Public Record

PUBLIC RECORD

UNITED STATES OF AMERICA

BEFORE FEDERAL TRADE COMMISSION

_____________________________________

DOCKET NO. 9255

_____________________________________

In the Matter of

TRANS UNION CORPORATION,

a corporation.

_____________________________________

INITIAL DECISION

_____________________________________

James P. Timony

Administrative Law Judge

Dated: July 31, 1998
Public Record -2-
Public Record -iTABLE OF CONTENTS

I. INTRODUCTION ..................................................... 2

II. FINDINGS OF FACT .................................................. 2

A. Respondent .................................................... 2

B. Consumer Reporting Agencies ...................................... 3

1. Credit Reporting ........................................... 3

2. Evolution of the Credit Reporting Industry ....................... 4

3. Credit Scoring ............................................. 4

C. Trans Union Consumer Reporting ................................... 5

D. Trans Union’s Target Marketing ..................................... 6

1. Trans Union’s Master File .................................... 6

2. Indicators from the September 1997 Master File ................... 7

a. Automobile ......................................... 8

b. Bank Card .......................................... 8

c. Department Store Card ............................... 10

d. Finance Trade ...................................... 10

e. Head of Household .................................. 11

f. Mortgage ......................................... 11

g. Length of Residence ................................. 12

h. Mail Order Buyer ................................... 13

i. Singles Select ...................................... 13

j. Student Loan ....................................... 13

k. Upscale Retail Card Selects ............................ 13

3. The September 1997 Master File .............................. 14

a. Trans Union’s “E-Val” ............................... 14

b. PIC .............................................. 14

c. P$YCLE .......................................... 14

d. SOLO ............................................ 14

e. TIE .............................................. 16

4. Trans Union’s Other Target Marketing Files ..................... 17

a. TransLink ......................................... 17

b. New Issues File ..................................... 18

c. Emerging Consumers File ............................. 18

5. Characteristics and Attributes ................................ 19

6. Changes in the Trans Union’s Master File

and Target Marketing Products ............................... 19
Public Record -ii7. Promotion of Trans Union’s Target Marketing ................... 20

a. Sales and Revenue ................................... 20

b. Credit-Based Marketing Information ..................... 21

c. Depth and Timeliness ................................ 23

d. Individual Observed Behavior .......................... 23

8. Individual Observed Credit Information for Target Marketing ........ 24

a. Trans Union’s Competitors’ Target Marketing Lists ......... 24

(1) First Data, Metromail, and Polk ................... 24

(2) ACXIOM ................................... 25

(3) Experian .................................... 25

(4) Business Development .......................... 26

b. Trans Union’s Exclusively Individual-Level Data ............ 27

E. Use of Trans Union’s Target Marketing Information in Credit Eligibility ...... 28

1. Credit Scoring ............................................ 29

a. FICO’s Scoring Models ............................... 30

b. Scoring Model Design and Terminology .................. 30

c. Scorecard Segmentation .............................. 30

2. Information Used in Scoring ................................. 31

a. Tradelines ......................................... 31

b. Characteristics and Attributes .......................... 32

(1) Bank Card ................................... 32

(2) Open Date of Tradelines ........................ 33

(3) Collection Account ............................ 34

(4) Finance Trade ................................ 34

(5) Mortgage .................................... 35

(6) Automobile Loan .............................. 35

(7) Credit Limit and Date Verified .................... 35

(8) Zip, Age & SSN .............................. 35

3. Information Sold by Trans Union in its Target Marketing Business Used in

Credit Scoring ............................................ 35

4. Credit Grantors Eligibility ................................... 36

a. Invitation to Apply .................................. 36

(1) Wachovia’s Invitation to Apply ................... 36

(2) Discover’s Invitation to Apply .................... 37

b. Information Sold by Trans Union in its Target Marketing Business

is Used in Credit Grantors’ Scoring ...................... 38

c. Prescreened Offers of Credit ........................... 38

(1) Wachovia’s Prescreen .......................... 39

(2) First Card’s Prescreen .......................... 41

(3) Chase’s Prescreen ............................. 42

(4) Northern Trust’s Prescreen Process ................ 44

d. Information Sold by Trans Union in its Target Marketing Business

is Used in Credit Grantor’s Prescreening .................. 45
Public Record -iiiF. Consumers’ Privacy and Disclosure of Consumer Reports ................ 45

1. Survey of Consumer Privacy ................................. 45

2. Government Interest in Consumers’ Privacy ..................... 49

3. Opt-Out ................................................ 51

G. The Direct Marketing Industry ..................................... 53

H. Consent Decree With TRW ....................................... 53

I. The 1996 Amendments to the FCRA ................................ 54

III. ANALYSIS ......................................................... 55

A. Target Marketing ............................................... 55

B. Credit “Eligibility” Information ..................................... 57

1. Credit Scoring ............................................ 58

a. Existence of Tradelines ............................... 59

b. Number of Tradelines ................................ 60

c. Other Characteristics ................................. 61

2. Prescreening ............................................. 63

3. Invitations to Apply ....................................... 66

C. Trans Union’s Target Marketing Lists ............................... 68

1. Target Marketing Databases ................................. 68

a. CRONUS ......................................... 68

b. The Master File Database ............................. 69

c. Characteristics and Attribute File ........................ 70

2. Promotion and Sale of Trans Union’s Target Marketing Products ..... 71

3. Master File Lists Show Detailed Credit Information ............... 73

a. Automobile ........................................ 73

b. Bank Card ......................................... 74

c. Department Store Card ............................... 75

d. Finance Trade ...................................... 76

e. Head of Household .................................. 76

f. Mortgage ......................................... 76

g. Length of Residence ................................. 78

h. Mail Order ........................................ 78

i. Singles ........................................... 79

j. Student Loan ....................................... 79

k. Upscale Card ....................................... 79

4. September 1997 Master File ................................. 79

a. E-Val ............................................ 79

b. PIC .............................................. 80

c. P$YCLE .......................................... 80

d. SOLO ............................................ 80

e. TIE .............................................. 82
Public Record -iv5. Trans Union’s Other Target Marketing Lists ..................... 83

a. TransLink ......................................... 83

b. New Issues ........................................ 83

c. Emerging Consumers ................................ 84

D. Burden of Proof ................................................ 84

E. Trans Union Target Marketing Products As Consumer Reports ............ 85

1. FCRA .................................................. 85

2. Facts ................................................... 86

F. Trans Union’s Constitutional Rights ................................. 87

1. PerformanceData Lists Are Commercial Speech .................. 88

2. Commercial Speech Law .................................... 89

a. Privacy Interest in the FCRA ........................... 90

b. Public Confidence in Credit Reporting .................... 91

c. Citizens’ Concerns ................................... 91

d. Government Interest Directly Advanced .................. 91

F. Summary ..................................................... 93

CONCLUSIONS OF LAW ................................................... 94

ORDER .................................................................. 95
Public Record

UNITED STATES OF AMERICA

BEFORE FEDERAL TRADE COMMISSION

____________________________________

)

In the Matter of )

)

TRANS UNION CORPORATION, ) DOCKET NO. D-9255

a corporation. )

____________________________________)

INITIAL DECISION

By: James P. Timony, Administrative Law Judge

____________________________________________________________

Christopher W. Keller, Esq., Jonathan A. Smollen, Esq., 

Kellie A. Cosgrove, Esq, Annemarie Scanlon Harthun, Esq.,

Lucy Morris, Esq.,

Federal Trade Commission, Washington, D.C.,

Counsel Supporting the Complaint.

Roger L. Longtin, Esq., Stephen L. Agin, Esq.,

Elizabeth R. Bacon Ehlers, Esq., Colleen E. McManus, Esq.,

Rudnick & Wolfe, Chicago, IL.,

Steven B. Feirman, Esq.,

Rudnick, Wolfe, Epstien & Zeidman, Washington, D.C.

Counsel Supporting Respondent.

____________________________________________________________
 116 F.T.C. 1334 (1993). The original complaint in this matter also alleged violations of 1

the FCRA by Respondent in connection with its prescreening activities. Those allegations were

settled by consent agreement on November 18, 1993. Id. at 1357-61. Respondent’s prescreening

is not, therefore, at issue.

 118 F.T.C. 821 at 838-95 (1994). 2

 Judge Parker ruled that the time limits required by recent amendment were impossible in 3

this case. Order of September 30, 1996.

 References to the record are made using the following abbreviations: 4

F Finding of Fact

CX Commission Exhibit

(continued...)

Public Record -2-

I. INTRODUCTION

The complaint, filed on December 15, 1992, alleges that Trans Union’s sale of target

marketing lists, with consumer information from its credit reporting files, was the sale of

consumer reports to persons who did not have a permissible purpose to receive them, in violation

of the FCRA, 15 U.S.C. § 1681. Administrative Law Judge Parker entered summary decision on 1

September 20, 1993, upholding the complaint.

Trans Union appealed to the Commission, which upheld Judge Parker on September 28,

1994. On appeal, the United States Court of Appeals for the District of Columbia Circuit held 2

that there was a genuine issue of material fact and that summary decision was inappropriate and

remanded the case to the Commission. Trans Union Corp. v. FTC, 81 F.3d 228 (D.C. Cir. 1996).

By Commission Order of July 9, 1996, the matter was remanded for trial. I was assigned

to preside on December 22, 1997. The trial commenced on February 17, 1998. The transcript is

3962 pages. About 500 exhibits were received. The record closed on March 27, 1998.3

II. FINDINGS OF FACT

A. Respondent

1. Trans Union Corporation (“Trans Union”) is a Delaware corporation, with its office at

555 West Adams Street, Chicago, Illinois 60661.

2. Trans Union gathers information on consumers and sells consumer reports in interstate

commerce. Its main competitors are Experian and Equifax. (Rodgers CX 191 at 47/3-13.)4
 (...continued) 4

TU Respondent’s Exhibit

References to trial transcript are usually made using witness name, page and lines:

Dexter 1231/4-21.

References to exhibits include number and page:

CX 125-3

TU-115 p.4.

Reference to deposition exhibits include witness name, exhibit number, and transcript page

and lines:

Marquis CX 188 at 147/20 -- 148/1.

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3. Trans Union is a consumer reporting agency, Section 603(f), Fair Credit Reporting Act

(“FCRA”). It sells data about the credit of millions of Americans. Buyers use this information to

evaluate consumers’ credit. (Rodgers CX 191 at 27/3-7.)

4. PerformanceData is a division of Trans Union engaged in “target marketing” since

1987. Previously known as “TransMark” then as “Trans Union Lists,” it became

“PerformanceData” in 1997. (CX 84-A.)

5. Trans Union’s “target marketing” uses information from its consumer reports. It

prepares a list of consumers who meet criteria specified by the client and sells this list for use in

soliciting those consumers. Target marketing aims sales efforts to consumers most likely to

respond to an offer. (Admitted.)

B. Consumer Reporting Agencies

1. Credit Reporting

6. In the United States, information on credit-worthiness of individuals for use by credit

grantors is gathered by consumer reporting agencies from credit grantors. (Connelly 2508/10-

14.)

7. Consumer reporting agencies do not pay for the data they receive from credit grantors,

but charge those credit grantors for edited credit data. (Connelly 2590/8-17.)
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8. Credit grantors supply information to consumer reporting agencies so they can later

determine credit eligibility based on information they receive from consumer reporting agencies. 

(Pendleton 405/1-5.)

9. Credit grantors need accurate data about the creditworthiness of consumers. (Johnson

1206/17 -- 1209/7.)

2. Evolution of the Credit Reporting Industry

10. The credit reporting industry has changed over time. Initially, retailers and other

credit grantors relied on their own experience with a consumer to grant credit. Credit grantors

started to exchange information about consumers. Credit bureaus developed to pool information

about consumers. (Johnson 1206/16 -- 1208/1.)

11. After World War II, consumer credit grew. Computers enabled consumer reporting

agencies to store more information. (Johnson 1205/24 -- 1206/11; 1210/7-16.) This led to a

uniform system of reporting credit information. (Johnson 1206/7-11; 1210/7-16.) The industry

consolidated with large regional and national privately held consumer reporting agencies. 

(Connelly 2494/19 -- 2496/21.)

12. From 1975 to 1980, the large national consumer reporting agencies offered

“affiliations” whereby local bureaus own data housed in the computers of the national consumer

reporting agencies which supply information in their computers to credit grantors. (Connelly

2498/4 -- 2499/2, 2499/7-15.) In the late 1980s, a final wave of consolidation took place,

resulting in three consumer reporting agencies -- Equifax, Experian, and Trans Union. (Connelly

2506/2 -- 2508/14.) 

3. Credit Scoring

13. The information credit grantors use to evaluate consumers has evolved. At first,

credit grantors pooled only negative information. Consumer reporting agencies started gathering

both negative and positive information. (Johnson 1209/12-25.)

14. Computers enabled credit grantors to analyze information about a consumer through

“credit scoring.” (Johnson 1209/15 -- 1213/11.)

15. Credit scoring uses credit information to build models to predict a consumer’s likely

future credit performance. Most of the data used for credit scoring comes from the consumer

reporting agencies. (Coffman 3825/18 -- 3826/2; Rapaport 673/15-25.) This data is objective

and is a better predictor than information provided by the consumer filling out an application. 

(Coffman 3806/2-14; 3857/24 -- 3858/4; 3858/17 -- 3859/3; CX 122-P.)
 A “tradeline” is a consumer account. F 22, 23. 5

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C. Trans Union Consumer Reporting

16. Trans Union has CRONUS, its system for supplying consumer reports. (Botruff

2043/3-6; Rock 2086/15-16.) CRONUS contains 600 million records. (Weith 1867/21-23.)

17. Trans Union receives consumer accounts receivable information from credit grantors

such as banks, mortgage companies, credit unions, automobile dealers, and collection agencies, as

well as public record information. (Stockdale 873/22-25.) Trans Union receives 16,000 magnetic

tapes or computer disks monthly, with information on 85,000 customers. (Stockdale 874/4-23.)

18. Trans Union receives information on 1.8 billion tradelines a month, including public 5

records, collections, student loans, and child support information. (Stockdale 908/1-19.) Some

customers report information daily to Trans Union; most report monthly or according to their

billing cycles. (Stockdale 904/8-11; Frank CX 186 at 19/3-6.) Most subscribers to Trans Union

(credit grantors) report customer account information in the Metro Format, a form designed by

credit grantors. (Stockdale 901/11-18; Botruff CX 181 at 26/15 -- 27/17; 65/3-12.)

19. Information submitted by credit grantors to Trans Union is added to CRONUS. 

(Stockdale 879/14-19; 880/3 -- 881/8.) Accounts receivable information is separated

geographically. (Stockdale 879/7-16.) Due to large volume, only some files on CRONUS can be

updated each day. (Stockdale 879/13-16.) CRONUS is updated each week. (Botruff CX 181 at

30/18 -- 32/7.)

20. To match incoming information to that in CRONUS, Trans Union will use account

number, name, account type and house number of address. If no match occurs, a new record is

created on CRONUS. (Stockdale 909/13 -- 910/8; 911/17-25.)

21. Information is also added to CRONUS by the ANCI file. (Stockdale 881/10 -- 882/9;

884/6-11.) The ANCI file gets information from consumers and credit grantors. (Stockdale

882/10-24.) Each day the ANCI file is read into CRONUS. (Stockdale 884/6-11.)

22. For CRONUS, tradeline information includes: a customer’s account number, name,

address, telephone number, social security number, and any generational suffix; the open date of

the account; the subscriber’s (credit grantor) name and code, and its kind of business (“KOB”);

the verified date on the account; the type of loan; the credit limit assigned by the credit grantor;

and the closed date of the account. (Stockdale 893/6-15; 894/4-12; 895/16 -- 896/1; 896/19-22;

897/13 -- 898/2; Botruff 2049/1-6; Weith 1844/18-22; Tr. 872, 875-76, 3372-73.)

23. On CRONUS, public records and collection accounts are considered “tradelines.” 

CRONUS contains records that have only public record information and records that contain

inquiries only -- that is, records with no trade information and no public record information; less
Public Record -6-

than 1% of the records in CRONUS do not have tradelines. (Stockdale 906/1-8, 21-23; 904/15-

18; Botruff CX 181 at 62/15-24; Tr. 904-05; CX 358-G.)

D. Trans Union’s Target Marketing

24. Trans Union uses credit information from CRONUS, along with other information, to

create products for its target marketing business, using the “Master File” database (F 25-36; 112-

116), and “Standard Characteristics” (F 108-111). Trans Union’s target marketing products are: 

“indicator” or “select” (F 37-76); modeled products (F 77-98); and TransLink and the other

databases (F 99-107).

1. Trans Union’s Master File

25. Trans Union’s data for target marketing is its Master File. (CX 72-C.) The source

for the Master File is CRONUS and the TransMark file which is a “snapshot” of CRONUS. 

(Cabigon 1365/13-18; Kinsinger 2017/19-23; Weith CX 196 at 179/11-13.) The TransMark

database is created each month of records from CRONUS. (Weith CX 196 at 179/12-13, 21-22;

180/11-12.) It combines all CRONUS records on the same name and address. (Weith CX 196 at

186/12-19; 188/7-14.)

26. The Master File is rebuilt three times a year (in 1997, in April, September and

December). (Admitted; Cabigon 1366/6-12; Davis 62/16 -- 63/8.) The Master File involves 160

million persons and 105-110 million households. (Weith 1859/8-18; CX 333.)

27. The Master File excludes persons based on the number of and qualifications of their

tradelines. (Weith CX 196 at 189/19 -- 190/11; 191/7-15; CX 101-A - C; Cabigon 1372/7 --

1374/8; CX 329-A; CX 341.)

