who provided inaccurate information: When the company obtained criminal and eviction records from third-party vendors, it failed to identify the third-party vendors in its disclosures to consumers. Instead, the company told people that criminal and eviction records were taken only from the jurisdictions where the proceedings took place. People trying to find a place to live did not know it was a third-party vendor that they needed to contact to correct inaccurate information.
If entered by the court, the agencies’ proposed order on rental background checks would require TransUnion to pay $11 million to consumers, and require the company to:
- Stop illegal tenant screening practices: The company would have to take certain actions to ensure reasonable procedures are followed to assure maximum possible accuracy of eviction records and to provide complete disclosures to consumers who request them. This includes developing procedures to stop reporting multiple filings for a single eviction case and to not report eviction cases absent a final outcome.
- Pay a $4 million penalty: The penalty will be deposited into the CFPB’s victims relief fund [10].
TransUnion, by mid-2018, had a backlog of thousands of requests for security freezes and locks. The backlog lasted for years, and it was only after the CFPB informed TransUnion that the agency was going to conduct an exam of its security freezes that it cleared the backlog of nearly 40,000 unfulfilled requests. Specifically, TransUnion has been accused of:
- Failing to timely place or remove security freezes and locks: For tens of thousands of individuals, since at least 2003, the company failed to timely place or remove security freezes and locks on tens of thousands of credit reports. Despite these failures, TransUnion falsely represented to consumers that their requests were processed when they were not.
- Failing to protect certain populations from pre-screened solicitation lists: TransUnion unlawfully failed to exclude thousands of individuals, including active-duty members of the military and other potential victims of identity theft, from pre-screened solicitation lists.
In addition to paying $3 million to consumers, the CFPB’s order [1] requires TransUnion to:
- Clean up its business practices: The company must identify and solve technology problems before they cause harm to consumers. It also must address the cause of the problems with freeze and lock requests.
- Pay a $5 million penalty: The penalty will be deposited into the CFPB’s victims relief fund.
Click here [11] to read the entire CFPB and FTC consent order issued against TransUnion.