Discover more from Advocate Andy
Trickery: How Credit Agencies Sell You Services You Don't Need
Digital dark patterns weave web of deception
If you’ve ever been tempted to purchase a credit monitoring service from one of the three major credit bureaus, don’t. If you already have this service, chances are the company that sold it used something called “digital dark patterns” to lure you into the purchase.
The bottom line: You can monitor your credit for free.
Credit bureaus know this, but they want to make money from consumer fear of fraud. So, these agencies use digital tricks to sell products consumers often don’t want and definitely do not need.
The consumer protection attorneys at Finn Law Group explain more about digital dark patterns and a recent legal action involving TransUnion, one of the three major bureaus.
The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against one of the largest credit reporting agencies in the United States. The CFPB alleges that Transunion used digital dark patterns — design and user interface elements created to manipulate users into taking a desired action — to lure consumers into enrolling in its services.
Here’s how Finn Law describes digital dark patterns:
A digital dark pattern is a user interface design that is intended to deceive or mislead users into taking an action that they would not otherwise take, such as buying a product or signing up for a subscription service. Dark patterns are often used in online advertising and marketing, and have been criticized for being unethical and manipulative. An example of a dark pattern is a fake “cancel” button that takes the user to a page that upsells them on a more expensive product.
Credit Monitoring is a Service Consumers Don’t Need
Ariel Nelson, an attorney with the National Consumer Law Center (NCLC) says:
“These products are a waste of your money. And when credit monitoring agreements include forced arbitration clauses, they can also force you to sign away your rights to take legal action if there is an error in your credit report.
“Always use annualcreditreport.com to order your credit report, and you may want to order by phone or mail to avoid accidentally getting charged for credit monitoring. Check your credit card statements and call to unenroll from credit monitoring if you see a charge for it.”
That’s right: You can do everything a credit monitoring service offers on your own, for free. In fact, it’s a good idea to access the free reports required by law to be provided to consumers. For an added layer of security, you may want to freeze your credit unless you are planning a major purchase.
Digital Dark Patterns are Designed to Get You to Buy
The use of digital dark patterns is a violation of the Fair Credit Reporting Act (FCRA), which prohibits deceptive practices in the marketing of credit products and services by credit reporting agencies. These practices can have serious financial consequences for consumers. In some cases, it can lead to people paying for products that they may never use, cancel a service or get help from customer service. In the case of Transunion, the use of digital dark patterns may have led to people paying for a credit monitoring service that they did not want or need.
Speaking of Predators: Payday Lenders Use Tricks to Trap Borrowers in Cycle of Debt
A report from the Consumer Financial Protection Bureau (CFPB) reveals that payday lenders engage in deceptive tactics in order to trap borrowers in a cycle of costly reborrowing.
The report suggests that even in states with extensive borrower protections, payday lenders are pushing consumers into high-cost loan rollovers.
“Our research suggests that state laws that require payday lenders to offer no-cost extended repayment plans are not working as intended,” said CFPB Director Rohit Chopra. “Payday lenders have a powerful incentive to protect their revenue by steering borrowers into costly re-borrowing.”
The Difference is Real: $345 or $660
The CFPB explains that a no-cost rollover offers substantial savings and gives a payday loan borrower a way out of debt:
The savings of a no-cost extended payment plan can be substantial. For example, on a typical $300 loan, a borrower would pay $45 in rollover fees every two weeks until they can pay off the principal and incurred fees. After four months, the borrower would have paid $360 in rollover fees and still owe the original $300. If the same borrower opted for a no-cost extended payment plan at the time of the first rollover, they would only have to pay $345 over an extended period.