28. The September 1997 Master File initially verifies the existence of at least one open

and qualifying trade in the individual’s CRONUS record. “Verified” means that some activity

occurred within the last 12 months, and "activity" means that something was reported, such as the

opening of the tradeline or the receipt of a payment. (Cabigon 1372/18 -- 1373/7; CX 329-A;

Weith CX 196 at 197/24 -- 198/14.)

29. For a single trade to qualify for the Master File, there must be no date closed present

on the record, the trade must not be disputed, and the trade cannot be a collection set or a public

record set. (Weith CX 196 at 191/7-15; 227/1-5; Cabigon 1374/5-21.)

30. A single tradeline with an account type "I" (installment) or "M" (mortgage) and a

current balance of zero will not count as the single qualifying trade for the Master File because

those indicators signify that the tradeline is closed. (Weith CX 196 at 194/13 -- 195/3.)
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31. The Master File "list exclusion" is a second qualification requiring that a consumer

have at least two open trades, one verified within 12 months. Prior to January 1998, consumers

with less than two open trades but still meeting the one qualified tradeline requirement were

placed in the Emerging Consumers file. Consumers who have at least two open trades, one

verified within 12 months, were then included in the Master File and the Attribute or Standard

Characteristics File. (Cabigon 1373/8 -- 1374/4; CX 329-A; Weith CX 196 at 224/23 -- 225/10;

CX 104-B.)

32. Trans Union withdrew some information in the Master File for sale after

September 30, 1997, but the minimum requirement for the Master File did not change until

January 1998. (Weith 1831/23 -- 1832/6.)

33. The minimum requirement for the Master File now is either two trades reported in the

last six months, or one trade reported in the last six months matched to an outside vendor file. 

(Weith 1830/23 -- 1831/4; Cabigon 1386/14 -- 1388/7; CX 332-A; CX 339-A.)

34. The Master File obtains a subscriber number from a person’s tradeline in CRONUS. 

(Cabigon 1393/11-16; Weith 1847/13 -- 1848/19.)

35. Employees of ACXIOM, a corporation whose single largest stockholder and second

largest customer is Trans Union, with Trans Union employees, build and sell information in the

Master File. ACXIOM ensures that addresses are correct. (Davis 85/12-17; Weith 1842/4-15;

Hinman 2338/7 -- 2339/11.)

36. The Master File is verified through the U.S. Postal Service’s National Change of

Address file (“NCOA”). (Weith 1838/10-21; Davis 87/1-10.) Fraudulent addresses are excluded. 

(Weith 1833/19 -- 1834/24.)

2. Indicators from the September 1997 Master File

37. The Master File contains “indicators” (“selects”) (such as the fact that a person has a

bank card) derived from CRONUS and other sources. CX 1-A -- Z-6 shows the selects available

to a customer assembling a target marketing list. (Davis 91/2-21.) Half of this information is

from CRONUS. (Cabigon 1438/12-25.)
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a. Automobile

38. Trans Union offers data showing open automobile loans, loan type (lease, refinanced

loan, equity transfer loan, automobile loan), open dates and expiration dates for the lease or loan,

and the high credit amount of most current loans/leases. Trans Union also offers “driver” lists. 

(CX 1-A -- E.)

39. The source for the “auto expiration date" (CX 1-A), "auto high credit" (CX 1-B),

"auto loan type" (CX 1-B), and "auto open date" (CX 1-C), is CRONUS. (Cabigon 1377/10-24.) 

A consumer is a "driver" (CX 1-E) if CRONUS shows an auto loan or a business that issues

gasoline cards. (Cabigon 1378/12-19.) When the September 1997 Master File examines

CRONUS to determine whether a person has an auto loan, it will not consider the loan if the open

date is more than five years old. (Weith CX 196 at 211/13-16; 212/3-4.) The availability of loan

and lease dates permits targeted promotions. (CX 45; CX 261-E -- G, J.)

40. [

 ]

41. [

]

42. [

 ]

43. [

]

b. Bank Card

44. Trans Union offers a list of persons with an open bank card (including the open date

of the most recent bank card) and an open premium bank card (including the open date of the

most recent premium bank card). (CX 1-C, R, T.) Trans Union’s September 1997 Master List
Public Record -9-

defines and calculates its premium bank card select as a bank card with a credit limit of more than

$9,999. (Dexter 1271/17-20; CX 64-A; Weith 1867/5-13.)

45. To generate the indicator "presence of an open bank card" (CX 1-C), the September

1997 Master File program looks to the CRONUS record. (Cabigon 1377/21 -- 1378/4.) For a

person to qualify for a premium bank card, CRONUS must indicate a tradeline with a type of

business "B," an account type equal "R," and a credit limit field indicating greater than or equal to

$9,999. (Weith CX 196 at 230/22 -- 231/8; CX 102-E; Cabigon 1427/9-17.)

46. Trans Union’s target marketing competitors offer bank card and premium bank card

selects obtained from self-reported survey responses or from files of credit card information

obtained from Business Development, Incorporated (“Business Development”) or Dresden

Direct. (F 47-50; 148-154.)

47. [

]

48. First Data’s active bank card select is an open bank card in a household. (Cleary

3094/17-22; TU-119 at 6.) [

 ] Nothing in the self-reported credit card

information nor in the information provided by Business Development reveals the open date of the

bank cards or premium bank cards. (TU-130 p.4; TU-117 p.2; TU-120 p.2; Schultea 3928/2-4;

CX 310-D.)

49. [

 ]

50. In addition to information from self-reported questionnaire responses and Dresden

Direct, ACXIOM obtains credit card information from other sources, including information that a

consumer used a credit card at one time, obtained from companies that compile that information. 

(Hinman 2247/18 -- 2248/7, 14-16.)
Public Record -10-

51. JAMI Marketing (“JAMI”) manages several lists that purport to provide credit card

information. The source of the credit card data in those lists is neither credit grantors nor

consumer reporting agencies. (Miller 3017/6-11.) The source is a list of the list owners’

customers who used a credit card to make a purchase from the list owner. (Miller 3018/22 --

3019/11; 3058/5-17; 3060/20 -- 3061/13; 3065/13 -- 3067/25.) JAMI-managed lists do not have

premium bank card selects. (Miller 3019/22 -- 3020/5.)

c. Department Store Card

52. Trans Union’s September 1997 Master File offers open department store trades

(including open date of the most recent department store trade). (CX 1-E, R.) To generate the

open department store card indicator (CX 1-E), the Master File looks to CRONUS. (Cabigon

1378/5-11.)

53. Trans Union’s target marketing competitors offer similar department store card

selects obtained from self-reported survey responses or from files of credit card information

obtained from Business Development, or Dresden Direct. (F 54; 47-48; 148-154.)

54. [

 ]

d. Finance Trade

55. Trans Union’s September 1997 Master File List offers several finance loan lists

including an open finance trade (with the open date of the most recent finance loan), a “30/60/90

day” finance trade, a mortgage or auto loan, and a closed finance loan trade. (CX 1-F, R.) A

“30/60/90 day” trade is due in 30/60/90 days. (Davis 154/24 -- 155/7; Cabigon 1412/7-11.)

56. To generate the open finance trade indicator (CX 1-F), the September 1997 Master

File examines CRONUS to determine if the subscriber’s business is "finance," if the account type

is installment, and if the finance trade has an open date. (Cabigon 1378/20-23; Weith CX 196 at

228/14-25; CX 102-A -- B.)

57. To generate the indicator "30/60/90 day finance trade" (CX 1-F), the September 1997

Master File determines if the individual has a tradeline with a finance company that issues

30/60/90 day loans by examining from CRONUS the subscriber’s business and the account. 

(Cabigon 1378/24 -- 1379/16.) To generate the "finance loan closed" indicator (CX 1-F), the

September 1997 Master File uses CRONUS. (Cabigon 1379/20-24.)
Public Record -11-

e. Head of Household

58. Trans Union offers a select for head of household. (CX 1-H.) The "head of

household" (CX 1-H) is derived from CRONUS; the person with the highest number of trades is

the head of household. (Cabigon 1380/1-19; Weith 1832/11-14.) If a household contains two

CRONUS records with the same number of trades, the head is the first record on file. (Weith

1832/17 -- 1833/6.)

f. Mortgage

59. Trans Union offers mortgage lists from the September 1997 Master File List

including: an open mortgage; a second open mortgage; and the open and closed dates and high

credit amounts of both mortgages. An additional list for both mortgages is the loan type

(including indicators for refinanced and secured mortgages and secured home improvement

loans). (CX 1-N -- P.)

60. The September 1997 Master File lists "mortgage one" and "mortgage two" (CX 1-N),

mortgage high credit (CX 1-O), mortgage closed dates (CX 1-O), and mortgage type (CX 1-P)

are derived from CRONUS. (Cabigon 1381/18 -- 1383/1.)

61. The September 1997 Master File list “Home Value Range” uses E-Val’s model to

calculate an individual’s home value. (CX 1-J.) The following are counted: (i) mortgage; or (ii)

non-automobile installment loan with a high credit amount greater than $49,000 or current

balance greater than $50,000; or (iii) real estate installment loan; or (iv) non-automobile secured

installment loan with a high credit or current balance greater than $16,000. (Weith CX 196 at

205/21-- 207/3.)

62. CX 326-B specifies the Trans Union attributes (F 108-111) used for the home value

calculation in September 1997. The following attributes were used to calculate home value: 

RE20 (months since oldest revolving trade opened, CX 327-B); MT28 (total mortgage high

credit/credit limit, CX 327-B); MT32 (maximum balance owed on all mortgage trades, CX 327-

B); MT33 (total balance of all mortgage trades, CX 327-B); PB14 (number of premium bank card

trades verified last 24 months, CX 327-D); and G051 (percent of trades never delinquent,

CX 327-E). (Cabigon 1370/19 -- 1371/8; CX 3-S.)

63. Trans Union uses age, mortgage, the original mortgage amount, and the opening

balance to calculate the current home market value for a house. (Weith 1848/24 -- 1849/25.) 

The calculation uses demographic information from CRONUS and from the census. (Weith

1850/17 -- 1851/3.)

64. The Master File list "home equity actual" (CX 1-I) (the dollar amount of equity in a

person’s home) and “home equity range” (CX 1-I) are calculated by using mortgage high credit
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and mortgage balance information from CRONUS and subtracting them from the estimated home

value. (Weith 1846/17 -- 1847/5; 1850/1-3; Cabigon 1380/20 -- 1381/11.)

65. [

 ]

66. Metromail obtains information regarding mortgages -- including rate type, loan type

(FHA, VA, Conventional), mortgage amount, and purchase price -- from deeds in the public

record. (Litz 2972/6-9; 2975/5 -- 2976/7.) Metromail also offers its clients the “Equity

Spenders” list which identifies households, from public record information and from self-reported

information, that have recently refinanced or purchased a home. (Litz 2973/6-19; TU-115 p. 113;

TU-116 p. 16.)

67. [

 ]

68. [

 ]

69. [

 ]

g. Length of Residence

70. Trans Union offers a length of residence select showing the number of years a person

has resided at an address. (CX 1-J.) The Master File length of residence indicator uses data from

CRONUS, including mortgage open dates. (Cabigon 1371/9 -- 1372/3; 1381/12-17; 1415/14-

19.)
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h. Mail Order Buyer

71. Trans Union lists mail order buyers, including its “MOB1" indicator (CX 1-J) based

on identifying tradelines (such as Spiegel’s, L.L. Bean, Eddie Bauer) on CRONUS and identifying

as a mail-order buyer on the Master File persons with those tradelines. (Weith 1847/13 --

1848/19.)

i. Singles Select

72. Trans Union offers a "singles" list showing single persons. (CX 1-U.) This Master

File indicator is from tradelines on CRONUS showing that credit was granted to a person (rather

than a joint account). (Cabigon 1419/21 -- 1420/4; Weith CX 196 at 219/2-4; CX 99-O.)

j. Student Loan

73. Trans Union offers several student loan selects showing a student loan (with the open

date of the most recent student loan), the aggregate high credit amount of all of a person’s

student loans, and a closed student loan. (CX 1-W.) A CRONUS record qualifies as a student

loan on the September 1997 Master File if the loan type is “student” and the date closed is not

equal to zero. (Weith CX 196 at 212/10-21; CX 100-N.)

k. Upscale Retail Card Selects

74. Trans Union’s September 1997 Master File offers a select for an open upscale retail

card (including the open date). In its promotional materials and internally, Trans Union indicates

that its upscale store select is based upon the National Retail Federation’s listing of “prestigious”

stores. (CX 1-Q, Y; CX 72-C; Davis 226/24 -- 227/3.)

75. For the upscale retail card and open date indicators, the September 1997 Master File

searches CRONUS records to find an open upscale retail card and an open date for the tradeline. 

(Cabigon 1383/2-12; 1393/11-16; Weith CX 196 at 229/7 -- 230/6; CX 102-D.)

76. [

 ]
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3. The September 1997 Master File

a. Trans Union’s “E-Val”

77. Trans Union offers a product called E-VAL, a scoring system that estimates the

amount of equity available in a consumer’s home, on its Master File in the form of its “Home

Value Ranges,” “Home Equity (Actual),” and “Home Equity Range” selects (F 61-64). (CX 1-I,

J; Davis 134/12 -- 135/13; CX 118-B.) E-Val selects were available for sale to target marketing

customers prior to October 1, 1997; they are now available only for firm offers of credit. (Davis

66/8-10, 73/4-14.)

b. PIC

78. PIC, a product created by Trans Union and LOCUS, predicts, inter alia, the likelihood

that a person owns financial service products. PIC is derived from characteristics in CRONUS. 

(Tr. 1863-64.) Trans Union used its Standard Characteristics (F 108-111) in developing PIC and

appends individual-level credit data to survey data to model the likelihood of a person owning

particular financial products. Until October 1, 1997, Trans Union offered PIC as a Master File

select; PIC is currently available only for firm offers of credit. (Davis 111/25 -- 112/24; 136/2-6;

214/1-5; 234/17-19; Weith 3749/4 -- 3751/1.)

c. P$YCLE

79. [

 ]

80. [

 ]

d. SOLO

81. [

 ]
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[

 ]

82. [

 ]

83. According to the SILHOUETTE User’s Guide, “[a]ssignment to a cluster is based on

a credit view of consumers . . . . Cluster 8, because of its generally high level of credit activity,

might contain consumers who are good candidates for credit offers.” SILHOUETTE

distinguishes its clusters based on some of the same factors used by Trans Union in its target

marketing list products -- e.g., finance accounts, bank revolving, department store, retail -- and

the variables in clusters can be “zero,” “one,” and higher numbers. (CX 122.)

84. [

 ]

85. [

 ]

86. Until October 1, 1997, Trans Union offered SOLO to its target marketing customers;

currently SOLO is available only in the context of firm offers of credit. (Davis 68/19-22.) Trans

Union withdrew SOLO because of the FCRA amendments and the fact that customers had

learned that SOLO clusters correlated with credit performance characteristics. (Davis 67/23 --

68/4.)

87. Prior to October 1, 1997, Trans Union attached SOLO codes to a customer’s own

client lists, allowing clients to analyze their existing customer base by SOLO codes. (Dexter

1312/17 -- 1315/4; Davis 70/6-18; CX 14.) This good credit risk list constitutes a consumer

report. (Marquis CX 188 at 128/2-9.) [

 ]

88. Until September 30, 1997, Trans Union offered to append SOLO clusters to

TransLink lists. (Dexter 1236/22 -- 1237/25; Davis 67/19 -- 68/4; CX 125-E.)
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89. [

 ]

90. Products similar to Trans Union’s SOLO and P$YCLE in the target marketing list

industry are not as strong as the Trans Union products. (Hinman 2271/9-11.) ACXIOM received

SOLO and P$YCLE codes from Trans Union until October 1, 1997. (Hinman 2269/15 --

2270/12.) The models that ACXIOM used in place of P$YCLE and SOLO (Claritas’ Affluence

and WealthWise and Experian’s P$YCLE) do not provide as strong predictive results as the Trans

Union products. (Hinman 2270/13 -- 2271/15.)

e. TIE

91. [

 ]

92. [

 ]

93. [

 ]

94. [

 ]

95. [

 ]
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[

 ]

96. [

 ]

97. [

 ]

98. Metromail contributes income information, based on census data and self-reported

consumer survey responses, to IN-SOURCE, a joint product with Experian. (Litz 2983/14 --

2984/11.) ACXIOM also has income information that it receives from other companies’ selfreported survey or product registration questionnaires and the estimated income models available

from other list providers such as Polk, Experian, and Metromail. (Hinman 2251/17 -- 2252/9.)

4. Trans Union’s Other Target Marketing Files

a. TransLink

99. TransLink is Trans Union’s reverse append product which matches a name and

address with a bank card number. (Smith 1487/20-25.) TransLink works as follows: a merchant

gets a bank card number from its customer, sends it to Trans Union, which returns a name and

address (“reverse append”). The source of the account number and name and address information

is CRONUS. (Weith 1823/22 -- 1824/14; Dexter 1305/24 -- 1307/6; Davis 89/25 -- 90/10;

CX 126; CX 132-D; CX 133-B; CX 266.)

100. When a merchant supplies Trans Union with an account number of a joint account,

Trans Union returns only one name -- the first name on that account. (Weith 1824/16 -- 1825/17;

1827/4-15.) The name of the owner of the card is returned to the merchant, regardless of who

used the card. (Weith 1827/19-24.) A TransLink customer complained that the TransLink

product returned names differing from the consumers. (Porretto 1628/7 -- 1630/9; CX 273-A --

K.)
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101. When Trans Union returns to the merchant the name and address of the person on

the credit card, the merchant prints a mailing label and sends the consumer a piece of junk mail. 

