Renters harmed, fair credit laws violated
By Charlene Crowell | Center for Responsible Lending
Two federal agencies recently reached a $23 million settlement with TransUnion, one of the nation’s three major credit reporting agencies, and a subsidiary, TURRS. The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) announced the settlement on October 12.
The regulators said the firm’s use of inaccurate, outdated, and incomplete eviction records to screen prospective tenants harmed consumers looking for rental housing and violated the Fair Credit Reporting Act (FCRA).
The settlement, when approved by a federal court, will require the firm to repay $11 million to affected consumers, an additional $4 million civil penalty, and $8 million to CFPB for lying to consumers. TURRSS failed to provide consumers with the names of third-party vendors from whom it received criminal and eviction records included in its tenant screening reports. Further, no effort was made to ensure the accuracy of tenant screening reports. As a result, reports included inaccurate and incomplete eviction records that hampered consumers’ ability to obtain housing.
“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 years-long illegal activity, clean up its broken business practices, redress its victims, and pay penalties.”
Samuel Levine, director of the FTC’s Bureau of Consumer Protection reacted similarly.
“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,” noted Levine. “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.”
According to the complaint, TransUnion and TURRS never took legally-required steps to ensure the accuracy of the data it received until April 2021 when the corporation learned of the related FTC investigation. The firms’ failure to follow reasonable procedures resulted in the use of error-laden consumer credit reports that wrongly showed multiple eviction records when only one may have occurred. As a result, many borrowers were denied rental housing, subjected to additional and undeserved fees, and had to spend hours or days trying to correct errors in their credit reports.
“An unfair denial of rental housing has effects beyond just the loss of rental application fees—it means losing out on the opportunity to live in a person’s preferred neighborhood, the neighborhood that makes sense for them in terms of schools, work, and more; and it may mean having to pay even more for housing down the line,” added Eric Halperin, CFPB’s Enforcement Director.
FCRA, a key consumer protection law passed more than 50 years ago, requires firms that collect consumer credit data, as well as those that use it in making credit-related decisions, to ensure accuracy of the information. Further, companies are required to investigate disputes and advise consumers when an adverse action is taken on the basis of credit reporting.
TransUnion, which has gathered an estimated 190 million consumer credit profiles, has a long history of anti-consumer behaviors.
For example, in 1992, FTC Commissioners issued a cease-and-desist order against the corporation after it was found to have sold information, without consumers’ consent, to a third party who used that information to solicit consumers to purchase goods and services.
A legal finding delivered in the case in 1998 agreed with the FTC, saying in part: “TransUnion invades consumers’ privacy when it sells consumers’ credit histories to third- party marketers without consumers’ knowledge or consent. ... “
In 2017 the CFPB took action against TransUnion and Equifax, another major credit reporting bureau, for deceiving customers and luring them into costly recurring payments by pushing credit-related products that offered false promises. In 2022, CFPB sued TransUnion, claiming the company did not meet the conditions of the earlier law enforcement order. That lawsuit has not been resolved.
CFPB encourages consumers to utilize a dedicated whistleblower hotline and email to report suspected wrongdoing. The email address is: firstname.lastname@example.org. As an alternative, consumers may also phone the toll-free Whistleblower Tip Line at (855) 695-7974.
Charlene Crowell is a senior fellow with the Center for Responsible Lending. She can be reached at Charlene.email@example.com.
DISCLAIMER: The beliefs and viewpoints expressed in opinion pieces, letters to the editor, by columnists and/or contributing writers are not necessarily those of OurWeekly.