Update: FTC Rules Against Trans Union Again

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The Federal Trade Commission ruled this week that consumer credit bureau Trans Union Corp. cannot sell certain consumer lists from its credit files for marketing purposes.


Trans Union, Chicago, which markets lists through its Performance Data unit, said it would appeal the decision to the U.S. Court of Appeals. The company also said it would continue to market its consumer lists during the appeals process.


The Fair Credit Reporting Act prohibits the major credit bureaus from selling certain information unless it is for one of the purposes permitted under the FCRA such as for the extension of credit or for employment or insurance applications. The law doesn't allow certain information to be sold for marketing, however. Trans Union sells both credit lists for the purposes permitted under the FCRA and lists that contain some data from the credit files other than basic information like name, address and Social Security number.


The FTC determined that the information provided by Trans Union in those lists - including the fact that a consumer has a relationship with a creditor and the consumer's age - can be used for establishing eligibility for credit and cannot be sold for marketing purposes by a credit bureau.


"What they maintain is that the target market lists we sell - which are basically name and address and things like presence of a mortgage - they say that that is a credit report, and we don't believe that that's true," said Jan Davis, executive vice president at Trans Union. "We believe that we've shown very clearly with the witnesses that we brought and everything else that [the data we sell] couldn't be used to make credit decisions and, therefore, shouldn't be considered credit data. But they obviously don't agree."


The battle with Trans Union began in 1992 when the FTC filed its first complaint. The other two credit bureaus, Equifax and Experian, both stopped selling consumer information derived from the credit lists, although Experian - then called TRW - still markets some data under terms of a consent decree reached with the FTC in 1993.


Trans Union appealed the FTC's original action, which has since been upheld by two administrative law judges in a series of appeals. Although the FTC has not yet levied any fines against Trans Union, further violations could lead it to seek monetary penalties in court, according to some reports.


The company maintains that it has the right to sell certain information under the free speech protections of the First Amendment.


Davis said the company has 30 days to file its appeal but "it's business as usual" in the meantime. She said Trans Union was expecting the FTC's most recent decision and they could wind up appealing the case to the U.S. Supreme Court.


"It reminds me of 'Butch Cassidy and the Sundance Kid,' " she said, referring to the pursuit of the outlaws. "They kept saying, 'Who are those guys?' "


A favorable ruling in this case by the FTC would have opened up the market for Experian, Orange, CA, to sell more data from its credit files to marketers. An Experian spokeswoman said no one was available to comment on the matter.


However, the spokeswoman did say that Experian only markets lists derived from the so-called "above the line" data on credit files, which consists of consumers' names, addresses and Social Security numbers. She said Experian sells lists to marketers based on additional data from the credit files, but only in aggregate form that is extrapolated into nine-digit ZIP code regional lists.
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