The merchant can use the consumer’s purchase information and know what the consumer bought. 

(Marquis CX 188 at 144/7-10; 151/10-12.)

102. Trans Union is the only consumer reporting agency that owns and markets this

reverse append product. (Davis 141/6-9; CX 78-Z-29.) Direct Tech, currently owned by

Experian, licenses the reverse append product from Trans Union. (Smith 3298/16-23; 3303/5-

12.)

103. Citibank does not permit Trans Union to use their credit card account numbers for

reverse-append disclosure of names and addresses in the TransLink product. (Marquis CX 188 at

147/20 -- 148/1.)

104. TransLink is among Trans Union’s largest selling target marketing products. 

(Admission.)

105. Until September 30, 1997, Trans Union appended SOLO, TIE, age data, and other

Master File elements to TransLink lists. (Dexter 1236/22 -- 1237/25; Smith 1488/23 -- 1489/5;

CX 125-E; CX 129; CX 279-B.)

b. New Issues File

106. Trans Union offers the New Issues File whereby customers may rent a list of persons

who received credit within the last 90 days. The file is created by selecting from CRONUS names

and addresses of consumers with at least two tradelines, one of which has an open date within the

last 90 days. (CX 4; Respondent’s Admissions.) A customer sees the time (30/60/90 days) and

the type of credit (retail, finance, mortgage or auto loan trades). (Davis 42/16 -- 43/1; CX 4.) 

Trans Union discontinued the sale of the New Issues File for target marketing customers and now

the file is available only for firm offers of credit. (Davis 81/24 -- 82/4.)

c. Emerging Consumers File

107. The Emerging Consumers File, based on data from CRONUS, included persons with

one tradeline within the prior twelve months. (Cabigon 1373/13-23; CX 329-F.) The tradeline

qualified if it was not closed. (Trans Union Corporation’s Answers to Complaint Counsel’s Third

Set of Interrogatories, Answer to Interrogatory No. 3.) Trans Union discontinued the Emerging

Consumer File in part because it might be “communicating information that we shouldn’t be

communicating.” (Davis 89/18-20.)
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5. Characteristics and Attributes

108. [

 ]

109. The source for the Attribute File is CRONUS. (Cabigon 1368/8-22; Davis 35/19-

21.) To be included in the Attribute File, a person must have at least two open tradelines, one

within the last 12 months. (Cabigon 1373/23 -- 1374/4; CX 329-A.)

110. Trans Union released to its target marketing clients its Standard Characteristics

(“Marketing Variables” (CX 78-Z-20 -- 22)) with names and addresses. (Davis 58/22 -- 59/14.) 

Among these characteristics are: months since oldest trade opened, and the number of personal

finance inquiries, finance installment trades opened in 24 months, and bank card trades. (CX 78-

Z-20 -- Z-22.) Trans Union discontinued the disclosure of these characteristics for target

marketing on October 1, 1997. (Davis 59/15-19.)

111. The Standard Characteristics File is available for use in the

PerformanceBase/RelationBase File only if a customer is extending a firm offer of credit. (Davis

40/10-16; 120/17 -- 121/4; Dexter 1281/11-16; CX 317.)

6. Changes in the Trans Union’s Master File

and Target Marketing Products

112. The Master File’s content remained unchanged until December 1997. On October 1,

1997, Trans Union discontinued certain files for target marketing. CX 2 lists the files in

September 1997 that remained available after October 1, 1997. Trans Union discontinued: all

open dates; high credit and loan type (although a finance mortgage trade remained available);

student loan closed; and PIC, P$YCLE, E-Val, SOLO and TIE. (CX 1-A -- Z-6; CX 2-A -- T;

Dexter 1281/11 -- 1282/8; Davis 98/17 -- 99/7; 142/5-12.)

113. Trans Union discontinued the Master File items after October 1, 1997, which were

reintroduced in December 1997: 30/60/90 day finance loan; premium bank card; length of

residence; and income and home value (both purchased from an outside source). (Davis 165/7 --

166/23; CX 342-E, H -- K, M -- N.)

114. Trans Union stopped offering the data in Findings 112-113 to its target marketing

customers as of October 1, 1997, because “before it was a cease and desist penalty, it now

became a $2500 per occurrence penalty” (Dexter 1280/19 -- 1281/10; Marquis CX 188 at 174/23

-- 175/6, 22-25); Trans Union “had gone from an environment where the worst thing that could
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happen is that we would have to stop selling lists to a world where there were significant financial

penalties . . . .” (Davis 142/22-25; CX 298-B.)

115. CX 342 contains the Master File items available after December 1997, derived from

CRONUS, showing presence of: an auto trade; second auto trade; bank card trade; department

store card; driver data; finance loan; 30/60/90 day finance trade; head of household; seven KOB

(kind of business) items; mail order trade; one mortgage; two or more mortgages; gold, platinum

or optima card; student loan; and upscale retail trade. (CX 315-D, E, G -- M, Q -- W; CX 332-B;

Cabigon 1426/9-23; 1427/18 -- 1428/3; 1429/9-17; 1429/22 -- 1430/2; Weith 13:1832/2 --

1833/6.)

116. A file (“Preapproved File”) similar to the September 1997 Master File is now

available.

117. This file includes the Standard Characteristics and all of the data are only available

for firm offers of credit. (Cabigon 1384/6 -- 1385/18; CX 340-B; CX 333; CX 334; CX 335.)

7. Promotion of Trans Union’s Target Marketing

a. Sales and Revenue

118. Trans Union sells its target marketing lists nationwide. Salespeople look to firms

using mail solicitations or telemarketing. Trans Union also sells lists to brokers, list managers,

and wholesalers, who sell the information from Trans Union lists with their own data, for sale or

lease to direct marketers. (Davis 45/3 -- 47/24; CX 15; CX 34; CX 41; CX 54; CX 307; CX 42;

CX 51; Dexter 1231/4-21.)

119. Trans Union sells target marketing lists for one-time use by its customers either by

rental or by license. Trans Union charges a “base price” per thousand names, with additional

charges per thousand based on the “selects” that the customer has chosen. (Davis 44/6-24; 64/6-

22; 65/3-14.)

120. Trans Union and its competitors in the target marketing list industry advertise their

lists in the Direct Marketing List Source which includes over 19,000 entries, including consumer,

business, and international lists, that are available in 212 markets. It is published every other

month by Standard Rate and Data Service (“SRDS”), the leading publisher of advertising rate and

direct marketing information, and is considered to be the “Bible” of the target marketing list

industry. (Markowski 2427/6-10; 2429/10-20; 2439/1-8; 2430/5-10; 2431/2-4; Dixon 298/9-16;

Hinman 2256/17 -- 2257/22.)

121. The format for the Direct Marketing List Source has eleven segments, describing the

list, selects and the list source. (TU-163 at A-11.) The information provided is obtained by

SRDS from the list owner/manager. Numerous listings in SRDS, however, do not contain
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information for every segment, including source. The only segment that SRDS confirms

independently involves the five most recent sales of the list. (Markowski 2440/3-11; 2441/6-25.)

122. Trans Union’s PerformanceData division employs 46 people including 10

salespersons. PerformanceData had 440 target marketing customers and $34 million in revenue in

1997. (Davis 27/18-21; 37/25 --38/4; 48/8-10; 141/10-14.)

b. Credit-Based Marketing Information

123. Trans Union promotes its Master File as a unique source of credit-based marketing

information from CRONUS. (CX 57; CX 58-C; CX 60-A; CX 69; CX 81; CX 264-A; CX 297-

A.) A promotional letter states: “Trans Union is a unique provider of credit-based marketing

information. Our database is unmatched when compared to traditional direct marketing vehicles

on the market today.” (CX 260-B.)

124. Trans Union promotes target marketing lists with credit information:

a. Trans Union’s Standard Characteristics correlate highly with “lending activity.” 

(CX 263-A.)

b. Trans Union data is “highly predictive in response modeling and profiling,

especially with financial offers.” (CX 265-A.)

c. Trans Union’s finance trade select provides consumers who have “generally had

trouble with their credit in the past and are highly responsive to credit offers.” 

(CX 68-A.)

d. Trans Union information contains “spending, payment and demographic data” that

is “highly predictive and cost effective.” (CX 57.)

e. “[S]ince credit has been established [for consumers on the student loan list], one

could argue that this list would have higher pass rates through the credit bureaus.” 

(CX 136.)

f. “[The demographic variables that Trans Union can provide] are derived from

approved application information and financial information provided by

subscribers.” (CX 70-A.)

g. Trans Union’s premium bank card select indicates individuals “who have been

approved for this high credit amount in the past.” (CX 64-A.)

125. Trans Union distinguishes itself from “its traditional competitors within the credit

reporting industry,” who have not pursued Trans Union’s “open policy” regarding the use of
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credit information by target marketers. (CX 61-A; CX 78-G; CX 268-A.) Although Experian

“comes closest as a competitor,” Experian “cannot provide . . . credit based data . . . our data far

outweighs their strength.” (CX 70-B; Dixon 267/11 -- 268/1.)

126. Trans Union promotes the fact that each person in the Master File must have at least

two active lines of credit. (CX 7; CX 33-A; CX 61-A; CX 78-G; CX 268-A.) Trans Union also

publicizes that a person with no activity in a 12 month period, such as payments or credit, is

dropped from the Master File. (CX 69-A.) Trans Union also publicizes the criteria for other lists

in its Master File, such as the premium bank card with a credit limit above $9,999. (CX 64-A.)

127. The Master File lists chosen by Trans Union’s target marketing clients show

individual credit information. (CX 33-A; CX 38-C, D; CX 62; CX 68; CX 79; CX 256-A, B;

CX 257.) In response to a client offering a $5,000 unsecured loan whose “ideal candidate” had

$10,000-$15,000 in debt, and $20,000+ in home equity, a salesperson recommended persons with

open mortgage trades, open finance trades, $30,000+ in home equity and a home market value

below $250,000. (CX 67.) Home Mortgage Funding, a mortgage refinancing lender, selected

persons with open finance trades and multiple mortgages for a telemarketing offer to assist those

whose property “came up as having a high interest” mortgage. (CX 19-A -- F.)

128. Mortgage refinance companies and home equity lenders use the Master File lists for

finance loans, first and second mortgages, length of residence, high credit amounts or initial loan

values for mortgages, and home equity or home value. (CX 18-A, B, J; CX 23-B, C, F, G;

CX 24-A, B, L; CX 39-B -- D.) Client mail or telemarketing shows that those solicited have high

interest loans or other debt to consolidate. (CX 19-F; CX 26-H; CX 28-B; CX 32-B; CX 39-D.) 

Clients, such as Mainstreet Mortgage, use a select identifying individuals with open mortgages

issued from finance companies. (CX 40-C, D.) Respondent’s witness, Kenneth Scott, stated that

finance company users are people who have had credit problems in the past, and, quite likely,

have had a bankruptcy. (Scott 2855/23 -- 2856/7.)

129. Trans Union’s mortgage open date lists permit a target marketing client to determine

the date a mortgage was taken out and the interest rate. The Mortgage Banc ordered a list of

persons with FHA mortgages opened between January 1994 and October 1995 with initial loan

values between $75,000-$99,999 and between $100,000-$150,000. (CX 17-A-B.) Another

ordered a list of persons with FHA mortgages opened between January and June 1995 with an

opening balance greater than $100,000. (CX 21-A.)

130. Trans Union’s lists allow target marketing customers to obtain lists based on detailed

credit information, such as whether the person has at least three open tradelines and the types of

tradelines (CX 25-A) or whether a person has two open tradelines, one of which has been open

for more than 36 months. (CX 23-B -- C; CX 28-A.)

131. Clients may copy information from the Master File. (Davis 162/2-17; Dexter 1249 -

- 1250/10.) For the September 1997 Master File, "printable" information includes: open dates for
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the first and second most current auto loans/leases and mortgages; home value ranges; and length

of residence. (CX 1-C, J, N, P.) Other information is "printable," including high credit amounts

and loan type for auto loans and mortgages and the aggregate high credit for all student loans

(CX 1-B, C, O, P, W.)

132. Trans Union’s Master File showing the presence of an upscale retail card was used

as part of the credit-based decision for a mailing of a “pre-approved Rubenstein Bros” credit

offer. (CX 35-A; Tr. 1938-40, 1945-46, 1957-59, 1962-66, 1973-74.)

c. Depth and Timeliness

133. Trans Union emphasizes that the Master File is “the freshest and most

comprehensive” data due to its “robust and extensive source of original credit based information”

(CX 268-A; CX 264-A), and that Trans Union has the largest data of consumer credit

information in the United States. (CX 75-B.) Trans Union describes the Master File as the

“richest source of individual-level financial data available” (CX 321), and that its database is “kept

fresh and current by nearly two billion updates supplied by credit grantors every month, and is

maintained for accuracy and quality.” (CX 72-B.)

134. Trans Union’s “primary database” is updated every 6.5 days from accounts

receivable information from the nation’s credit grantors. (CX 78-G; CX 268-B.) Trans Union

has automobile loan information for all states. (CX 66-A.)

d. Individual Observed Behavior

135. Trans Union promotes the Master File as a unique source for individual-level

observed behavior data. According to CX 83-C, a PerformanceData brochure, the Master File is

“without equal” and its information is “highly accurate” and is “based on actual behavior -- not

self-reported or neighborhood values.” (CX 83-C.) The Master File is “living and breathing

data,” “the most comprehensive available in terms of observed behavior (not self-reported)”

(CX 264-A) and as the “only source of individual-level financial data” that is “individual and

behavioral.” (CX 78-Z-36.)

136. The Master File’s data has an advantage over target marketers like Polk, First Data,

and Metromail, who rely on survey data directly from individuals, who may provide inaccurate

information, while Trans Union’s data is reported by third parties, making it more valid. (Dixon

292/14 -- 293/5; Porretto 1621/16-20.)
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8. Individual Observed Credit Information for Target Marketing

a. Trans Union’s Competitors’ Target Marketing Lists

137. Trans Union’s competitors in the target marketing list industry include: First Data

Solutions (formerly Donnelley Marketing) (“First Data”); R.L. Polk & Company (“Polk”);

Metromail Corporation (“Metromail”); ACXIOM Corporation (“ACXIOM”); and Experian

(formerly TRW)(“Experian”). (Davis 161/5-16; Cleary 2942/4-18; Hinman 2199/19 -- 2200/17;

M.Smith 3299/22 -- 3300/8.)

(1) First Data, Metromail, and Polk

138. First Data, Metromail, and Polk provide their customers with lists of consumers for

use in target marketing. (Hinman 2213/8 -- 2214/14; Scott 2686/15 -- 2687/8.) First Data’s

DQI contains 97 million households and the names of 185 million persons (Cleary 3083/25 -- 2

3084/7); Metromail’s National Consumer Database (“NCDB”) contains 100 million households

and the names of 155 million persons (Litz 2968/12-23; 2969/5-10); [

 ]

139. [

 ]

140. [

 ]

141. Metromail’s NCDB gets information from: public records of real estate transactions

from county clerks, courthouses and tax assessor files maintained in Metromail’s Realty Database,

a separate file of 30 million homeowners; information that Metromail obtains from newspapers;

and information from catalogers and magazines that Metromail maintains in its Mail Order

Responder (MOR) Bank. (TU-115 pp. 158 and 160; Litz 2970/5 -- 2971/7; 2972/10 -- 2973/3.)
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142. [

 ]

143. First Data, Metromail, and Polk have self-reported information. Metromail’s

BehaviorBank includes 28 million households and 40 million persons (TU-115 p. 166); Polk’s

Lifestyle Selector includes 36 million persons (Nusbaum 2879/11-19); [

 ] Self-reported information is

obtained from responses to consumer surveys and from product registration cards. (TU-117;

TU-120; TU-130.) Metromail’s BehaviorBank data is stored separately from the NCDB

information; some of the names in the two files overlap. (Litz 2976/16 -- 2977/17.) [

 ]

(2) ACXIOM

144. ACXIOM is developing a list database called InfoBase Prospects, on 117 million

households and names of 160 million persons. (Hinman 2340/4-10; 2261/12-19) ACXIOM

compiles Consumer InfoBase from data it obtains from credit card information from Trans Union

and from Dresden Direct (Hinman 2247/23 -- 2248/21); property transaction data, including

mortgage data from deeds obtained from county tax assessors registrars (Hinman 2250/5-14); and

income information from self-reported survey data and estimated income models obtained from

Polk, Experian and Metromail, and, prior to September 30, 1997, from Trans Union. (Hinman

2251/11 -- 2252/21.) Data in Consumer InfoBase is in InfoBase Prospects. ACXIOM is

prohibited by contract from using in its target marketing list business any data supplied by Trans

Union for Consumer InfoBase. (Hinman 2308/21 -- 2309/3.)

(3) Experian

145. [

 ]

146. Experian uses individual information in its consumer reporting database (FileOne) to

compile PDS allowed by the consent order Experian (at that time “TRW”) entered with the FTC: 
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name; telephone number; address; zip code; year of birth; age; generational designation; and social

security number. The consent order permits Experian to also use mother’s maiden name but it

does not. (TU-109; M.Smith 3293/24 -- 3294/11.) [

 ] Prior to the consent order, Experian had used other

information from its consumer reporting database in its target marketing business, including

presence of a bank card, retail card, or a mortgage loan, and account numbers for the reverse

append process, the use of which for target marketing purposes is now prohibited under the terms

of the consent order. (M.Smith 3287/17 -- 3288/7.)

147. Every name that appears in Experian’s consumer credit reporting database also

appears in PDS, regardless of the number of tradelines the consumer does or does not have. To

be included in Experian’s FileOne, a consumer does not need any tradelines. (M.Smith 3428/18 --

3429/8-18.)

