TransUnion shares fell close to 4% on Thursday after the credit bureau was slapped with fines totalling $23 million for illegal rental background checks on tenants and its credit reporting practices.
In a joint statement, the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) said they took action against a rental screening subsidiary of TransUnion for violations of the Fair Credit Reporting Act.
TransUnion, which operates one of the three US nationwide consumer reporting companies and also provides rental background check reports, “failed to take steps to ensure the rental background checks that landlords use to decide who gets housing were accurate,” they said.
Additionally, it withheld, from renters, the names of third parties that were providing the inaccurate information.
For this, the CFPB and FTC requested a federal court to order TransUnion to pay $15 million for its lawbreaking behavior and to make significant improvements to how it reports evictions.
In an “eviction fiction” blog on the FTC’s website, the commission said the settlement with TransUnion underscores the importance of the “maximum possible accuracy” requirement of the Fair Credit Reporting Act (FCRA).
“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,” commented Samuel Levine, Director of the FTC’s Bureau of Consumer Protection.
Separately, the CFPB said it is ordering TransUnion to pay $8 million for lying to consumers about timely placing or removing security freezes and locks on the credit reports of tens of thousands of consumers.
The CFPB noted that the TransUnion conglomerate has been subject to four CFPB law enforcement actions across various products over the past seven years.
In addition to the latest two actions for rental background check and security freezes failures, the CFPB said it has taken repeated actions against TransUnion for its subscription plans.
“Americans across the country were put at risk of wrongful housing denials because TransUnion failed to follow the law,” CFPB director Rohit Chopra added.
“We are ordering TransUnion to cease its yearslong illegal activity, clean up its broken business practices, redress its victims, and pay penalties.”
The company’s shares were down $2.81 at $68.91 by 1pm in New York.
Contact the author at stephen.gunnion@proactiveinvestors.com