Failure to carry out rental background checks has resulted in total fines of $23m for a rental screening subsidiary of the TransUnion conglomerate.

“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.”

The Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) charged the subsidiary with violations of the Fair Credit Reporting Act after it was found to have 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 agencies said.

Federal court order

The CFPB and FTC requested a federal court to order the TransUnion business to pay $15m for failing in numerous instances to take steps to assure the maximum possible accuracy of eviction records in its rental background check reports.

Separately, the CFPB ordered TransUnion to pay $8m for lying to consumers about timely placing or removing security freezes and locks on the credit reports of tens of thousands of consumers. The consumer watchdog said the company told consumers the requests were completed when, in reality, the requests were dumped into its years-long backlog. TransUnion also failed to keep active-duty members of the military from pre-screened solicitation lists, which the CFPB called “a simple step that protects service members from identity theft”.

“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.”

Free security freezes

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 also requires that companies respond in a timely manner to consumer requests to place or remove security freezes – a tool that, along with credit locks, helps prevent potential identity theft by blocking many third parties from accessing consumers’ credit reports.

As one of the three nationwide consumer reporting companies, TransUnion touts free security freezes as the best way to help a consumer prevent new accounts from being opened in his or her name, noting that it won’t affect that person’s credit score to use the service.

“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.”

Samuel Levine, Director, FTC Bureau of Consumer Protection

Beyond security freezes and security locks of individuals’ consumer reports, the company performs rental background check reports that may include information about individuals’ credit, criminal, and eviction histories through its subsidiary TransUnion Rental Screening Solutions.

Rental background check reports

In their joint complaint, the CFPB and the FTC allege that 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, often by failing to ensure its reports reflected the current status of public records, such as when an eviction was dismissed.
• Failed to identify which vendors provided inaccurate information pertaining to criminal and eviction records from third-party vendors, causing people trying to find a place to secure housing to not know it was a third party they needed to contact to correct inaccurate information.

In addition to the money penalty, the agencies ordered TransUnion to take certain actions to ensure reasonable procedures are followed to assure maximum possible accuracy of eviction records, provide complete disclosures to consumers who request them, and create procedures to stop reporting multiple filings for a single eviction case or prior to a final outcome.

Security freezes and lock requests

In its action pertaining to TransUnion’s backlog of requests for security freezes, the CFPB said that despite not honoring these requests, the company falsely represented to consumers that their requests were processed. The CFPB also said 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.

The CFPB said TransUnion must “clean up its business practices,” by identifying and solving technology problems before they cause harm to consumers.

Prior enforcement actions

In the last seven years, TransUnion has been subject to four CFPB law enforcement actions across various products. In April 2022, the CFPB filed a lawsuit against TransUnion, two of its subsidiaries, and longtime executive John Danaher for violating a 2017 law enforcement order.

Its 2017 order was issued to stop the company from engaging in deceptive marketing, regarding its credit scores and other credit-related products. After the order went into effect, TransUnion continued its unlawful behavior, disregarded the order’s requirements, and continued employing deceitful digital dark patterns to profit from customers, plus additional consumer financial protection laws.

In that 2022 action, Chopra said: “TransUnion is an out-of-control repeat offender that believes it is above the law. I am concerned that TransUnion’s leadership is either unwilling or incapable of operating its businesses lawfully.”