Credit reporting agency TransUnion (NYSE:TRU) has resolved two major cases with the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC), agreeing to pay a total of $23 million in fines. The resolution comes after allegations of Fair Credit Reporting Act violations and improper handling of security freeze procedures.
The first case, involving TransUnion Rental Screening Solutions, Inc. (TURSS), focused on the company's alleged inaccurate consumer reports and non-disclosure of sources. This led to a $15 million settlement and necessitated changes in eviction records reporting, along with the introduction of an adverse action template for enhanced rental screening transparency. The company was also required to pay redress and penalties.
The second case centered on TransUnion's alleged untimely placement or lifting of security freezes and locks, resulting in an $8 million settlement. As part of this settlement, TransUnion was required to implement a comprehensive compliance plan and make payments for redress and penalties.
TransUnion, one of the major US credit reporting agencies alongside Equifax (NYSE:EFX) and Experian (OTC:EXPGF), collects extensive financial data on over 200 million Americans. The company had been accused of failing to verify the accuracy of rental background checks, potentially leading to wrongful housing rejections. It was penalized for falsely communicating the status of security freezes on credit reports to tens of thousands of consumers, creating a considerable backlog of unresolved requests.
In response to these allegations, CFPB Director Rohit Chopra ordered TransUnion to cease its illegal practices, provide compensation to victims, and pay the imposed penalties. This comes even as TransUnion reported a revenue surge of 25% to $3.71 billion in 2022.
According to InvestingPro's real-time metrics, TransUnion's market cap stands at 13.44B USD, with a P/E ratio of 58.43 and a revenue of 3748.6M USD in Q2 of 2023. The company has shown a steady revenue growth of 10.17% and a gross profit margin of 65.29%. Despite the recent legal setbacks, TransUnion's strong earnings and impressive gross profit margins, as noted in InvestingPro Tips, should allow the company to continue its dividend payments. The company is also expected to grow its net income this year.
For investors, it's worth noting that TransUnion generally trades with low price volatility and its liquid assets exceed short-term obligations. This information, along with many other valuable insights, can be found in the InvestingPro Tips, which provides a comprehensive analysis of the company's financial health and market performance.
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