TransUnion settles with the FTC, CFPB for $23 million for impeding tenants' ability to obtain housing

WASHINGTON — Two federal consumer protection agencies have reached a $23 million settlement with credit reporting firm Trans Union LLC, which does business as TransUnion, and a namesake subsidiary for failing to report accurate tenant screening information — the largest amount ever recovered in an FTC tenant-screening matter, according to a Thursday release.

"Americans across the country were put at risk of wrongful housing denials because TransUnion failed to follow the law," Consumer Financial Protection Bureau Director Rohit Chopra said. "We are ordering TransUnion to cease its yearslong illegal activity, clean up its broken business practices, redress its victims, and pay penalties."

The Federal Trade Commission and the CFPB said Colorado-based TransUnion Rental Screening Solutions, Inc. (TURSS) and the parent company violated the Fair Credit Reporting Act for neglecting to ensure the validity of third-party background data and for inconsistently providing tenants with the names of vendors responsible for sharing criminal and eviction records.

The FCRA protects information collected by consumer-reporting agencies.

Under the proposed order, which is pending approval by a federal court, $11 million of a $15 million settlement will compensate consumers and $4 million will go to the CFPB's civil penalty fund.

The CFPB is separately ordering TransUnion to pay $8 million for backlogging "tens of thousands" of consumer requests to place or remove security freezes and locks on credit reports while telling customers they were completed.

"We corrected associated system issues in 2020 and have processes in place to monitor and address any issues going forward," TransUnion told CNBC.

The firm also said it has worked with the CFPB and FTC over the past year "to enhance our rental-screening reporting practices, including making certain changes to how eviction records are reported."

"We believe these changes will soon become industry standard," a TransUnion representative told CNBC. "This settlement reflects the agencies' evolving regulatory objectives and our openness to join them in reasonable initiatives that are beneficial to consumers and support safe, affordable housing."

TURSS, which provides consumer background screening reports for tenant and employee selection, allowed multiple inaccuracies in tenant eviction data from third-party sources, according to a complaint filed in a Colorado federal court.

These records sometimes contained repeated instances of the same eviction case — such as a civil new filing and a civil dismissal — which TURSS often reported as separate events until April 2021, when the company began grouping events in a single case together after learning about the FTC's investigation, according to the complaint.

The agencies said TURSS also failed to accurately report the outcomes of the evictions, mislabeled the nature of monetary amounts associated with the cases and sometimes included sealed eviction records in screenings, the complaint said.

The CFPB and FTC further argued that tenants who can't access vendors that keep criminal and eviction records face challenges in correcting inaccurate background data.

"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.

The companies must also address the violations in the complaint and provide consumers with means to dispute inaccurate information, according to the release.