On October 12, 2023, the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) took action against TransUnion’s rental screening subsidiary for violations of the Fair Credit Reporting Act. It is alleged that TransUnion did not have adequate processes in place to ensure the rental information it was providing to others was accurate – and some of the information was not accurate. For example, they supposedly reported that a consumer had multiple evictions when it was only 1 eviction.
TransUnion allegedly provided inaccurate rental background checks to landlords and withheld the names of third parties supplying this incorrect information. As a result, the CFPB and FTC are seeking a federal court order for TransUnion to pay $15 million for these violations and to improve its eviction reporting practices.
In a separate action, the CFPB has fined TransUnion $8 million for misleading consumers about the timely placement or removal of security freezes on credit reports. TransUnion allegedly falsely informed consumers that their requests were processed, when in reality, they were added to a backlog. Additionally, TransUnion allegedly failed to offer the required free security freezes and did not protect active-duty military members from pre-screened solicitation lists, which could lead to identity theft.
CFPB Director Rohit Chopra stated that TransUnion’s failure to follow the law put many Americans at risk of wrongful housing denials. Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, emphasized the importance of accurate tenant screening reports for a fair economy.
The Fair Credit Reporting Act (FCRA) mandates Consumer Reporting Agencies to ensure two main things:
1. They must adopt reasonable procedures to guarantee the utmost accuracy of the information in Consumer Reports.
2. When a consumer asks, they must reveal all the data in the consumer’s file and where that information came from.
If these rules are broken, it’s considered an unfair or deceptive act, which goes against the FTC Act.
Now, focusing on TU’s subsidiary provides background screening reports to various entities in the U.S., like landlords and employers. These reports can contain public records, such as criminal and eviction details, and even credit information. Importantly, these reports fall under the category of “Consumer Reports” as per the FCRA.
Eviction records can show various stages of the eviction process. They might display the initiation of an eviction, the outcome, and any follow-up actions. These records can also show amounts owed or paid by the consumer. Sometimes, these records can be sealed or removed based on consumer requests or state laws.
However, TU’s subsidiary had been allegedly lax in their reporting. They’ve provided numerous reports containing eviction details, but some of those reports haven’t always been accurate. For instance, they’ve sometimes included multiple entries for a single eviction case or even included records that were supposed to be sealed.
Regulators argue that TU did not have robust oversight (monitoring and testing) to ensure they could catch when the reports were not accurate.