Appeals Court Nixes TU Appeal of FTC List Sale Order
Trans Union Corp.’s bid to overturn a Federal Trade Commission order to stop selling target marketing lists has been rejected by a federal appeals court in Washington.
The refusal of a three-judge panel of the U.S. Court of Appeals for the District of Columbia to consider the firm’s challenge means that Trans Union must stop selling consumer reports in the form of target marketing lists by April 23.
It cannot use credit report information about auto loans, mortgages, lines of credit and other credit-related data to build and sell marketing information about individuals without their express permission.
Shortly after the FTC filed administrative charges in 1992 against Trans Union alleging that the information in its target marketing lists violated the Fair Credit Reporting Act, Equifax and Experian, formerly TRW, stopped selling data from their credit reports for target marketing purposes.
Officials of Chicago-based Trans Union were said to be “disappointed” by the court’s action, spokesman Jeffrey Junkas said. “We are reviewing the decision to decide what we are going to do next. We’re weighing our options.”
Those options include asking for the full nine-member appellate court to review the panel’s decision or petition the U.S. Supreme Court to review the lower court’s action.
In its unanimous 15-page decision, the three judge appellate panel refused to review the FTC’s order saying essentially that Trans Union’s challenge to it was without merit.
In court papers, they said that Trans Union “sells lists of names and addresses to target marketers, companies and organizations that contract consumers with offers of products and services. The Federal Trade Commission determined that these lists were consumer reports under the Fair Credit Reporting Act and thus could no longer be sold for target marketing purposes. Challenging this determination, petitioner [Trans Union] argues that the Commission decision is unsupported by substantial evidence and that the [FCR] Act itself is unconstitutional. Because we find both arguments without merit, we deny the petition for review.”
The tribunal, affirming the government’s interest in protecting personal privacy, rejected Trans Union’s assertions about the alleged vagueness of the FCRA saying it could have sought an advisory opinion from the FTC.
Although the judges sharply criticized Trans Union for failing “to mount a proper substantial evidence challenge” to the FTC’s order to stop selling consumer reports in the form of target marketing lists, they said that the company highlighted a “potentially troubling inconsistency” in the FTC’s position on the issue.
The tribunal said that while lenders consider names and addresses when prescreening consumers for guaranteed offers of credit, the FTC “does not prohibit the sale of names and addresses for target marketing purposes” although some lenders will not offer credit to some consumers with just a post office box instead of an actual street address.
“Prescreening and the guaranteed offers of credit it spawns can only take place through the use of consumer reports, whereas the use of credit data for non-credit-related mailings is at most helpful to those ends,” the court concluded.
