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Credit bureau TransUnion has agreed in perhaps the largest legal settlement ever to offer up to nine months of free credit-report monitoring to more than 150 million Americans. But consumer advocates' reaction to the news was lukewarm, saying the services offered are only somewhat useful.
Any consumer who had a credit card or a mortgage, auto or student loan, or other open credit account or credit line in the U.S. anytime from 1987 to May 28 of this year will be able to choose from two free TransUnion services for a limited time, according to the terms of a settlement, which likely sets a record in affecting the largest number of people.
The lawsuit, filed in federal court in Chicago, claimed that TransUnion had violated the Fair Credit Reporting Act when it sold consumer information to businesses for their targeted marketing efforts.
The law allows companies to sell publicly available information but not private data. TransUnion, based in Chicago, said it had not violated the law, and it discontinued the practice in question in 2001.
"There's been no finding that TransUnion violated any law," said Colleen Ryan, a company spokeswoman.
Seeking to end a class-action lawsuit that's been pending for almost a decade, TransUnion agreed to offer consumers one of two options:
- Six months of TransUnion's credit-monitoring service for free, giving consumers unlimited access to their credit reports and scores, and e-mail notifications when changes occur on their credit reports. The settlement values this service at $59.75.
- Nine months of the credit-monitoring service, plus access to the credit scores used in insurance decisions, and TransUnion's mortgage simulator service, by which consumers can see how their credit score affects their mortgage rate. Value: $115.50.
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Consumers who choose the first option sacrifice their rights to enter a class-action claim against TransUnion, though they might still bring an individual case, while those who choose the second option sacrifice any further legal claims of any kind in the matter. Consumers will not need to provide a credit card to sign up for either service, and both services will simply end -- that is, TransUnion will not automatically sign people up for a paid service, according to the settlement agreement.
There is a third option: Consumers can sign up for a cash payment instead of the free services, but any such payments won't be made for two years -- and they'll be paid only if there's money left after any other "post-settlement claims" have been paid out of a $75 million fund set up by TransUnion for the purpose, according to the settlement.
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The settlement still needs to be approved by the court.
"We're very pleased, and we think the settlement is an excellent result for the class," said Chris Micheletti, a San Francisco attorney and one of the plaintiffs' counsel on the case, in a telephone interview.
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