TransUnion's Tangled Web, Apple's Pay Later Poison
On the CFPB's increasingly aggressive enforcement
Recent stories about credit reporting agency TransUnion and tech giant Apple point to an increasingly aggressive Consumer Financial Protection Bureau (CFPB). The bureau is putting corporations on notice that they take their job as a regulator seriously - issuing warnings, pursuing enforcement actions, and generally paying attention to what is impacting consumers in the finance space.
When TransUnion was charged with repeatedly deceiving consumers into purchasing essentially useless credit monitoring products, the company didn’t apologize and didn’t stop.
Breakin’ the Law: TransUnion Charged with Repeatedly Deceiving Consumers | by Andy Spears | Medium
Instead, TransUnion is now asking the courts to dismiss a case brought by the Consumer Financial Protection Bureau (CFPB) that seeks to hold the credit reporting agency accountable for persistent wrongdoing.
American Banker notes:
But the Chicago-based credit reporting agency is fighting back in court after the CFPB sued the company and a former executive in April for allegedly violating a previous 2017 order.
The lawsuit is being closely watched because TransUnion already paid a $3 million fine and $13.9 million in restitution to consumers to resolve the 2017 order — only to be sued for the same violations five years later.
Here’s the deal, though: They didn’t stop deceiving customers. TransUnion’s argument seems to be that they already paid a fine for deceiving customers, now they can’t be punished again for repeat deception.
However, as American Banker reported, the CFPB didn’t stop receiving complaints about TransUnion:
By 2019, however, the CFPB had received nearly 100 complaints from consumers alleging that TransUnion enrolled them in monthly credit monitoring services they didn’t want. Many of the consumers said they had responded to ads to obtain a free credit score but had not read the fine print disclosing that they were enrolling in a monitoring service.
TransUnion signs a 2017 consent order and pays a fine. Then, in 2019, TransUnion customers complain about the SAME type of deception. The CFPB takes TransUnion to court and TransUnion says: “Hey, we already paid a fine for this, so we’re good.”
Fortunately, the CFPB says “not so fast.”
Now, TransUnion appears to be chafing under the lash of a regulator determined to actually hold them accountable for their bad actions.
Advocates at the National Consumer Law Center (NCLC) have warned against the tactics used by credit bureaus:
“This type of flagrant violation is typical behavior for not just TransUnion, but all three credit bureaus,” said Chi Chi Wu, staff attorney at the National Consumer Law Center. “Federal regulators, state Attorneys General, consumer advocates, and private attorneys have been battling a culture of impunity and arrogance by the credit bureaus for decades. Unfortunately, it’s the American consumer who ultimately pays the price for the credit bureaus’ longstanding habit of flouting the law.”
CFPB vs. Apple
Apple is making a foray into the Buy Now, Pay Later space with a product called Apple Pay Later. The idea is that customers who are already using their phones to pay for purchases will appreciate the seamless ability to add a buy now, pay later feature.
Forbes reports that the Consumer Financial Protection Bureau (CFPB) is now taking a look at Apple’s move, raising concerns about data privacy and antitrust issues.
Apple’s announced buy now, pay later (BNPL) service — Apple Pay Later — is being investigated by the Consumer Financial Protection Bureau (CFPB), the consumer finance regulator in the US. CFPB director Rohit Chopra said that Apple Pay Later raised “a host of issues,” including antitrust and data privacy concerns.
The Forbes analysis notes that while Apple is a big tech player, it’s not exactly huge in the payments space. In fact, the largest player in the payments space remains PayPal, followed by CashApp and Apple lags behind in third place.
Further, PayPal has already integrated a Pay in 4 feature and is growing its Buy Now, Pay Later offerings.
With regard to antitrust issues, Forbes notes:
Apple Card growth is anemic. After seeing a doubling of Apple Card holders in 2020, growth in 2021 slowed to a crawl. Cornerstone found that the number of consumers with an Apple Card grew from 6.4 million at the beginning of 2021 to just 6.7 million at the start of 2022.
In short, Apple is not the real giant here. Rather, Forbes suggests, the CFPB should look into PayPal. That said, the investigation into Apple seems to be a warning to both Big Tech and BNPL players that the CFPB is taking its regulatory role seriously.
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