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Credit firm TransUnion used deceptive marketing and 'dark patterns,' lawsuit alleges

FILE - In this July 18, 2012, file photo, credit logos are displayed on a downtown storefront as a pedestrian passes in Atlanta. U.S. consumer borrowing rose by a solid 3.6% in July, the second monthly gain after the coronavirus pandemic had sent consumer borrowing down sharply in the previous three months, the Federal Reserve reported Tuesday, Sept. 8, 2020. (AP Photo/Ashley Hopkinson, File)
Credit bureau TransUnion used digital tricks known as "dark patterns," such as putting information in low-contrast fine print and in an image that took longer to load than the rest of the webpage, government officials say.

The federal regulator that oversees consumer finance is suing TransUnion, one of the top credit-reporting agencies in the U.S., for deceptive marketing practices and using "dark patterns" on its website to trick consumers into signing up for recurring charges.

The Consumer Financial Protection Bureau (CFPB) filed the complaint in federal court on Tuesday, accusing the company, two of its subsidiaries and former executive John T. Danaher of violating a 2017 settlement agreement over similar claims.

"TransUnion is an out-of-control repeat offender that believes it is above the law," the CFPB's director, Rohit Chopra, said in a statement. "I am concerned that TransUnion's leadership is either unwilling or incapable of operating its businesses lawfully."

As part of the 2017 settlement around deceptive marketing practices, TransUnion agreed to pay $13.9 million in restitution to victims and another $3 million in civil penalties, the CFPB said.

The company also agreed, in a binding law enforcement order, to take other actions regarding how it interacts with customers, such as obtaining informed consent for certain recurring payments and giving people an easy way to cancel subscription services.

The CFPB now says TransUnion has violated the tenets of that agreement.

The government accuses TransUnion of giving consumers a false idea that they were already enrolled in the company's credit-monitoring services and misrepresenting how other companies would use the credit scores compiled by TransUnion, among other claims.

To dupe customers into spending extra money on TransUnion services, TransUnion also employed deceptive digital tricks known as "dark patterns," such as putting information in low-contrast fine print or including a disclosure in an image that took longer to load than the rest of the webpage, the lawsuit claims.

The CFPB alleges that Danaher, who was a top executive of the TransUnion subsidiary that sold products and services directly to consumers, failed to comply with the 2017 order.

In a statement, TransUnion calls the lawsuit "meritless" and says the claims don't reflect the company's "consumer-first approach" to business.

The Chicago-based firm says it submitted a plan to the CFPB outlining how it would comply with the 2017 settlement but claims it never heard back from the bureau.

"We have been in compliance with our obligations and we remain in compliance with the consent order today," the TransUnion statement says.

"Rather than providing any supervisory guidance on this matter and advising TransUnion of its concerns – like a responsible regulator would – the CFPB stayed silent and saved their claims for inclusion in a lawsuit, including naming a former executive in the complaint," the statement continues.

But consumer advocates have applauded the CFPB for filing the lawsuit and say such behavior is "typical" of credit-reporting agencies.

"Federal regulators, state Attorneys General, consumer advocates, and private attorneys have been battling a culture of impunity and arrogance by the credit bureaus for decades," said Chi Chi Wu, a staff attorney at the National Consumer Law Center, in a statement. "Unfortunately, it's the American consumer who ultimately pays the price for the credit bureaus' longstanding habit of flouting the law." Copyright 2022 NPR. To see more, visit https://www.npr.org.