(4) Business Development

148. To the extent Trans Union’s competitors obtain any information provided by credit

grantors for use in their target marketing list business, they generally do so indirectly from

Business Development, a small company (4 1⁄2 employees, 1997 revenue of $200,000, no profit in

1997) whose primary business is providing copies of its National Marketing File. Business

Development is not a consumer reporting agency, but rather a business that collects information

from credit grantors for use in their customer mailing lists. (Schultea 3946/23 -- 3947/12; 1028/5

-- 1029/2.)

149. The National Marketing File is a list of 90 million consumers who are credit users or

who have used credit that Business Development provides to its contract customers -- including

Dresden Direct and First Data. (Schultea 3905/10-16; 3907/18 -- 3908/1; 3909/1-7; 3910/20 --

3911/1.) The National Marketing File contains two credit card related fields: a counter field that

indicates number of tradelines including credit cards, up to nine; and a bank card indicator field

that is either blank or contains a single “B”. (Schultea 3911/3 -- 3913/7; Tr. 3943/6-23.) The

National Marketing File contains no names of credit grantors and does not differentiate any type

of credit card except bank card. (Schultea 3911/22-24; 3913/2-7.)

150. The National Marketing File was built in 1989-1990 by merging the customer lists of

20-25 of Business Development’s major retail company and bank clients who had credit card

customers. The counter was increased by one each time a consumer’s name appeared on one of

the lists and a “B” was placed in the bank card field if the customer’s name was on a list from a

bank. (Schultea 3915/2 -- 3916/21.) These lists were obtained in connection with Business

Development’s providing target marketing services, such as developing target marketing lists. 

(Schultea 3913/12 -- 3914/23.)
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151. Business Development updates the National Marketing File whenever it receives a

list of consumers from a client. If a consumer is already in the National Marketing File, the

counter is increased by one and, if the client is a bank and there is no “B” in the bank card field, a

“B” is added. The bank card field contains only one “B” even if the consumer has appeared on

more than one bank’s list. (Schultea 3913/2-4.) If there is a consumer name on the client’s list

that is not already in the National Marketing File, the name is added to the file. (Schultea 3917/20

-- 3918/18.)

152. A record is deleted from the National Marketing File only when the U.S. Postal

Service’s National Change of Address (“NCOA”) file indicates that the address is no longer viable

or the consumer is deceased, in which case the entire record is removed from the National

Marketing File. (Schultea 3912/4-12; 3918/24 -- 3919/7; 3920/2-11.) Otherwise, the information

from the original file build in 1989-1990 is still contained in the National Marketing File, as is all

information added later. The National Marketing File contains references to credit card accounts

that have been closed or are inactive. (Schultea 3922/3-14.)

153. Business Development does not know that the consumers in the National Marketing

File use one or more credit cards. Business Development’s lists show active bank card holders,

active retail card holders, and active finance users. (Schultea 3928-34, 3940.)

154. Business Development knows only that consumers have, or had, the number of

credit cards -- but not that they are using that credit or that they currently have the number of

cards designated. (CX 310-C, D; Schultea 3923/8-23; 3924/24 -- 3925/5.) A “B” indicates only

that consumers have, or had, a bank card, not that they currently have or use a bank card. 

(Schultea 3926/16-20.) The National Marketing File does not contain salary ranges, age ranges,

dates accounts were opened, credit limits on accounts, loan amounts, whether a consumer file has

been closed, or whether a consumer has a new bank card. (Schultea 3927/15 -- 3928/13.)

b. Trans Union’s Exclusively Individual-Level Data

155. Consumer information in target marketing lists can be individual, household, census

block, zip-plus-four, and zip code. “Zip-plus-four” refers to a geographic area defined by a nine

digit postal code and, in target marketing terms, “zip-plus-four” level data refers to aggregated

data of consumers or households from a particular “zip-plus-four”; the information within the

“zip-plus-four” is averaged. (Davis 156/1 -- 157/4.) [

 ]

156. Individual-level data is better for target marketing response rates and predicting

buying behavior than data at broader levels, such as household or zip-plus-four. Respondent’s

witness, Donald Hinman, described the difference between the levels of data as follows: “The

broader the geography, the less powerful the data tends to be. And when you go from a broad

geography to a narrow geography, it’s much more powerful. When you go from a household to
Public Record -28-

an individual it gets even more powerful.” “Powerful” in this context refers to the “[a]bility to

accomplish your market objective. To achieve your response rate or to predict a buying

behavior.” (Hinman 2259/6 -- 2260/2.)

157. Trans Union’s competitors in the target marketing list industry furnish information in

their target marketing lists primarily at the household level or broader.

158. [

 ]

159. [

 ]

160. ACXIOM collects information on an individual level and records it on a household

level. (Hinman 2260/15-16.) Within ACXIOM’s household-level records, estimated income is

household-level, but age and date of birth is individual-level data. (Hinman 2262/4-11.)

161. [

 ]

162. [

 ]

163. [

 ]

E. Use of Trans Union’s Target Marketing Information in Credit Eligibility

The Court of Appeals remanded this case on the issue of whether the existence of a

tradeline constitutes a consumer report. The Court stated that complaint counsel might satisfy the
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factual burden with evidence indicating that Trans Union intended the existence of a tradeline to

serve as a factor in credit-granting decisions. The Court added that evidence “that credit

decisions could be made, even in part, on such ‘existence’ information might be probative of

Trans Union’s intent,” and that the Commission might embark on a similar inquiry with respect to

any list criterion employed by Trans Union in its target marketing lists. (Trans Union, 81 F.3d at

233.)

164. The existence of a tradeline, sold by Trans Union in its target marketing business, is

used in credit scoring models by credit grantors in their eligibility determinations.

1. Credit Scoring

165. Predictive decision tools use data and statistical analyses to develop ways of using

past information to predict future outcomes. Credit scoring uses past information on credit to

predict likely outcomes. (Rapaport 673/15-25; Coffman 379/16-22.)

166. Most credit risk models use credit bureau data to observe consumer behavior. 

(Coffman 3825/18 -- 3826/2.)

167. Established in 1956, Fair Isaac Company (“FICO”) is the leading developer of tools

used by the credit industry to determine credit risk. (Rapaport 672/25 -- 673/6.) FICO has

scorecards using self-reported information from consumers’ applications and credit bureau

information to help credit grantors predict credit risk. (Rapaport 674/15-20; 675/18 -- 676/2.)

168. FICO collaborated with each major credit bureau to develop credit risk scoring

offered by each bureau under different names: EMPIRICA at Trans Union; Experian/Fair Isaac

model at Experian; and Beacon at Equifax. (Rapaport 680/8-21.)

169. A credit grantor can purchase a credit score along with a credit report from the three

major credit bureaus. (Rapaport 681/19-25.) Credit bureau scores use information only

available on a credit report and predict credit risk involving the general population, not just the

individual credit grantor. Credit bureau scores can be used for decisions to grant an applicant

credit, to make a preapproved credit offer, to reissue, increase or decrease a credit line, or for

over-limit authorizations. (Rapaport 675/1-8; 679/11 -- 680/7; 680/25 -- 681/9.) Credit card

issuers, retailers, finance companies, auto lenders, installment lenders, utilities, and student loan

lenders use bureau scores. (Rapaport 682/9-16.)

170. The credit score is returned by the credit bureau from which it is purchased. FICO

products return a score and four reason codes showing why an individual’s score deviated from

the optimal score. Credit grantors use reason codes to provide reasons for adverse action when

denying credit. (Rapaport 681/21 -- 682/7; 689/14 -- 690/1.)
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a. FICO’s Scoring Models

171. Using Trans Union’s credit bureau information, FICO and Trans Union offer: 

EMPIRICA, a generic risk score which predicts the likelihood of delinquency on a loan or credit

transaction by a consumer having at least one tradeline that was delinquent or worse in a two year

period; Horizon, which predicts the likelihood a consumer will go bankrupt; and UniQuote, which

predicts the likelihood a mortgage account will become delinquent. (Rapaport 690/15 -- 691/7;

692/21 -- 693/7; Tr. 800-02.) Industry Options, a refinement of EMPIRICA, offers scores for the

bank card, personal finance, installment and auto loan industries. (Rapaport 692/1-18.)

172. CX 87 is a list of all the scoring factors or adverse action reason codes that are used

by EMPIRICA and its Industry Options. CX 309 contains reason codes for the Horizon

bankruptcy score. (Rapaport 693/17-22.)

173. [

 ]

b. Scoring Model Design and Terminology

174. A credit scoring model may use scorecards, variables, and score values. A scorecard

contains characteristics, ranges of attributes and score values of each attribute. (Rapaport 683/20

-- 684/18.)

175. A characteristic is a piece of information describing a consumer such as the number

of bank cards in a consumer’s credit report. (Coffman 3828/14-23.)

176. Each characteristic can be broken into attributes; for example, age of an applicant is

a characteristic, and the attribute might be that the applicant’s age is between 25 and 30 years old. 

(Coffman 3829/7-11.) An attribute is predictive if it adds statistically significant information to

the forecast. (Coffman 3830/8-24.) The statistical model will look at each attribute within each

characteristic. (Coffman 3829/12-13.)

177. [

 ]

c. Scorecard Segmentation

178. The first step in scoring divides a consumer’s credit file into scorecards of

characteristics. This applies the model to homogeneous groups of people, and is called

segmentation analysis. (Rapaport 685/1-5, 17-21; 686/10-11.)
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179. [

 ]

180. [

 ]

181. [

 ]

182. [

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183. [

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2. Information Used in Scoring

184. Except for owning property in the case of a mortgage loan, there is no one factor

that would make an applicant eligible for credit. (Coffman 3860/20 -- 3861/25.) [

 ]

a. Tradelines

185. [

 ]

186. [

 ]
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[

 ]

187. [

 ]

188. [

 ] "EMPIRICA NOT SCORED:

INSUFFICIENT CREDIT message occurs when a credit file does not contain a tradeline opened

for at least six months and a tradeline updated within the last six months." (CX 87-A.)

189. [

 ]

b. Characteristics and Attributes

190. [

 ]

191. [

 ]

(1) Bank Card

192. [

 ]
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193. [

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194. [

 ]

195. Number of open bank card trades is a scorecard attribute. (Coffman 3868/16 --

3869/10.) The predictive attribute "number of open bank card trades" may be qualified by the

condition that the trades must have been updated within the last six or twelve months. (Coffman

3869/6-15.) In some models the weight given to the attribute "zero" open bank card trades and

the weight given to "one" bank card trade differs. (Coffman 3869/16 -- 3870/9.)

(2) Open Date of Tradelines

196. Scoring models look to the open date of tradelines to determine the age of the oldest

trade, how long the consumer has had credit, and how long the consumer has had certain types of

credit. (Coffman 3847/13-17, 23-24; 3876/14 -- 3877/20.) Age of oldest trade is an important

indicator of credit performance. (Rapaport 774/6-19.)

197. [

 ]

198. [

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199. [

 ]

(3) Collection Account

200. [

 ]

201. [

 

]

(4) Finance Trade

202. [

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203. [

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(5) Mortgage

204. The number and amount of mortgages are used as predictive attributes. (Coffman

3862/5-17.) Some scoring models accord different scores for mortgage trades. (Coffman

3860/20 -- 3861/25.)

205. Some scoring models use the attribute "mortgage exact amount" and verified

mortgage trades with different loan amounts are given different scores. (Coffman 3870/10 --

3871/4.)

(6) Automobile Loan

206. Some scoring models use as predictive variables the number of auto loans, updated

and verified within a certain period as an open loan. (Coffman 3865/10 -- 3866/2; 3867/13-16;

3866/17 -- 3867/12.)

(7) Credit Limit and Date Verified

207. To calculate credit use, a scoring model examines the credit limit in the consumer’s

credit report; for the calculation, a trade would be open, timely verified, and undisputed. 

(Coffman 3849/12 -- 3850/8; 3882/7 -- 3884/4.) A recent analysis of a consumer’s credit report

is important. (Coffman 3850/10-23.)

(8) Zip, Age & SSN

208. [

 ]

209. [

 ]

210. [ ]

3. Information Sold by Trans Union in its Target Marketing Business Used in

Credit Scoring

211. The presence or absence of a tradeline, bank card, retail account, finance loan, auto

loan, collection account or a mortgage is used in credit scoring; so are the amount of a mortgage,

the open dates, credit limits, and date of a tradeline. (F 181, 182, 185-187, 189, 191, 192-207.)
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4. Credit Grantors Eligibility

212. [

 ]

a. Invitation to Apply

213. An invitation to apply is an application for credit, mailed to persons who may return

the application to the credit grantor. (Koppin 483/25 -- 484/2; 488/24 -- 489/2; Zancola 666/2-8;

666/25 -- 667/2.) Credit grantors purchase lists of names for mailing the invitation to apply. 

(Koppin 486/18-20; 487/2-4.) This mailing is not a guaranteed offer of credit. (Pendleton

360/13-18; Zancola 666/2-6; Koppin 482/24 -- 483/2; 489/2-4.) The credit grantor decides to

grant credit only after receipt of the completed application. (Pendleton 360/13-25; Koppin

486/23 -- 487/1.)

(1) Wachovia’s Invitation to Apply

214. In evaluating applications responding to an invitation to apply, Wachovia uses a

credit scoring process by Wachovia and FICO. (Pendleton 360/20 -- 361/9.) [

 ]

215. [

 ]

216. [

 ]

217. [

 ]

218. [

 ]
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219. [

 ]

220. [

 ]

(2) Discover’s Invitation to Apply

221. [

 ]

222. [

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223. [

 ]

224. [

 ]

225. [

 ]

226. [

 ]

227. [

 ]
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228. [

 ]

229. [

 ]

230. [

 ]

231. Discover formerly used the existence of a student loan as one of the factors in

deciding to extend credit but that was stopped. (Stormoen 2959/22 -- 2960/24.)

b. Information Sold by Trans Union in its Target Marketing Business

is Used in Credit Grantors’ Scoring

232. In deciding credit eligibility, credit grantors use the presence of a tradeline, bank

card, or mortgage. Credit grantors also use: FICO scores, the number of retail cards, and the

open dates and credit limits for tradelines. (F 216, 218, 220, 224, 226-229.)

c. Prescreened Offers of Credit

233. In a prescreened offer of credit, a credit grantor mails a firm offer of credit to a

person. (Koppin 482/21-23; 488/20-23; Pendleton 357/23 -- 358/3; 359/1-6.)

234. Credit grantors obtain names of persons to consider for the prescreening from an

outside list or by an “extract” of names from a consumer reporting agency. (Koppin 484/14-19;

485/2-7; Pendleton 357/23 -- 358/3; McCoy 495/14-24.)

235. [

 ]

236. [

 ]
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237. Whether from an outside list or from an extract, the names are processed by a

consumer reporting agency so that credit criteria may be applied. (Koppin 489/5-9; Pendleton

358/19 -- 359/6.) Credit grantors use the three national consumer reporting agencies to conduct

prescreening. (Koppin 483/14-16; Pendleton 359/24 -- 360/2; Zancola 668/2-6; McCoy 495/14-

20.)

238. [

 ]

239. [

 ]

(1) Wachovia’s Prescreen

240. [

 ]

241. [

 ]

242. [

 ]

243. [

 ]

244. [

 ]

245. [

 ]

246. [

 ]
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[

 ]

247. [

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248. [

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249. [

 ]

250. [

 ]

251. [

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252. [

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253. [

 ]

254. [

 ]

255. [

 ]
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(2) First Card’s Prescreen

256. [ ]

257. [

 ]

258. [

 ]

259. [

 

]

260. [

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261. [

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262. [

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263. [

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264. [

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265. [

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266. [

 ]

267. [

 ]

268. [

 ]

269. [

 ]

270. [

 ]

271. [

 ]

(3) Chase’s Prescreen

272. [

 ]

273. [

 ]

274. [

 ]

275. [

 ]
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276. [

 ]

277. [

 ]

278. [

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279. [

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280. [

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281. [

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282. [

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283. [

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284. [

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285. [

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286. [

 ]

(4) Northern Trust’s Prescreen Process

287. [

 ]

288. [

 ]

289. [

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290. [

 ]

291. [

 ]

292. [

 ]

293. [

 ]

294. [

 ]
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d. Information Sold by Trans Union in its Target Marketing Business

is Used in Credit Grantor’s Prescreening

295. Credit grantors use a tradeline, bank card, finance company trade, mortgage,

refinanced trade, and a student loan in prescreening. (F 243-245, 248-252, 258, 259, 269, 278-

282, 288, 290, 291.) Credit grantors also use FICO scores, type of tradeline, and credit limit and

open date of tradelines in prescreening. (F 242, 247, 253, 254, 264, 268, 275, 277, 283, 289.)

F. Consumers’ Privacy and Disclosure of Consumer Reports

1. Survey of Consumer Privacy

296. Complaint counsel offered a survey to assess consumer attitudes regarding the use of

information derived from CRONUS and from credit reports to compile marketing lists. (Mazis

1080/10-18.)

297. Dr. Michael Mazis wrote the questionnaire and determined the methodology for the

privacy survey. (Mazis 1081/21-24.) International Communications Research (“ICR”) conducted

the survey using Dr. Mazis’ questionnaire and methodology. (Mazis 1082/25 -- 1083/3; Waldeck

1057/1-8; 1057/14-20; 1068/8-23.) ICR is qualified to conduct such a consumer survey. 

(Waldeck 1051/24 -- 1052/3.)

298. Ms. Karen Waldeck collected and reported the data for Dr. Mazis’ survey (CX 274)

and prepared a final report. (CX 274; Waldeck 1054/3-5; 1054/20 -- 1055/1; 1063/1-9; 1064/16 -

- 1065/6.)

