Bloomberg News

TransUnion’s Credit Data Sale Hurts Unemployed, Groups Say

October 11, 2011

(Updates with TransUnion response in fifth paragraph.)

Oct. 11 (Bloomberg) -- TransUnion Corp., which provides credit information to banks and consumers, should stop selling its reports to employers who use the information in hiring decisions, according to civil-rights groups and the AFL-CIO.

Credit checks by employers discriminate against black, Latino and unemployed applicants, according to a statement signed by 25 groups and sent today to TransUnion, which keeps credit histories on 500 million consumers and businesses. Chicago-based TransUnion has led lobbying against state laws restricting the use of credit histories in hiring, according to the statement.

“We believe that hard work and dedication, not hiring tools with a discriminatory impact such as credit reports, should be the economic passport for working people,” the groups said.

Employers’ use of credit checks in hiring is being challenged by state and federal agencies. The U.S. has sued companies such as the Washington Post Co.’s Kaplan education unit over the practice. California’s Democratic Governor Jerry Brown signed a law limiting many employers from using credit reports in hiring, according to a statement yesterday on the state website.

Employers are interested in “whether an individual acted prudently while he or she was employed,” Colleen Tunney-Ryan, a TransUnion spokeswoman, said in an e-mail, without commenting on the call to stop selling its reports. “A pre-employment report is one tool to help them assess that.”

Money, Secrets

Employers frequently research credit histories when hiring for jobs that involve handling money, trade secrets, client assets and sensitive personal information, she said. Pre- employment credit reports help employers protect their employees and customers, she said.

The campaign to stop TransUnion is backed by the Washington-based National Organization for Women, a feminist- activist group; the NAACP, a Baltimore-based group seeking to end race discrimination; the AFL-CIO, the nation’s largest labor group; and the International Brotherhood of Teamsters.

“An individual’s credit score isn’t indicative of the type of employees they will be,” said Hilary Shelton, senior vice president for advocacy at the National Association for the Advancement of Colored People. Blacks have a higher unemployment rate and lower credit scores than whites, he said.

All credit-reporting companies should stop selling them to companies who use them in hiring, he said. Equifax Inc. and Experian Plc are among other companies selling credit reports.

Employer Checks

Almost half of U.S. businesses check credit histories of candidates, and about 13 percent order checks for all applicants, according to the Alexandria, Virginia-based Society for Human Resource Management.

“Some private-sector employers are required, by federal law, to examine credit history for applicants,” Michael Eastman, executive director of labor-law policy at the U.S. Chamber of Commerce, the largest U.S. business federation, said in an e-mail. “Robust laws and protections already exist to prevent the use of this data for discriminatory purposes.”

California, Connecticut, Hawaii, Illinois, Maryland, Oregon and Washington state also limit use of credit reports, according to the National Conference of State Legislatures. Almost 60 bills in 28 states and District of Columbia were introduced or pending in 2011, according to the conference’s web site.

Kaplan Higher Education was sued Dec. 21 by the Equal Employment Opportunity Commission, which said the company rejected job applicants based on their credit information, causing a disparate impact on black candidates.

“For employees whose responsibilities include financial matters, such as those who advise students on financial aid, background checks also include credit histories,” Kaplan said in a statement.

--Editors: Steve Geimann, Larry Liebert

To contact the reporter on this story: Stephanie Armour in Washington at

To contact the editor responsible for this story: Larry Liebert at

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