Prepared Remarks of CFPB Enforcement Director Eric Halperin on the TransUnion Enforcement Actions

Good morning, and thank you all for being here today.

Trans Union is one of the three nationwide consumer reporting agencies. This special position affords them significant power over the lives of consumers, because their core business is to collect and maintain data and credit account information on more than 200 million Americans, and to sell consumer credit reports, which are used to make important decisions regarding consumers’ creditworthiness. As such, credit reporting agencies have a responsibility to ensure that consumers’ personal data is accurate and secure. Credit reporting agencies function as gatekeepers, and no one should be barred from housing or be at risk of identity theft because a company fails to follow the law.

Trans Union collects data about consumers’ payment histories, debt loads, maximum credit limits, names and addresses of current creditors, and other elements of their credit relationships. Consumer credit reports are used in a variety of ways, including by lenders evaluating whether or not to extend credit. TransUnion Rental Screening Solutions has also provided reports to thousands of landlords and property management companies to use as rental background checks in making rental decisions. Theses rental background checks are essentially a dossier of information on a consumer collected from many sources, including public records, many of which Trans Union purchases from third parties like LexisNexis. Therefore, the accuracy and security of credit reports and rental background reports generated by Trans Union have serious implications for consumers’ financial well-being, people’s ability to find housing, and the economy more broadly.

Joint Law Enforcement Action on Rental Background Checks

Today, the CFPB together with our close partner, the Federal Trade Commission, took action against TransUnion Rental Screening Solutions and its parent company, Trans Union, for failing to ensure the rental background checks that landlords use to make rental decisions were accurate and withholding information renters needed to correct inaccurate information. The CFPB and FTC filed a proposed order, which if the court enters, would require the companies to stop their illegal tenant screening practices, and pay $11 million in consumer redress as well a $4 million penalty.

Today’s joint complaint alleges that TransUnion Rental Screening Solutions’ failure to follow reasonable procedures to assure maximum possible accuracy resulted in its providing rental background checks with incorrect and misleading information. TransUnion Rental Screening Solutions received numerous consumer disputes about the eviction records contained in its rental background checks but failed to take meaningful action.

Inaccurate and outdated information in rental background checks can significantly interfere with consumers’ ability to find housing and harms them by, for example, leading to prolonged housing searches, additional application fees, time and money spent correcting errors, higher rental payments, temporary housing costs, and denial of housing. The cost of housing is the biggest expense for most families. 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 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.

The complaint alleges, among other things, that:

• TransUnion Rental Screening Solutions’ procedures caused renters’ eviction histories to appear more problematic than they actually were;
• TransUnion Rental Screening Solutions’ reports did not update or even accurately report on the outcome of eviction cases, including when the case was dismissed; and
• TransUnion Rental Screening Solutions failed to follow reasonable procedures to prevent including sealed eviction cases in rental background checks.

In many instances, TransUnion Rental Screening Solutions only corrected its procedures after the FTC had notified TransUnion of the pending investigation.

The proposed order includes injunctive relief that will result in a significant improvement in how TransUnion Rental Screening Solutions reports evictions. For example, the company will be required to develop, implement, and follow written procedures reasonably designed to prevent the inclusion in tenant screening reports of any eviction proceeding that does not have a final outcome and to prevent the company from reporting multiple filings for a single eviction action. No tenant screening report should make a consumer’s eviction history appear more problematic than it actually is.

In addition, as the CFPB has previously highlighted, there are widespread industry problems in the use of rental background check reports. Some companies are using black box algorithms to produce a renter’s “risk score” or make a recommendation to a landlord. Such scores or recommendations can conceal inaccurate data from scrutiny. That is why it is more important than ever to ensure that companies are reporting accurate data and disclosing sources of that data.

We thank the FTC for their partnership in stopping this unlawful conduct.

CFPB Law Enforcement Action on Security Freezes and Locks

Today the CFPB is also separately ordering TransUnion and two of its subsidiaries to pay $8 million for failing to timely place and remove security freezes and locks on credit reports of tens of thousands of consumers who requested them.

For years, consumers have had a right under state law to obtain a security freeze from the nationwide consumer reporting companies, and since 2018, federal law has required that the consumer reporting industry provide these freezes to consumers as a free service. Freezes are an important tool for consumers to protect themselves from identity theft and fraud.

But for tens of thousands of consumers, TransUnion failed to timely place or remove security freezes and locks on their credit reports—it was only after the CFPB informed TransUnion that it was going to conduct an exam of its security freezes that TransUnion cleared its backlog of nearly 40,000 unfulfilled requests. Trans Union also unlawfully failed to exclude thousands of individuals, including active-duty military personnel and other potential victims of identity theft, from pre-screened solicitation lists.

Prior Actions Against TransUnion Conglomerate

In addition to today’s actions, the CFPB has taken additional actions against TransUnion. In 2017, the CFPB settled charges with TransUnion and its subsidiaries for deceptively marketing credit scores and credit-related products, including credit monitoring services. The CFPB sued TransUnion, two of its subsidiaries, and a longtime executive in April 2022. The CFPB’s 2022 suit, which is ongoing, involves allegations that TransUnion used deceptive marketing to trap consumers into recurring payments for products in violation of the CFPB’s 2017 order against TransUnion and the Consumer Financial Protection Act.

CFPB’s Actions Addressing Credit Reporting

Today’s actions reinforce the importance of holding law breakers accountable—and being ever diligent in ensuring that entities within our authority are following the law.

The CFPB has done a lot to address problems in the credit reporting industry and to protect consumer data. We’ve issued an advisory opinion affirming that it is illegal to use sloppy identity matching practices that result in false data, as well as an advisory opinion to reaffirm the Fair Credit Reporting Act’s confidentiality requirements, underscoring it is illegal to provide data on the wrong person. Last year, the CFPB issued guidance reinforcing it can be a violation of the prohibition on unfair acts or practices to have insufficient data protection or security for sensitive consumer data. The CFPB has issued additional guidance making clear it is illegal to report facially false junk data on consumers. And last year, the CFPB issued guidance making clear that consumer reporting companies need to take consumers’ dispute rights more seriously.

Finally, the CFPB is committed to policing the consumer financial market. In the last two years, the CFPB has filed or resolved about 55 enforcement actions on behalf of consumers through final orders and obtained orders requiring over $7.8 billion total in consumer relief and penalties.

We also are committed to continued partnering with state and other federal partners such as the FTC. Together we can pursue meaningful remedies—including redress for consumers and strong injunctive relief—against actors engaged in the most significant consumer harm.

Thank you and I’d like to turn it over to my friend Sam Levine at the FTC. Thank you Sam for your partnership.