299. Dr. Mazis used a telephone survey to obtain a nationally representative sample. 

(Mazis 1082/22 -- 1084/10.) ICR conducted the survey by telephone. (Waldeck 1057/3-7.)

300. ICR selected the households to be surveyed through random digit dialing. (Waldeck

1059/9-12; Mazis 1084/5-6, 24-25; CX 274-C; CX 354-A.)

301. In order to ensure a random sampling within each household, ICR used the “last

birthday” method requiring interviewers to request to speak with the individual over the age of 18

who had the most recent birthday in each household. (Waldeck 1059/25 -- 1060/8; Mazis

1088/16-18; CX 274-C; CX 354-A.)

302. A pre-test of the questionnaire was conducted prior to conducting the survey. 

(Waldeck 1058/24 -- 1059/1; CX 354-A.) The pre-test resulted in only minor changes to the

questionnaire, and demonstrated significant variation in responses indicating that the questions

were understood. (Mazis 1087/3-14; Waldeck 1068/16-23.) The interviewers conducting the

pre-test and the survey had no knowledge that the FTC was the client for whom the survey was
Public Record -46-

conducted nor were they aware of the purpose for which it was conducted. (Waldeck 1061/12-

15.)

303. After collecting data, ICR conducted a test to verify the data and that the interview

was properly conducted. (Waldeck 1064/4-15; Mazis 1089/11-16; CX 354-A.) ICR’s validation

test requires calling back at least 20% of the individuals surveyed and confirming their responses

to selected questions. (Waldeck 1064/4-16.) A 20% validation test is considered standard within

the survey industry. (Mazis 1089/14-16.)

304. The sample size of the survey ICR conducted was 1,002. (Waldeck 1060/12-16;

CX 354-A.) This was projectable to United States households with a margin of error of plus or

minus 3%. (Mazis 1089/17-19; CX 354-A.)

305. The questionnaire stated that the survey concerned marketing lists. (Mazis 1091/6-

10; CX 274-Z-34.) Participants could indicate that they had “no opinion” in response to a

question. (Mazis 1092/11-19; CX 274-Z-34.)

306. Participants were provided with potential responses from “very acceptable” to

“somewhat acceptable” and “somewhat unacceptable” to “very unacceptable,” and definitions of

each of these terms. (Mazis 1092/2; 1092/24 -- 1093/5; CX 274-Z-34.)

307. Interviewers asked questions regarding types of consumer information used to create

marketing lists. (Mazis 1095/14 -- 1096/1; 1097/10-21; CX 274-Z-34 -- Z-35.) For example: 

“Do you think that it is very acceptable, somewhat acceptable, somewhat unacceptable, very

unacceptable to sell to companies a list of individuals based on whether or not they have a second

mortgage?” (CX 274-Z-35.)

308. Fifty percent of the respondents were first asked: “Do you think that it is very

acceptable, somewhat acceptable, somewhat unacceptable, very unacceptable to sell to companies

a list of individuals based on whether or not they have a mortgage?” followed by the question: 

“Do you think that it is very acceptable, somewhat acceptable, somewhat unacceptable, very

unacceptable to sell to companies a list of individuals based on the state that they live in?” (Mazis

1095/13-20; CX 274-Z-34.) For the other 50% of the interviewees the order of these questions

was reversed. Consecutive questions on a similar topic are rotated to prevent “order bias.” 

(Mazis 1094/13 -- 1095/10; CX 274-Z-34.)

309. Interviewers asked similar questions on a random basis, with regard to selling lists

based on the following:
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your estimated income

whether or not you have an auto loan or lease

whether or not you have a second mortgage

type of mortgage you have

the approximate amount of your mortgage

estimated amount of your home equity

whether or not you live in an apartment

whether or not you have a credit card

whether or not you have a premium bankcard

(Mazis 1097/23 -- 1098/8; CX 274-Z-35.)

310. Dr. Mazis prepared charts, CX 354-A -- D, summarizing his findings of the survey. 

(Mazis 1104/2-4; 1105/24 -- 1106/6; CX 354-A-D.)

311. The results were as follows (stated in terms of the combined percentage of

respondents indicating somewhat or very unacceptable to sell marketing list based on):
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Approximate amount of mortgage 72.8%

whether or not you have a second mortgage 72.5%

estimated amount of home equity 70.1%

estimated income 68.6%

type of mortgage 66.1%

whether or not you have a mortgage 65.4%

whether or not you have an auto loan or lease 64.1%

whether or not you have a premium bank card 64.0%

whether or not you have a credit card 60.9%

whether or not you live in an apartment 55.5%

state of residence 46.1%

(CX 354-C; CX 274-Z-25 -- Z-26.)

312. These results extend from a high of 72.8% (regarding the approximate amount of a

mortgage) to a low of 46.1% (regarding state of residence). (Mazis 1109/2-4; 1106/25 --

1107/3.)

313. Next, the interviewers asked questions to determine consumer attitudes towards

credit report data as a source of information for marketing lists. (Mazis 1080/15-24; 1099/17 --

1100/3.) The next question in the survey stated: “When companies put together mailing or

telemarketing lists to sell products to consumers they sometimes use information from consumers’

credit reports. Have you heard of a credit report?” (Mazis 1099/22 -- 1100/3; CX 274-Z-35.)

314. This filtering question insured that only respondents familiar with a credit report

answered the next question. (Mazis 1100/13-17.) Eighty-nine point five percent of the

respondents had heard of a credit report. (Mazis 1104/9-11; CX 274-Z-31; CX 354-B.) Ten

point one percent of the respondents had not heard of a credit report and were not asked the next

question. (Mazis 1100/10-12; 1101/3-5; CX 274-Z-31; CX 354-B.)

315. The following question stated: “Thinking about information from consumers’ credit

reports, do you think it is very acceptable, somewhat acceptable, somewhat unacceptable, or very

unacceptable to use information from credit reports to put together marketing lists to sell

products to consumers?” (CX 274-Z-36.)

316. Of those answering this question, 76% found this practice unacceptable. (Mazis 

1104/22 -- 1105/3; CX 274-Z-32; CX 354-B.) This means that 68.1% of the survey’s
Public Record -49-

respondents found the use of credit report information for the compilation of marketing lists to be

unacceptable. (Mazis 1105/13-19; CX 354-B.)

317. Based on these results, Dr. Mazis determined that consumers have a strong privacy

interest in the use of information from their credit reports. (Mazis 1107/23-25.) 

318. Consumers also have a strong privacy interest regarding the use of specific types of

information derived from CRONUS for the purpose of compiling marketing lists. (Mazis

1109/20-25.)

319. The conclusion that the Fair Credit Reporting Act protects consumers’ privacy

interests by prohibiting the unauthorized dissemination of their credit histories to third-party

marketers is supported by the results of the consumer survey performed by ICR.

2. Government Interest in Consumers’ Privacy

320. Professor Joel Reidenberg testified to the privacy protections afforded to consumers’

credit information under the Fair Credit Reporting Act. (Reidenberg 964/5-14.)

321. Fair information practices are a set of standards that are applied to the treatment of

personal information. These standards focus on ensuring fairness to the individual in the

treatment of his or her personal information. (Reidenberg 947/7-13.) Personal information is

“information that relates to an identified or identifiable individual.” (Reidenberg 949/20-21.)

322. Fair information practices espouse the principle that personal information should be

collected openly for use for a specified purpose. (Reidenberg 947/14-19.) Once collected,

personal information should only be used for the purpose for which it was collected, unless the

individual has the opportunity to participate in the decision to allow other uses. (Reidenberg

947/18-24.)

323. Congress has enacted legislation regarding the use of personal information. 

(Reidenberg 953/24 -- 954/11.) The Fair Credit Reporting Act imposes legal obligations upon the

credit reporting sector that are consistent with fair information practices standards. (Reidenberg

955/22 -- 956/18.)

324. Professor Reidenberg analyzed the legislative history of the FCRA. (Reidenberg

974/8-20; 986/10-13.)

325. In enacting the FCRA, Congress intended to ensure confidence in the credit

reporting system. Congressional concern was due to the “rampant” disclosures unrelated to the

extension of credit of information held by consumer reporting agencies. (Reidenberg 958/2-15.)
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326. Prior to the FCRA, the media publicized stories regarding non-credit related

disclosures of information by consumer reporting agencies. These news accounts were

considered by Congress in formulating the FCRA. (Reidenberg 960/19 -- 961/5.) Congress also

considered testimony by Professor Alan Westin regarding examples of such disclosures. 

(Reidenberg 961/22 -- 962/5.)

327. The FCRA addressed non-credit disclosures by requiring “permissible purposes” for

the disclosure of information held by consumer reporting agencies. (Reidenberg 955/22 -- 956/4;

956/9-11.)

328. Under the FCRA, a permissible purpose for disclosure exists if a consumer

authorizes the disclosure. (Reidenberg 975/3-8.)

329. The 1996 amendments to the FCRA authorize disclosure of credit report

information for prescreening if: (1) a firm offer of credit is made with limited post-screening to

verify identity and continued compliance with the grantor’s selection criteria; (2) the credit

grantor’s selection criteria are identified; (3) the prescreening has an opt-out system; and (4) the

credit grantor provides notice to the individual. (Reidenberg 967/2-23; 971/5-11.)

330. Under the amended FCRA, the permissible purpose for disclosure of credit reports

in prescreening extends to firm offers of credit or insurance. Oscar Marquis, Trans Union’s

general counsel, rejected proposed prescreen mailings of a sweepstakes/magazine subscription

promotion and other non-credit offers, that would have used “credit criteria” because he did not

consider them to be offers of credit. Prior to October 1, 1997 such offers would have been target

marketing. (Marquis CX 188 at 167/24 -- 171/22.)

331. In the amended FCRA, the right to opt-out of prescreening provides consumers with

a right to participate in the decision to use their information for firm offers of credit. (Reidenberg

976/11-16.) Use of credit report data for a prescreen firm offer of credit is consistent with the

purpose of collecting the information. (Reidenberg 966/19 -- 967/1.)

332. Professor Reidenberg testified that the maintenance of documentation of criteria is

unique to the FCRA (Reidenberg 971/2-16), and that the opt-out requirements are the “only

situation in the private sector where . . . a third party has to tell you where they got your name.” 

(Reidenberg 967/23 -- 968/1.)

333. Trans Union does not provide target marketing lists on New Hampshire residents

because the state credit reporting statute requires prior consent. (Marquis CX 188 at 148/11-19;

N.H. Rev. Stat. Ann. § 359.)
Public Record -51-

3. Opt-Out

334. “Opt-out” refers to the procedure whereby consumers can request that their names

be removed from target marketing lists, including direct mail and telemarketing lists. (Davis

210/20-25.)

335. The target marketing list industry consists of list providers, list managers, list

brokers, and list users/renters/purchasers. (Miller 3008/5-25; 3034/1-9, 17-24; 3034/25 --

3035/1-25.) Consumers in general are unaware that their names and addresses are used to

compile lists since the majority of all lists are developed as a result of secondary uses of

information. (CX 151-A.)

336. Most consumers are unaware that they can opt-out of target marketing lists. (Beales

3669 -- 3670/14; Westin 3639/8-19.) Of consumers surveyed in 1991 and 1996, 44% stated that

they were aware of procedures that would allow them to remove their name from direct mail lists. 

(TU-88 at FTC B0003194.)

337. The Direct Marketing Association (“DMA”) maintains two opt-out files for use by

its member companies. Consumers who request that DMA place their names on the opt-out lists

must reregister after five years. (Cleary 3081/15 -- 3082/14.)

338. DMA member companies are not required to use the DMA opt-out files, and can

nevertheless make available on their mailing and telemarketing lists the names of those consumers

who have requested to opt-out at the DMA. (Cleary 3082/17 -- 3083/6; Nusbaum 2905/24 --

2906/25.)

339. DMA has a small advertising budget to notify consumers of their right to opt-out

and relies on consumer affairs columnists, government, and interview news programming to notify

consumers of DMA opt-out availability. (Cleary 3142/10-20.)

340. List brokers and list managers do not notify consumers about the opt-out process. 

They rely on the opt-out service provided by the DMA. (Miller 3073/15-19.)

341. Respondent’s own witness was unaware of any list providers that require their

clients to notify consumers of the opt-out process, except where required by law in the context of

prescreening. (Hinman 2238/1-17.)

342. Trans Union’s opt-out program complies with Section 604(e)(5) of the Fair Credit

Reporting Act, which requires consumer reporting agencies to notify consumers of their right to

opt-out of firm offers of credit. (Botruff 2065/22 -- 2066/9; TU-203.) Trans Union provides

consumers with the choice of opting out for a two-year period or opting out permanently -- the

percentage of those who choose to opt-out permanently is in the high nineties. 

(Botruff 2063/1-7.)
Public Record -52-

343. Trans Union does not require its list clients to notify consumers of their right to optout of target marketing lists other than on prescreen. Trans Union sales people who review nonprescreen promotional pieces are not aware of any such mailings that carry an opt-out

notification. None of the non-prescreen promotional mail in evidence contains an opt-out

notification that informs the consumers that their names are on a Trans Union list nor how to optout of Trans Union’s target marketing lists. (Dexter 1276/15 -- 1277/1; Clifton 1916/25 --

1917/23; CX 11; CX 18-A-J; CX 19-A-G; CX 20; CX 24-A-M; CX 25; CX 26-A-I; CX 26-A-E;

CX 32-A-B; CX 35-A-D; CX 36 A-D; CX 39-A-D; CX 40-A-H; CX 256; TU-175; TU-176.) 

There is no direct, credible evidence of the success rate of the opt-out actually stopping direct

mail or telemarketing calls.

344. DMA’s Mail Preference Service consists of names of 3.5 million consumers who do

not want their names to be included on any target marketing mailing lists. (Tr. 3081-82, 2203-

04.)

345. DMA’s Telephone Preference Service includes the names of 750,000 consumers

who do not want their names included on any telemarketing lists. (Tr. 3081-82, 2204.)

346. Trans Union’s “Privacy Protocol,” which appears on Trans Union’s website, states

that Trans Union “believe[s] consumers should have the right to make informed decisions about

the use of their personal data, including the right to be removed from direct marketing lists.” 

(TU-50; TU-51.) PerformanceData employees, including Jay Frank, Senior Vice President in

charge of PerformanceData, indicated that they had either never seen the protocol, or were

unfamiliar with its substance. (Porretto 1620/2-13; Dixon 293/14-16; Dexter 1286/2-14; Frank

CX 186 at 64/6 -- 65/11.)

347. CRONUS indicates whether a consumer wants to be excluded from any direct mail

or telemarketing list. (Tr. 3677-78.). In January 1997, CRONUS contained the names of 5.1

million consumers who opted out. (Tr. 2060.)

348. Trans Union placed an advertisement in the September 22, 1997 edition of the USA

Today praising the benefits of direct mail advertisements and notifying consumers that information

in Trans Union’s consumer files may be used in connection with credit or insurance transactions

that are not initiated by the consumer and of the address and toll-free telephone number for

consumers to use to opt-out, but warning that the opt-out does not guarantee that the consumer

won’t receive direct mail offers from other sources. (TU-203.)

349. In February 1998, CRONUS contained the names of 6.1 million consumers who

opted out. (Tr. 2066.)

350. PerformanceData does not include in the List Master File the name of any consumer

in CRONUS who has opted out. (Tr. 3677-78.)
Public Record -53-

351. PerformanceData obtains from ACXIOM a list of telephone numbers to be included

in the List Master File. (Tr. 3678.) The list of telephone numbers which PerformanceData

receives from ACXIOM does not include unlisted telephone numbers or the telephone number of

consumers whose names appear on DMA’s Telephone Preference Service. (Tr. 3678-79.)

352. PerformanceData and the list providers who testified voluntarily do not include on

any direct mailing or target marketing list the names of consumers who opt-out. (Tr. 3677-79,

2205, 2905-07, 2996-98, 3080-83, 3379-80.)

G. The Direct Marketing Industry

353. There are 15,000 companies engaged in supplying consumer direct marketing lists. 

(Tr. 3337.)

354. The total gross annual revenue of companies supplying consumer direct marketing

lists and file enhancement data may be $1.5 billion. (Tr. 3320-21.) Five companies’ revenues

represent 40% of this $1.5 billion market: R.L. Polk & Company, ACXIOM, Metromail

Corporation, First Data Solutions and ABI/DBA. (Tr. 3321-22.) PerformanceData has a 2%

share of this market. (Tr. 3322.)

355. There are 30,000 direct marketing lists. (Tr. 2213.) “The Direct Marketing List

Source” identifies more than 19,000 lists in 212 markets. (Tr. 2429, 2432.)

H. Consent Decree With TRW

356. Prior to January 1993, Experian’s predecessor, TRW Information Systems and

Services (“TRW”), conducted its target marketing business in the same manner as

PerformanceData’s business which is at issue here. (Tr. 3287-88.)

357. On January 14, 1993, the Commission and TRW entered into an amendment to a

previously-entered consent decree which provides that TRW is allowed to extract the following

information from its consumer reporting database for target marketing: name, telephone number,

mother’s maiden name, address, zip code, year of birth, age, any generational designation, social

security number, or substantially similar identifiers, or any combination thereof. (TU-109;

Tr. 3286-87, 3293.) Under the consent decree, Experian (TRW), unlike Trans Union, does not

extract open dates, high credit amounts, auto loan expiration dates, and loan dates from its

consumer reporting data base for use in target marketing lists. (F 146.)

