The Chicago-based TransUnion, Americas largest credit reporting agency was fined $17 million by The Consumer Financial Protection Bureau (CFPB) over the company’s marketing and advertising practices, disclosed this week.
TransUnion revealed the settlement in a December 29 filing with the SEC, according to which the settlement was originated from a “civil investigative demand” from the Consumer Financial Protection Bureau that was received by the company in September 2015.
CFPB Director Richard Cordray said, “TransUnion and Equifax deceived consumers about the usefulness of the credit scores they marketed and lured consumers into expensive recurring payments with false promises. Credit scores are central to a consumer’s financial life, and people deserve honest and accurate information about them.”
TransUnion said that the consumer protection bureau request covered “common industry practices relating to the advertising, marketing and sale of consumer reports, credit scores or credit monitoring products to consumers.”
Now, as a result of CFPB September 2015 investigation, TransUnion is settling with the Bureau, pledging to change its advertising strategies, and preparing to repay penalty to affected consumers.
TransUnion was fined by $16.9 million: the breakup $13.9 million will go to the affected consumers and $3 million goes in CFPB civil penalty fund.
The company further told that it has agreed to change its advertising practices in the following two ways.
- Must provide consumers an easy way to cancel the purchase of credit-related product and services.
- More robust disclosures will be given to the consumers regarding the nature of the credit score plus confirming consumer consent if the company sells its product or service by using negative option feature.
- Develop and submit a comprehensive compliance plan to the consumer protection bureau, addressing each step and action required by the Consent Order terms and particular period and deadlines for implementation.
TransUnion also disclosed that it would also incur $2.5 million as part of the settlement on account of “additional legal, administrative and compliance cost.”
A total of $19.4 million will be set aside to cover the cost of CFPB settlement.
According to TransUnion’s Securities and Exchange Commission filing, the settlement agreement for final approval will now go to the Director of the CFPB, Richard Cordray.
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