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Feds charge TransUnion’s rental background checks weren’t accurate, freezes were skipped

TransUnion is being ordered to pay $15 million for failing to ensure the rental background checks that landlords use to decide who gets housing were accurate. The company will also have to pay $8 million for lying to consumers about placing and removing security freezes on their credit reports.

The actions were taken by the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC).

“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 yearslong illegal activity, clean up its broken business practices, redress its victims, and pay penalties.”

“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.”

Security freezes

In the security freeze case, the company allegedly told consumers the requests were completed when, in reality, the requests were dumped into a yearslong backlog. 

TransUnion also failed to keep active-duty members of the military from pre-screened solicitation lists – a simple 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 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.

TransUnion TransUnion operates one of the three nationwide consumer reporting companies. It 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. 

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.

TransUnion’s pattern of misconduct

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 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. 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.

Rental background checks

The CFPB has previously highlighted widespread problems 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. 

As a result of the errors, people are denied housing, charged more for housing, spend longer finding housing, and incur more housing search costs.

In today’s 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.

Security freeze and requests

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. 

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, the CFPB said.

Read today’s CFPB and FTC joint complaint and proposed order.

Read today’s CFPB order.