358. Experian’s Fall 1997 Catalog of Consumer Lists and Processing Services advertises

a “Consumer Database” composed of records on 161,235,677 consumers. (TU-112.) [

 ]
Public Record -54-

[

 ]

359. Experian’s Fall 1997 Catalog of Consumer Lists and Processing Services advertises

a 30-day new mover list totaling 950,000 consumers a month and a 14-day new mover list

totaling 550,000 consumers a month with a 12-month total of 11,406,804 consumers. (TU-112.)

360. At the time that TRW entered into the consent decree with the Commission, TRW

was using credit attributes from its consumer reporting database, aggregated to a geographic area

defined by a nine digit postal zip code (“zip-plus-four”), in connection with its target marketing

business without objection by FTC representatives. (Tr. 3290-93, 3305-07.) This information

was made available by TRW for statistical modeling and as a data attribute. (Tr. 3306.)

361. There are 20 million zip-plus-four’s in the U.S. A zip-plus-four includes 5-15

households. (Tr. 2688.)

I. The 1996 Amendments to the FCRA

362. On September 30, 1996, Congress passed amendments to the FCRA effective

September 30, 1997. These amendments were included in the Omnibus Consolidated

Appropriations Act of 1997. (CX-167-A.)

363. Effective September 30, 1997, § 603 of the FCRA was amended to include a

definition of “firm offer of credit or insurance.” FCRA, § 603(1)(1997).

364. Section 604(c) of the amended FCRA created a new permissible purpose for

transactions not initiated by consumers, i.e., prescreening; a provision addressing the information

a credit grantor could receive on consumers in prescreening; and provisions for “opt-outs.” 

FCRA, §§ 604(c) and (e)(1997).

365. Under the amended FCRA, when a consumer responds and accepts a firm offer of

credit, a credit grantor can then review the consumer’s credit report and deny the consumer the

credit offered if the consumer’s credit report reflects something negative about the consumer’s

credit performance. FCRA, § 603(1)(1997).

366. The Senate passed S. 650, a bill amending the FCRA. (TU-214.) The bill passed by

the Senate included the amendments to §§ 603 and 604 discussed above; however, the Senate bill

also included a provision affirmatively authorizing the use of information from consumer files in

connection with direct marketing transactions by defining the information the Senate considered

to be outside the scope of “eligibility information” covered by the FCRA as “name and address of

consumer and other information that would not disclose the credit payment history, credit limit,

credit balance, or any negative information pertaining to the consumer.” (TU-214; Tr. 2550-56,

3513-17.)
Public Record -55-

367. The FCRA amendments passed by Congress do not include the provision in the bill

passed by the Senate which affirmatively authorized the use of information from consumer files in

connection with direct marketing transactions. (CX-167-A&B; TU-213.) On September 30,

1996, the following colloquy took place between Senator Bryan and Chairman Alfonse D’Amato

(R-NY):

Mr. BRYAN. Mr. President, I wish to engage my esteemed colleague Chairman

D’Amato in a brief colloquy to clarify two items pertaining to the Fair Credit

Reporting Act (FCRA) amendments contained in the H.R. 4278, the Omnibus

Consolidated Appropriations Act of 1997. First, the House of Representatives in

negotiations over the weekend deleted a Senate-approved measure which would

have codified the permissibility of direct marketing under the FCRA. The deletion

leaves the law silent on this issue, retaining the status quo. The House action does

not reflect any congressional intent regarding the extent to which direct marketing

is permissible under FCRA.

The second item relates to a requirement imposed under section 609 of the

FCRA for personnel being accessible to consumers. The requirement that

personnel be available under normal business hours is not intended in any manner

to interfere with the use of automated menu telephone systems which provide the

consumers with a range of options. The standard is satisfied as long as the system

provides a consumer the option to speak to a live operator at some point in the

audio menu.

Does the chairman confirm these understandings?

Mr. D’AMATO. Yes, Senator Bryan. I agree with your assessment on these

points.

(TU-213; Tr. 2555-56.)

III. ANALYSIS

A. Target Marketing

Target marketing involves selling goods and services directly to consumers by mail or

telephone. Consumers are picked by geographic, credit-related, demographic traits. (F 5.) 

Marketers want to limit the number and type of persons solicited to improve the response rate in

order to increase profits.
 Trans Union sold its lists under different names -- TransMark, Trans Union Lists and 6

PerformanceData. (F 4.)

 F 112 - 113. 7

 F 114. 8

 F 32, 33, 112. 9

 F 116. CX 333, 334 and 335 set out the contents and quantities for the List Master file 10

(CX 333), the "pre-approved file (in RelationBase)"(CX 334), and a comparison of the two

(CX 335).

 Trans Union continues to sell data for target marketing from its Master File (F 25, 11

115), and has not argued abandonment. Because of the possibility of recurrence, abandonment of

a practice is not a basis to avoid entry of a Commission order. Official Airline Guides v. FTC,

630 F.2d 920, 928 (2d Cir. 1980).

 This database was referred to by the Court of Appeals as the "base list." Trans Union,

12

81 F.3d at 229, 232, 234.

Public Record -56-

Trans Union’s target marketing lists use consumer information from CRONUS. On 6

October 1, 1997, Trans Union stopped selling some target marketing lists and data in nonprescreen promotions. On that day amendments to the FCRA became effective, providing for 7

civil penalty liability. 15 U.S.C. § 1681s(a)(2). Trans Union ceased selling those products for use

other than firm offers of credit because of potential civil penalty liability for violations of the

FCRA under the new amendments. Trans Union’s caution there seems to conflict with its 8

perseverance in this case. There would be no such risk if the products being sold to target

marketers were not consumer reports. 

Four weeks prior to trial in this matter, Trans Union revised its target marketing database,9

involving data on bank cards, finance trades, dollar amounts and open dates. In late-January 1998

Trans Union created a separate database (known as PerformanceBase or RelationBase) for dollar

amounts, open and closed dates, loan types, home equity, and SOLO. The data on 10

PerformanceBase is now available only for firm offers of credit.

These revisions do not vitiate the charges in the complaint.11

Trans Union’s target marketing product is the Master File. Until January 1998, when 12

Master File was changed to comply with the October 1, 1997 changes to the FCRA, the Master
 F 28, 31, 126. "Tradeline" refers to information supplied by a credit grantor about a 13

consumer’s account: the account number, type of account, date opened, high credit, current

balance, payment history. F 22, 28.

 F 33. 14

Public Record -57-

File required at least two open tradelines, one of which must have been verified within 12

months. The January 1998 Master File requires one tradeline. 13 14

Consumer files in the Master File may have data on a bank card, auto loan, or mortgage,

but every file must have at least two (or, as of January 1998, one) qualifying tradelines. The

individual consumer information that comes from CRONUS may include the presence, amount,

dates, and type of: auto loan, bank card, premium bank card, department (retail) card, upscale

retail card, finance loan (mortgage, auto), student loan, and head of household.

In addition to its Master File, Trans Union sells other target marketing products that use

consumer credit information from CRONUS. Trans Union sells monthly and weekly lists of

persons who have been issued new credit -- in a bank card, mortgage, auto, retail card, upscale

retail card, and finance company -- within the last 30 to 90 days. Trans Union also sells its

income estimator ("TIE") showing a person’s income. SOLO shows 35 credit characteristics; EVAL provides information about home value and home equity; PIC uses data from CRONUS,

and external survey data, to predict the likelihood of purchase of such products as mutual funds

and IRA accounts.

Trans Union also sells TransLink, a product that "reverse appends" a consumer’s name

and address to a third-party credit card account number obtained by a merchant at the point of

sale and supplied to Trans Union for the purpose of discovering the card account holder’s identity

and address. Although TIE, E-Val, SOLO and PIC are now available only for firm offers of

credit, Trans Union continues to sell its TransLink product to those without a permissible purpose

to receive consumer reports.

Each of Trans Union’s target marketing products is a consumer report because it discloses

information from Trans Union’s consumer reporting database that is also used by credit grantors

for credit eligibility determinations. This is true of the element common to all Trans Union target

marketing products -- existence of tradeline -- as well as the specific elements included in list

selects and in Trans Union’s specialized products such as SOLO and TIE.

B. Credit “Eligibility” Information

Credit grantors make eligibility determinations on applications submitted by consumers. 

Credit grantors also seek to increase their business by extending credit to new account holders

through their own marketing efforts, including: prescreened offers of credit; non-prescreened
 F 212. 15

 F 186. 16

 F 190-191, 211. 17

 F 167. 18

 F 167. 19

Public Record -58-

offers, known as “invitations to apply”; and in-branch or take-one applications for credit. In 15

each case, credit grantors use their own standards to evaluate the creditworthiness of applicants

and other consumers to whom the credit grantor wishes to extend an unsolicited offer of credit. 

In many cases, credit grantors make use of credit scoring models to assist them in their eligibility

determinations. Credit scoring is the most direct evidence that Trans Union itself intended the

same elements that it uses in its target marketing lists also to be collected and used for eligibility

determinations.

1. Credit Scoring

The Court of Appeals stated that, "[o]n remand, if the FTC wishes to classify existence-oftradeline information as a consumer report, it must gather evidence that indicates that Trans

Union intended the mere existence of a tradeline . . . to serve as a factor in credit-granting

decisions . . ." 81 F.3d at 233. The trial record proves Trans Union’s intent because it establishes

that credit scoring products developed by Trans Union use number of tradelines in credit scoring

based on information from CRONUS. Credit scoring, including Trans Union’s own scoring, use 16

factors -- such as presence of bank cards, auto loans and mortgages -- also used by Trans Union

in target marketing lists.17

Credit scoring weighs factors in a credit grantor’s decision to approve credit, evaluating

the risk posed by each applicant. With computers, credit scoring has become more prevalent. It

uses information (from loan applications or credit bureau records) to predict a person’s future

debt repayment performance.18

"Custom" scoring helps credit grantors by identifying the "good" and "bad" performing

consumer accounts of that company by statistical analysis. Custom scoring also uses information

from consumers’ applications and credit bureau information.19
 F 168-169. 20

 F 169. 21

 F 170. 22

 F 167-168, 171. Industry Options, a refinement of EMPIRICA, offers scores for the 23

bank card, personal finance, installment and auto loan industries. Trans Union also offers

DELPHI, a bankruptcy model, developed with another modeling company, MDS. F 173.

 F 186-187; CX 89-S. DELPHI requires at least one qualifying tradeline to score a 24

consumer file. F 185.

 F 188. An "EMPIRICA NOT SCORED: INSUFFICIENT CREDIT message occurs 25

when a credit file does not contain a tradeline opened for at least six months and a tradeline

updated within the last six months." (CX 87-A.)

 F 189. 26

Public Record -59-

The three national credit bureaus sell credit history scores to help lenders assess risk on

loans. Credit bureau scoring systems use only credit bureau data. Credit grantors receive a 20 21

numerical score for each applicant, based on the individual’s credit history. The higher the score,

the better the credit risk.22

Trans Union, in partnership with Fair Isaac Co. (FICO), the leading credit scoring

company, developed: EMPIRICA, Trans Union’s credit scoring predicting delinquency on a loan

or credit; Horizon, predicting bankruptcy; and UniQuote, predicting the likelihood that a

mortgage will become delinquent.23

a. Existence of Tradelines

Trans Union’s EMPIRICA, Horizon, and UniQuote scoring models will not score an

applicant whose credit file has no tradeline or at least one tradeline updated in the past six

months. If there is no tradeline, the model cannot calculate a credit score. Most credit 24 25

grantors will not approve an applicant for credit where there is no score at the credit bureau.26

This evidence alone establishes Trans Union’s intent that a tradeline is a factor in credit eligibility.
 F 174-177, 179. 27

 F 175. 28

 F 176, 180. 29

 F 178. 30

 F 181, 183. 31

 Id.; CX 88-B. 32

 CX 88-E. 33

Public Record -60-

b. Number of Tradelines

Credit scoring involves identifying, by statistical analysis, characteristics in consumers’

credit histories that predict credit performance. A “characteristic” is information from a 27

consumer’s credit history, such as the number of bank credit cards in a consumer’s credit report.28

Variables ("attributes") are assigned weights, based on credit history and statistical analysis. For 29

the characteristic "open bank cards," attributes are the number of bank cards, such as "zero,"

"one," "2-3," "4-6," "7 or more."

The first step in scoring puts a consumer’s credit file into a scorecard based on

information in the consumer’s file. A scorecard is tailored to homogenous people. EMPIRICA 30

uses ten scorecards. Each scorecard contains characteristics, attributes and weights.31

Scoring assesses the consumer’s credit history to gauge the number of tradelines. 

EMPIRICA’s ten scorecards are "each tailored to a distinct consumer group based on their credit

behavior." As stated in Trans Union’s EMPIRICA brochure: 32 33

EMPIRICA selects one of 10 different scorecards which best

reflects the consumer’s credit history to calculate the EMPIRICA

score. Scorecard selection is based upon such credit information

as:

Number of tradelines

Age of oldest tradeline

Age of newest tradeline
 F 181. 34

 Trans Union promotes EMPIRICA for credit decisions, setting credit limits, assigning 35

interest rates, repricing accounts and improving collections. CX 88-C.

 CX 93, F 190. 36

 F 191-194. 37

 F 191, 202-203. 38

 F 191, 196-199. 39

 F 200-201. 40

Public Record -61-

Of the ten scorecards, two are for applicants with serious delinquency, and one is for

applicants with a single tradeline; other applicants have two or more tradelines. EMPIRICA 34

distinguishes between consumers who have one tradeline and those who have two or more. It

sends the credit files of those consumers who have no serious delinquency and a single tradeline

to a different scorecard than consumers who have two or more tradelines. A consumer’s credit is

scored differently based on number of tradelines and on the age of the oldest and newest

tradelines. EMPIRICA will not score an individual with no tradeline. The use of number and age

of tradelines in Trans Union scoring products is evidence that Trans Union intended that these

elements serve as factors in credit decisions.35

c. Other Characteristics

The characteristics on a scorecard determine the applicant’s score. Scorecard predictive

characteristics use the same information that Trans Union uses to assemble its target marketing

lists.36

EMPIRICA (for auto loans, bank cards, finance and installment loans), Horizon

(bankruptcy), and "UniQuote" (mortgage loan) use as predictive characteristics scores:

[ ]37

[ ]38

[ ]39

[ ]40

EMPIRICA provides adverse action codes that explain the score. The credit grantor can

then supply the reasons to those applicants who are declined for credit. Among the EMPIRICA

explanations are: "Lack of recent information on bank card accounts or lack of bankcards" and
 CX 87. 41

 CX 309. 42

 Rapaport 672/11-22, 674/12-14; Coffman 3795/20 -- 3796/23, 3798/1-18, 3800/4, 6, 43

13, 20-21, 3803/13 -- 3804/22..

 F 191. 44

 F 204-205. 45

 F 206. 46

 F 207. 47

 [ 48

 ]

Public Record -62-

"lack of recent information on auto loans or lack of auto loans." For Horizon, reason codes 41

include: "[N]o mortgage loans reported."42

Factors used by Trans Union in its target marketing lists are also used in scoring models. 

Michael Rapaport of FICO and John Coffman of May & Speh, another credit scoring firm,43

testified that they use information that Trans Union makes available in its target marketing lists. 

Mr. Rapaport testified that these factors include: presence or absence of a retail account, an auto

loan, a mortgage loan, as well as a consumer’s homeowner status. Scoring models also consider

the open date of the newest tradeline, finance loan, and auto loan. Dr. Coffman testified that 44

number and amount of mortgages are used as predictive attributes in credit risk scoring. He also

testified that verified mortgage trades in different loan amounts are given different scores.45

Dr. Coffman has seen auto loans used as a predictive characteristic. He testified that, to 46

calculate credit, scoring models examine the credit limit in a consumer’s credit report. The use 47

of these factors in target marketing lists and in Trans Union credit scoring establishes Trans

Union’s intent.48

In its opinion, the Court of Appeals stated that 

On remand, if the FTC wishes to classify existence-of-tradeline

information as a consumer report, it must gather evidence that

indicates that Trans Union intended . . . or, of course, that someone

used or expected [existence-of-tradeline information] to be used [as

a factor in credit-granting decisions]. 
 Commentary on the Fair Credit Reporting Act, 55 Fed. Reg. 18,804, 18,815 (1990). 49

 F 233. 50

 F 237, 243-245, 258, 278-281, 288, 290, 295. 51

 F 238, 244-245, 258, 276, 287. 52

Public Record -63-

Trans Union, 81 F.3d at 233. The evidence proves that credit grantors consider existence of

tradeline (and other factors that Trans Union uses in its target marketing lists) to extend consumer

credit. Credit grantors extend credit to new accounts by prescreened offers of credit and

invitations to apply.

2. Prescreening

The FCRA requires that consumer reporting agencies furnish consumer reports only to

those with a "permissible purpose" to obtain a report; prescreen offers are an exception to the

requirement that, for a permissible purpose to exist, the consumer must have initiated the

transaction. Trans Union, 81 F.3d at 234. Prescreening is the process whereby a credit grantor

extends credit to consumers who meet credit standards. A prescreened list is a list of consumer

reports because it shows that each consumer meets criteria for creditworthiness. The Commission

interpreted the FCRA to permit prescreening if the credit grantor agrees in advance that each

consumer whose name is on the list after prescreening will receive an offer of credit.49

The Court of Appeals, in its opinion remanding this case, indicated that prescreening was

reasonable and noted that "prescreening and the guaranteed offers of credit it spawns can only

take place through the use of consumer reports . . . ." Trans Union, 81 F.3d at 234 (emphasis in

original). Prescreening is now sanctioned by the FCRA in amendments effective October 1, 1997. 

Section 604(c), 15 U.S.C. § 1681b(c).

The mail offer of a pre-approved credit card is an unsolicited offer to consumers; the

consumer has not applied for credit, and the credit grantor does not have application information. 

The credit grantor decides upon credit criteria to extend the "firm offer" of credit to creditworthy

consumers. These criteria result in an offer of credit and are "intended . . . to serve as a factor in 50

credit-granting decisions . . . ." Trans Union, 81 F.3d at 233.

Credit grantors deciding to extend credit in prescreen offers use tradeline information from

consumer reporting agencies, including Trans Union. The presence of one or more tradelines is 51

a threshold criterion for prescreens. Consumers without minimum tradelines are not offered

credit.52
 Northern Trust’s Personal Financial Services Marketing division issues consumer loans, 53

including debt consolidation loans, preapproved home equity loans, and automobile loans. 

(McCoy 493/25-494/6.).

 F 288-290. 54

 Wachovia Bank Card Services (Wachovia) is a subsidiary of Wachovia Bank of 55

Georgia and is an issuer of MasterCard and Visa credit cards, including bank cards. (Pendleton

351/24-352/6.) Wachovia has 3 million active bank card holders and $5.3 billion outstanding. 

(Pendleton 410/1-2.).

 F 243. 56

 F 240, 242. 57

 F 245. 58

 F 246. 59

 F 247, 249-250, 252. 60

 F 248, 251. 61

Public Record -64-

[ ] [ 53

 ]54

[ ] [ ] 55 56

[ ] [ 57

 ] 58

[

 ] [ 59

 ] [ 60

 ]

[ ] [ 61
 F 253-254. 62

 FCC National Bank (First Card) is a division of First Chicago NBD and is an issuer of 63

Visa and MasterCard credit cards. (Koppin 476/5-15.) First Card has 14 million credit card

holders, 11 million active credit card holders, and about $17.8 billion outstanding. (Koppin

482/7-11.)

 F 258. 64

 F 268-269. 65

 Chase Manhattan Bank issues a variety of credit cards and has 20 million credit card 66

holders. (Zancola 662/6-12; 665/9-11.)

 F 278. For purposes of this criterion, there is no requirement that the trade be open -- 67

only the number of trades. CX 280-Z-46; F 281.

 F 276, 278-281. [ 68

 ] F 280.

 F 279, 281. 69

Public Record -65-

 ]62

[ ] [ 63

 ] [ 64

 ]65

[ ] [ 66

 ] [ ] [ ] 67 68 69
 F 281. 70

 F 283 [ 71

 ] F 284 [

 ] F 285 [ ] F 286 [ ]

 F 282. 72

 F 241, 256, 272. 73

 H. Rep. 103-486, 103rd Cong., 2nd Sess., 32 (1994)(“A prescreened list is a series of 74

credit reports because the consumers whose names appear on the list have been determined,

through information in their credit files, to meet credit criteria identified by a credit grantor.”)

 F 213. 75

 F 214, 221. 76

 F 219, 230. 77

Public Record -66-

[ ] [ ] [ 70 71

 ]72

There is no single criterion in credit granting that qualifies a consumer for credit. In 73

prescreening, each element from a consumer’s credit report used by a credit grantor to make a

firm offer of credit is a factor in eligibility for credit. The credit grantor does not have a

permissible purpose to obtain a consumer report unless every consumer who meets the prescreen

criteria is given a firm offer of credit. The 1996 amendments to the FCRA recognize prescreening

as a permissible purpose. Congress intended prescreen lists to be treated as “credit reports.”74

The prescreen criteria are factors in the eligibility for credit.

3. Invitations to Apply

Some banks solicit consumers to apply for credit in “invitations to apply.” The bank mails

an application for credit to consumers. This is not a guaranteed offer of credit. The credit

grantor decides whether to grant credit on the completed application. When a consumer 75

responds, the application is scored by the credit grantor; the decision to grant credit depends on 76

the score.77

[

 ]
 F 216. [ 78

 ] F 217. 

 F 38, 44, 218. 79

 F 220. 80

 F 221-222. 81

 F 223. 82

 F 226. 83

 F 227. 84

Public Record -67-

[ ] [ 78

 ] [ 79

 ] [ 80

 ]

[

 ]81

[

 ] [ 82

 ]83

[

 ] [ 84

 ] 
 F 228. 85

 F 38 (high credit), 45, 56 (open date). 86

 F 229. 87

 F 231. 88

 F 230. 89

 F 232. 90

Public Record -68-

[ ] [ 85

 ]86

[

 ] [ 87

 ] [ 88

 ]89

In deciding credit eligibility on invitations to apply, credit grantors use the presence of a

tradeline, a bank card, and a mortgage. Credit grantors also use as factors: FICO scores, the

number of retail cards, and the open dates and credit limits for tradelines. Credit grantors have 90

used presence of a student loan in credit eligibility.

Each of these elements, by their use in credit decisions, is a factor in credit eligibility.

C. Trans Union’s Target Marketing Lists

1. Target Marketing Databases

The Trans Union target marketing lists come primarily from CRONUS, the company’s

credit report database.

a. CRONUS

CRONUS is the Trans Union database for individual consumer credit data used to supply

consumer credit reports to Trans Union’s customers. It contains 600 million records, including
 F 16. 91

 F 22-23. 92

 F 17-19. 93

 F 17-18, 22. 94

 F 19. There is a second database -- ANCI -- that accumulates information daily -- 95

showing inquiries when a Trans Union customer obtains a credit report on a consumer, and

manual changes to a consumer file done in response to a consumer dispute. The information on

ANCI is checked whenever a consumer report is delivered, and is used in the update of

CRONUS. F 21.

 F 25. 96

 Id.

97

Public Record -69-

250 million records of previous addresses. A “record” on CRONUS means name and address. 91

Additional consumer information -- account number, open date, account type, payment history --

is known as a tradeline. A record can be created on CRONUS by an inquiry or public record

entry alone; having a record on CRONUS does not imply the existence of a tradeline. CRONUS 92

contains credit data supplied by Trans Union subscribers, public record data (which Trans Union

purchases from vendors who gather the information at courthouses and similar public records

sources), and demographic information, most of which also comes from Trans Union’s credit

grantor subscribers.93

About 85,000 subscribers supply data to Trans Union in a form known as the Metro

format. Trans Union updates tradelines on CRONUS nightly, completing a full update of the 94

entire database every week.95

b. The Master File Database

Trans Union’s database for its target marketing activities is its Master File. The source of

individual consumer information for the Master File is CRONUS, and the TransMark database, an

intermediate file which is a “snapshot” of CRONUS. The TransMark database is created each

month of records from CRONUS; it combines all the CRONUS records on the same name and

address. The Master File database is built using the records for each person in the TransMark

database.96

The Master File uses individual information from CRONUS. This process rejects 97

CRONUS records that do not have the minimum number of qualifying trades and applies other
 F 27-30. 98

 F 29. If a consumer’s only tradeline is a collection account, that person will not appear 99

on Trans Union’s Master File. The impact is to shield from the list collection accounts denoting

less creditworthy individuals. F 200-201.

 F 31. 100

 F 33. 101

 F 25, 34, 39, 45, 52, 56-58, 60-64, 70-73, 75. 102

 F 26. List orders are handled by ACXIOM Corporation, a data processing firm in 103

Conway, Arkansas. Trans Union owns an interest in ACXIOM. Trans Union also contracts with

ACXIOM to perform computer functions for Trans Union, in Chicago and in Conway. F 35.

 F 108. The source for the Attribute File is CRONUS. In order to be in the Attribute 104

File, a person must have at least two open tradelines, one of which is verified within 12 months. 

F 109. 

 F 110. Among the characteristics are individual level information such as: months 105

(continued...)

Public Record -70-

criteria. The Master File rejects tradelines in CRONUS reported by collection agencies 98

indicating derogatory information.99

Prior to the December 1997 Master file, the minimum requirement for a consumer to be

included was two open tradelines, one verified within twelve months. After December 1997, it 100

is either two trades reported in the last six months, or one trade reported in the last six months

matched to an outside vendor file. If a person meets the minimum requirement in the Master 101

File, the consumer’s record is further examined for individual information from CRONUS. The 102

Master File is rebuilt every four months.103

c. Characteristics and Attribute File

Trans Union uses over 300 credit attributes from CRONUS. This Attribute File, also

known as Standard Characteristics, contains credit information about creditworthiness, i.e., the

number of trades with payments over 180 days or the maximum balance owed on all mortgage

trades. Standard Characteristics are used by Trans Union in target marketing products such as

PIC, P$YCLE, SOLO, TIE, and E-Val.104

Trans Union released characteristics, with names and addresses attached, to its target

marketing clients. Trans Union discontinued the disclosure of these characteristics on October 1,

1997. Trans Union’s Standard Characteristics are no longer available for use in Trans Union’s 105
 (...continued) 105

since oldest trade opened, and number of personal finance inquiries, finance installment trades

opened in 24 months, and bank card trades. Id.

 F 111. 106

 F 118. PerformanceData employs 46 people including 10 salespersons. 107

PerformanceData had 440 target marketing customers (many of whom are third parties

representing other customers) and $34 million in revenue in 1997. F 122.

 F 118-119. 108

 F 123. 109

 F 124; CX 263-A and CX 265-A. 110

 F 124. 111

Public Record -71-

target marketing business; they are available as part of the PerformanceBase/ RelationBase File

only for use in firm offers of credit.106

2. Promotion and Sale of Trans Union’s Target Marketing Products

Trans Union salespeople around the country sell its target marketing lists. They identify 107

prospects by mail solicitation or telemarketing. Trans Union also sells lists to brokers, list

mangers, and wholesalers (Metromail, R.L. Polk, ACXIOM and Donnelley Marketing), who sell

Trans Union lists or information from Trans Union’s lists and their own database, to direct

marketers. Trans Union provides target marketing lists for one-time use by its customers by

rental or license.108

Trans Union promotes lists by emphasizing the unique source of Trans Union’s creditbased consumer data. Trans Union equates target marketing products with credit information 109

by stating, for example, that Trans Union’s Standard Characteristics correlate highly with “lending

activity,” and Trans Union data are “highly predictive . . . especially with financial offers.” 

110

Trans Union salespeople refer to the credit-based character of the target marketing lists. 

Trans Union’s finance list provides persons who have “generally had trouble with their credit in

the past and are highly responsive to credit offers” (CX 68-A); for persons on the student loan

list, “since credit has been established, one could argue that this list would have higher pass rates

through the credit bureaus” (CX 136); and Trans Union’s premium bank card list indicates

persons “who have been approved for this high credit amount in the past” (CX 64-A). 

111
 F 133. 112

 F 126. 113

 F 126. 114

 F 44, 126. 115

 F 127. 116

 F 128-130. 117

 F 133. Trans Union describes the Master File as the “richest source of individual-level 118

financial data available” (CX 321-F), and that its database is “kept fresh and current by nearly two

billion updates supplied by credit grantors every month, and is maintained for accuracy and

quality” (CX 72-B).

 F 135. The Master File is characterized as “living and breathing data,” “the most 119

comprehensive available in terms of observed behavior (not self-reported)” (CX 264-A) and as

the “only source of individual-level financial data” that is “behavioral” (CX 78-Z-34).

Public Record -72-

Trans Union promotes its target marketing lists as providing "deepest access to creditbased information" (CX 61-A) and "[t]his data should not be looked upon as merely credit-based

data, but as an individual-level data source unmatched by any other offering" (CX 61-B).112

The requirements for Trans Union’s target marketing lists are disclosed to potential

customers; Trans Union promotes the fact that each individual in the Master File must have at

least two active lines of credit. Trans Union also publicizes that a person who shows no 113

activity within a 12 month period, such as payments or credit use, is dropped from the Master

File. Trans Union publicizes criteria for lists, such as the premium bank card list which is 114

described as identifying persons who hold a bank card with a credit limit above $9,999.115

The Master File lists chosen by Trans Union’s target marketing clients show the

specificity which Trans Union provides in individual-level credit information. The diversity and 116

source of this credit-based information permits target promotions by credit grantor marketers.117

Trans Union emphasizes that the Master File is “the freshest and most comprehensive”

source for data due to its “robust and extensive source of original credit based information,” and

that Trans Union’s database is the largest database of consumer credit information in the United

States. Trans Union also promotes the Master File as a unique source for individual-level, 118

observed behavior data. According to a PerformanceData brochure, the Master File is “without

equal” and its information is “highly accurate” and is “based on actual behavior --- not selfreported or neighborhood values." Trans Union sellers testified that Trans Union’s lists are 119

superior because Master File data is reported by third parties, and is not the self-reported
 F 136. 120

 F 130. Trans Union’s Master File has also been used for mailing a “pre-approved" 121

credit offer. F 132.

 F 131. For the September 1997 Master File, "printable" information includes: open 122

dates for the first and second most current auto loans/leases and mortgages, home value ranges,

and length of residence. (CX 1-C, J, N, P). Other information is printable upon request,

including high credit amounts and loan type for auto loans and mortgages and the aggregate high

credit for all student loans (CX 1-B -- C, O -- P, W).

 F 38. The source for the Master File “auto expiration date" (CX 1-A), "auto high 123

credit" (CX 1-B), "auto loan type" (CX 1-B), and "auto open date" (CX 1-C), is individual

records in CRONUS. A person is a "driver" (CX 1-E) if the CRONUS record for the person

shows an auto loan or a tradeline with a business that issues gas cards. When the Master File

program examines CRONUS records to determine whether a person has an auto loan, it will not

consider the record if the open date is more than five years old. F 39.

Public Record -73-

information relied upon by other target marketers, such as Polk, Donnelley, and Metromail,

whose target marketing databases contain survey information directly from consumers, who may

provide inaccurate information. Trans Union promotes the fact that its data is more objective

because it is reported by third-party credit grantors.120

Target marketing customers can obtain Trans Union lists with credit information similar to

prescreen criteria, such as whether the individual has at least three open tradelines and the types

of tradelines, or whether a person has two open tradelines, one open for more than 36 months.121

Clients may also have certain information from the Master File printed out, permitting target mail

and telephone solicitations. 

122

3. Master File Lists Show Detailed Credit Information

Only Trans Union offers target marketing lists based on individual-level credit data. These

lists are unique in their source, in the extent of individual information they reveal, and in their use

in target mail and telephone promotions.

a. Automobile

Trans Union offers lists indicating the presence and number of open automobile loans,

loan type (lease, refinanced loan, equity transfer loan), the open and expiration dates for the lease

or loan, and the high credit amount of the lease or loan. Trans Union also offers a “driver” list.123

Other target marketing firms offer automobile lists limited to ownership information and

not the range of credit-based data that Trans Union supplies. Other lists obtain data from self-
 F 40, 134. 124

 F 41. [ 125

 ] F 43.

 F 42. 126

 F 44, 126. To generate the "presence of an open bank card," the Master File looks to 127

the date open of the individual CRONUS record for bank card tradelines. For a person to qualify

as a premium bank card holder, the individual CRONUS record must indicate a tradeline with a

kind of business, account type, and a credit limit greater than $9,999. F 45.

 F 46. 128

 F 46-48, 131-146, 148-154, 157-160. 129

Public Record -74-

reported survey responses or from the state departments of motor vehicles registration data, not

from consumer reporting information. [ 124

 ]125

[

 ]126

b. Bank Card

Trans Union sells lists that permit target marketing of persons who have an open bank

card (including the open date of the most recent bank card) and holders of an open premium bank

card (including the open date of the most recent premium bank card). Trans Union defines its

premium bank card list as disclosing a bank card with a credit limit of more than $9,999.127

Other firms offer bank card lists, with the information at the household level, from selfreported survey responses or from suppliers of credit card information not from consumer credit

reporting databases. This material is not comparable to the range, depth, accuracy or timeliness 128

of Trans Union’s CRONUS-derived, individual-level credit card information. [ 129
 F 47-48. 130

 F 48. 131

 F 44, 48-51. 132

 F 49. 133

 F 52. To determine the "presence of an open department store card" (CX 1-E), the 134

Master File looks to the individual CRONUS record. F 52.

 F 53. 135

 F 54. 136

Public Record -75-

 ] Nothing in the self-reported 130

credit card information nor in the information provided by other suppliers shows the open date of

the bank cards or premium bank cards. Target marketing lists from other list providers show 131

credit card use; they are not comparable to Trans Union’s bank card list because they do not show

whether a consumer has a bank card tradeline, nor any of the information about the tradeline that

can be gleaned only from a consumer credit reporting database -- open date, open date of most

recent, and high credit limit; these lists are available only from Trans Union.132

[

 ]133

c. Department Store Card

Trans Union offers a list for presence of an open department store trade, including open

date of the most recent department store trade. Other list providers offer department store card 134

information from self-reported survey responses or from suppliers of credit card information

whose source is not obtained from consumer credit reporting databases. [ 135

 ]

[

 ]136

d. Finance Trade

Trans Union offers its customers finance loan lists including presence of an open finance

trade (along with the open date of the most recent finance loan), presence of a “30/60/90 day”
 F 55. To determine the "presence of an open finance trade” (CX 1-F), the Master File 137

examines the individual CRONUS record showing whether the subscriber’s business is "finance,"

the account type is installment, and if the finance trade has an open date. F 56. Trans Union

defines a “30/60/90 day” trade where payment is due in 30/60/90 days. F 55. To determine the

"presence of a 30/60/90 day finance trade," the Master File examines an individual CRONUS

record for the subscriber’s kind of business and the account type. A "finance loan closed" also

uses individual CRONUS records. F 57. 

 F 124, 128, 203. 138

 F 58. 139

 F 58. 140

 F 59. 141

 F 60. 142

 F 61-63. This is the same model used by Trans Union to create E-Val. Among the 143

(continued...)

Public Record -76-

finance trade, a financial loan identifier (identifying mortgage or auto loans from a finance

company), and presence of a closed finance loan trade. The finance loan lists are promoted by 137

Trans Union, and used by Trans Union list clients, to market to riskier segments of the

population, because finance companies historically lend to more marginal credit risks.138

e. Head of Household

Trans Union offers a list for head of household, derived from individual CRONUS

records, naming the person with the greatest number of trades in a household as the head of

household. No other list provider offers a list showing the person in a household with the 139

greatest number of tradelines.140

f. Mortgage

Trans Union offers mortgage related lists including: the presence of an open mortgage,

presence of a second open mortgage, and the open and closed dates and high credit amounts

(stated in range values) of both mortgage trades. Trans Union’s list customers can also obtain

information about the type of mortgage loan (VA and FHA loans, refinanced and secured

mortgages, and secured home improvement loans). The lists for presence of mortgages, 141

mortgage high credit range, mortgage closed dates, and mortgage type are derived from

individual CRONUS records. The Master File list “Home Value Range” uses Trans Union’s 142

Standard Characteristics, which is CRONUS-derived individual credit information, to calculate a

consumer’s home value.143
 (...continued) 143

standard characteristics used by Trans Union for the home value calculation are: months since

oldest revolving trade opened, total mortgage high credit/credit limit, maximum balance owed on

all mortgage trades, and total balance of all mortgage trades. F 62.

 F 65, 66. [ 144

 ] F 66.

 F 66. 145

 F 67. 146

 F 69. [ 147

 ]

 F 68. 148

 F 63. The Master File list "home equity actual," the actual dollar amount of estimated 149

equity in an individual’s home, and “home equity range,” similar information stated as a range

value, are calculated by using mortgage high credit and mortgage balance information from

(continued...)

Public Record -77-

List providers other than Trans Union offer mortgage lists. Their information is from selfreported sources such as surveys, and the public record -- including county registrar and tax

assessor files. [ 144

 ]145

[

 ] [ 146

 ]147

Except when a house is sold, any calculation of home value or equity is an estimate. Trans

Union’s up-to-date mortgage balance information makes calculations more accurate than

extrapolations from deed information, which may be old. [ ]

[ ] Polk’s internal analysis determined that the Trans

Union data were more accurate than the public record data.148

Trans Union’s home equity list uses credit attributes from CRONUS, including presence

of a mortgage, the original open date, and the opening mortgage balance, to calculate the current

home market value for a house, and then uses the current mortgage balance to calculate the

estimated equity available. Knowing the equity in a residence is valuable information to sellers 149
 (...continued) 149

CRONUS and subtracting them from the modeled home value. F 64.

 Knowing that a homeowner took out a mortgage during a period of high interest rates 150

facilitates telemarketing and other promotions that specifically mention refinancing the prospect’s

high-interest loan. F 129; CX 19-F.

 F 127-129. 151

 F 70. 152

 F 71. Trans Union sells its lists to mail-order sellers (Spiegel’s, L.L. Bean, Eddie 153

Bauer); it examines individual consumer records on CRONUS and identifies as a mail-order buyer

on the Master File those consumers who have open tradelines with mail order companies. Id.

 F 72. 154

Public Record -78-

of home equity loans; it permits them to solicit those likely to be qualified to purchase. Using

Trans Union’s mortgage data, a telemarketer of home equity loans can obtain names of consumers

who have multiple mortgages, are homeowners, age 24-55, with home market value $50,000 -

$299,000. (CX-24.) Lists can use open dates of loans (e.g., month that a mortgage was taken

out); loan types or sources (e.g., mortgages issued by finance companies (CX-40); and types of 150

credit cards (e.g., upscale retail cards (CX- 35).151

g. Length of Residence

Trans Union offers a length of residence list showing the number of years a person has

resided at a current address. The Master File length of residence indicator uses individual data

from CRONUS, including mortgage open dates.152

h. Mail Order

Trans Union offers mail order buyer lists; many are based on information purchased from

outside vendors. One top seller, however -- Trans Union’s “MOB1" -- is based on individual

credit information in CRONUS.153

i. Singles

Trans Union offers a "singles" list of unmarried consumers, based on tradelines for the

person in CRONUS.154

j. Student Loan
 F 73. 155

 F 74-75. 156

 F 76. 157

 F 61, 77. 158

Public Record -79-

Trans Union offers several student loan lists including presence and open date of a student

loan, the aggregate high credit amount of all of a person’s student loan, and a closed student loan,

all derived from CRONUS individual credit information.155

k. Upscale Card

Trans Union offers a list for the presence and open date of an open upscale retail card

(Neiman Marcus, Saks, Tiffany). To find the upscale retail card and open date, the Master File

uses individual CRONUS records, including the specific subscriber number on the individual

consumer’s tradeline. If the subscriber code matches the code for one of the companies on the

National Retail Federation list of upscale stores, the person is named as having an open upscale

retail card on the Master File.156

List providers other than Trans Union do not differentiate their retail card lists to provide

an "upscale" list. [

 ]157

4. September 1997 Master File

a. E-Val

Trans Union offers E-VAL, a scoring system that predicts the amount of equity available

in a consumer’s home. E-Val is also available on Trans Union’s Master File in the form of its

“Home Value Ranges,” “Home Equity (Actual),” and “Home Equity Range” lists. E-Val lists

were available for sale to target marketing customers prior to October 1, 1997; they are now

available only for firm offers.158

b. PIC

PIC, created by Trans Union and an outside modeling firm, predicts the likelihood that a

person owns a financial service. Trans Union used surveys and characteristics from the

consumers’ CRONUS files in PIC. A PIC score is calculated using individual credit data to

predict the likelihood of a person owning an IRA account or certificate of deposit. Until
 F 78. 159

 F 79. 160

 F 80. 161

 F 81. 162

 F 82-83. 163

Public Record -80-

October 1, 1997, Trans Union offered PIC as a Master File select; PIC is now available only for

firm offers of credit.159

c. P$YCLE

P$YCLE, created by between Trans Union and Claritas, assigns consumers to one of 42

segments (known as “clusters” or "buckets"). P$YCLE uses individual-level Standard

Characteristics to calculate an estimate of a person’s income producing assets, and assign the

person to a P$YCLE’s “bucket.” Trans Union offered P$YCLE for non-firm offers prior to

October 1, 1997; P$YCLE is now available only for firm offers.160

[

 ]161

d. SOLO

SOLO puts consumers into groups (“clusters”) based on individual level CRONUS data,

including 35 credit characteristics. SOLO is a “sister product” to SILHOUETTE, a Trans Union

product identifying people likely to respond to a firm offer of credit and is available only to those

with a permissible purpose under the FCRA.162

SILHOUETTE’s characteristics include “number and types of trades . . . age of trades,

credit limits, credit utilization, payment history . . . ." According to the SILHOUETTE User’s

Guide, “[a]ssignment to a cluster is based on a credit view of consumers . . . Cluster 8, because of

its generally high level of credit activity, might contain consumers who are good candidates for

credit offers.” SILHOUETTE distinguishes clusters based on some of the same factors used by

Trans Union in its Master File target marketing list products -- e.g., finance accounts, bank

revolving, department store, retail.163

SOLO and SILHOUETTE use the same 35 Trans Union Standard Characteristics;

SOLO’s 41 clusters were developed from SILHOUETTE’s 25 clusters. SOLO and
 F 82, 85; CX 110. "SILHOUETTE provides . . . actual credit data to catgorize [sic] 164

individuals. Therefore the FTC requires permissible purpose . . . to use SILHOUETTE. SOLO is

also based on credit information; however, when SOLO clusters are reported back, the credit

characteristics are masked . . . " F 85; CX 115-Z-49.

 F 84-89. 165

 F 86. 166

 F 87. Until September 30, 1997, Trans Union appended SOLO clusters to TransLink 167

lists. F 88, 105. 

 F 89. 168

 F 90. 169

Public Record -81-

SILHOUETTE evaluate individual credit behavior. SOLO is described by Trans Union as "a

disguised version of SILHOUETTE for list applications."164

Trans Union’s internal Seller’s Guide describes SOLO as “objectively-reported, behaviorbased information, rather than self-reported (and therefore inevitably biased) information.” It

notes that "SOLO is most often used by credit grantors for non-preapproved offers, such as home

equity offers or secured card offers." Until October 1, 1997, Trans Union offered SOLO to its 165

target marketing customers; now SOLO is available only for firm offers of credit. Trans Union

withdrew SOLO from its target marketing customers because of the FCRA Amendments and

because customers had learned that SOLO clusters correlated with how consumers pay their

bills. Prior to October 1, 1997, Trans Union attached SOLO codes to a customer’s own client 166

lists. Trans Union’s internal seller’s guide for SOLO states that SOLO clusters can be used to

“profile” one’s “best customers.” Trans Union intends that SOLO is used for credit eligibility. 167

The internal Trans Union SOLO seller’s guide discusses its use for preapproved offers of credit,

and tracking “activation, utilization, retention, and/or profitability” of credit accounts, and use

with Trans Union’s income estimator, “TIE,” for prescreened offers.168

Competitors’ models similar to Trans Union’s SOLO and P$YCLE are not comparable

because they do not use individual credit information. ACXIOM received SOLO and P$YCLE

codes from Trans Union until October 1, 1997. The models that ACXIOM uses in place of Trans

Union’s P$YCLE and SOLO (Claritas’ Affluence and WealthWise and Experian’s P$YCLE), do

not predict as well as the Trans Union data.169

e. TIE

TIE, Trans Union’s income estimator, calculates an individual consumer’s estimated

income based on credit data from CRONUS. Prior to October 1, 1997, TIE was offered for
 F 91. 170

 F 92. 171

 F 93-94. 172

 F 95. 173

 F 95-98. 174

 F 99, 101. 175

Public Record -82-

target marketing purposes; it is now available only for firm offers. To receive a TIE score, a 170

consumer must have at least two tradelines, one of which must have a credit line greater than

zero, and one must have been open for at least twelve months. To calculate a consumer’s TIE

score, Trans Union uses 23 Standard Characteristics, such as number of tradelines.171

Trans Union intends TIE to be used in credit granting. A product brochure for TIE states

that TIE can be used to “[f]ine tune credit limits and loan conditions on credit applications,” to

“‘Red Flag’ applicants whose low income estimate may indicate the need for additional

verification,” and to“[f]lag accounts to increase/decrease lines of credit.” Trans Union’s internal

seller’s guide for TIE recommends uses of TIE: credit risk scoring for new or existing accounts; 

use in prescreen criteria; as a supplement to credit applicant data; and to set initial credit limits.172

Competitive list providers offer estimated income developed from public record and selfreported data, subjective information that has not been verified, and household income rather than

individual level income. TIE is updated every seven days, whereas the income estimates of other

list providers rely on census data updated every ten years. [ ] [ 173

 ] offer an income product, based on self-reported information and census figures. None of that

information is individual credit data nor is it from credit reporting agencies.174

5. Trans Union’s Other Target Marketing Lists

a. TransLink

TransLink is Trans Union’s reverse append product that associates a name and address

with a bank card number. It works as follows: consumers charge purchases at a merchant using

credit cards other than the merchant’s own credit card; the merchant sends to Trans Union a list

of the credit card account numbers; Trans Union, using individual account information from

CRONUS, returns to the merchant the names and addresses of the consumers. The merchant can

then send those consumers promotions. The merchant "prints a mailing label and sends [the 175

consumer] a piece of junk mail." Until September 30, 1997, Trans Union appended SOLO, TIE

and age data to TransLink lists.
 CX 58-D. 176

 F 104. 177

 F 106. 178

 F 107. 179

 Brief pp. 17-18. 180

Public Record -83-

Trans Union promotes TransLink as a file that is

created from consumers who frequently use their MasterCard, Visa,

American Express, Discover, Optima and other third party cards. 

This file contains a consumer’s active tradeline number and address

. . . Successful address matches can also be linked to Trans

Union’s Master File for other demographic appends.176

TransLink is among Trans Union’s most profitable list products. Trans Union is the only 177

consumer reporting agency that offers this service.

b. New Issues

The New Issues file is a list of consumers receiving credit in the last 90 days. A Trans

Union customer knows the date (30/60/90 days) and type of credit (retail, finance, mortgage or

auto loan trades). The New Issues file gets this data from CRONUS. On October 1, 1997, Trans

Union discontinued the sale of the New Issues file for target marketing customers and now the file

is only available for firm offers of credit.178

c. Emerging Consumers

The Emerging Consumers file gets from CRONUS names of consumers with one tradeline

with a date verified within the last twelve months. Trans Union discontinued the Emerging

Consumer file due to concern that it was “communicating information that we shouldn’t be

communicating.”179

D. Burden of Proof

Respondent argues that complaint counsel has the burden of proof by "clear and 180

convincing evidence." The two Commission cases cited by respondent do not support this
 Id. p. 18 n.9. McGraw-Hill Pub. Co., 57 F.T.C. 1152 (1960), cited by respondent as 181

requiring "clear and convincing evidence," specifically used the preponderance of the evidence

burden of proof, 57 F.T.C. at 1171.

 Treatise on Constitutional Law, Rotunda, Vol. 3 at p. 168 (1986). 182

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proposition. Respondent also cites Alioto v. Cowles Communications, Inc., 519 F.2d 777, 779 181

(9th Cir. 1975), which used the clear and convincing standard in a case where the burden of proof

requires a showing that a libelous statement was made in reckless disregard of the truth. In

general, the clear and convincing burden of proof is used where the Court considers a particular

type of claim should be disfavored on policy grounds. No such precedent is cited here, and the 182

preponderance of the evidence standard applies in this case.
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E. Trans Union Target Marketing Products As Consumer Reports

1. FCRA

The FCRA defines "consumer report" to mean

any written, oral, or other communication of any information by a

consumer reporting agency bearing on a consumer's credit

worthiness, credit standing, credit capacity, character, general

reputation, personal characteristics, or mode of living which is used

or expected to be used or collected in whole or in part for the

purpose of serving as a factor in establishing the consumer's

eligibility for

(A) credit or insurance to be used primarily for personal, family, or

household purposes;

(B) employment purposes; or

(C) any other purpose authorized under section 604.

15 U.S.C. § 1681a(d).

In the context of this litigation, as framed by the Court of Appeals, 

[t]o qualify as the sort of "information" that can constitute a

consumer report, then, an entry on a Trans Union mailing list must

(A) "bear[ ] on" at least one of the seven factors and (B) be used,

expected to be used, or collected for one of three types of

purposes.

The first element does not seem very demanding, and we do

not understand Trans Union to even contest the proposition that a

person’s having two tradelines "bear[s]" on one or more of the

seven enumerated factors. . . . 

In addressing the next factor, whether information in the

lists is "used or expected to be used or collected in whole or in part

for the purpose of serving as a factor in establishing the consumer’s

eligibility" for various benefits, the Commission considered only

credit eligibility, and we follow suit.

Trans Union, 81 F.3d at 231. 
 Respondent called witnesses who testified that data from the Master List File could not 183

be used in part to determine credit eligibility. Respondent’s witnesses were not credible on this

issue. Dr. Coffman, who works with Trans Union on predictive models, showed bias when he

testified, inconsistently, that a post office box may be part of eligibility because some creditors

will not mail to a post office box. (Tr. 3840.) Furthermore, Dr. Coffman testified that based on

his experience with credit risk scoring models he has seen the number of mortgages and their

amounts, the number of auto loans, the number of open bank cards, and the age of the oldest

trade and credit limits used as predictive attributes in scoring models. (F 195, 204-07; Coffman

3862/5-17; 3868/16 -- 3869/10; 3869/6 -- 3871/4; 3876/14 -- 3877/20; 3882/7 -- 3884/4.) 

Another respondent witness, Kenneth Scott, president of a direct marketing advertising agency,

has experience in marketing credit cards, not in eligibility determinations. (Scott 2608/23 --

2609/18; 2614/17 -- 2616/16; 2622/23 -- 2624/1.)

 F 28-31, 33, 92, 106-107, 109, 126. 184

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The issue here is whether information that Trans Union conveys in its target marketing

lists is also information that is used by credit grantors in eligibility determinations. The Court of

Appeals indicated that to be "a factor," information should play a role in the credit decision but

that it need not be the decisive factor. Trans Union, 81 F.3d at 233. Thus, the Court of Appeals

noted that on remand the FTC could show that Trans Union used or expected existence-oftradeline information to be used as a factor in credit-granting decisions by demonstrating "that

credit decisions could be made, even in part, on such ‘existence’ information." Id.

Under the language of the statute, existence-of-tradeline information could constitute a

consumer report because it serves as "a factor" in credit grantors’ decisions to grant credit. Trans

Union’s credit scoring and the criteria they use for prescreen and invitation to apply offers, show

that the presence of a tradeline may be a factor in determining whether a consumer is eligible for

credit. Other factors used by credit grantors, including presence, type and date of tradelines, are

used in Trans Union’s target marketing lists. Trans Union’s lists may be consumer reports

because the information is “used . . . or collected in whole or in part for the purpose of serving as

a factor in establishing the consumer’s eligibility for . . . credit.” 15 U.S.C. 1681a(d)(1).

2. Facts

The factors that Trans Union uses in target marketing products are also used by credit

grantors deciding credit. That makes them "consumer reports." 15 U.S.C. 1681a(d)(1). Trans 183

Union, 81 F.3d at 233.

Every name on Trans Union’s target marketing lists must have at least one qualifying

tradeline. This is also required in Trans Union’s credit scoring, and in credit grantors’ decisions 184
 F 185-188, 243-245, 258, 278-282, 288, 290. 185

 Age of newest and oldest tradeline is also an eligibility factor. F 117, 196, 198-199, 186

228; 18 F.T.C. at 841-42.

 F 44. 187

 E.g., F 216, 224, 248-252. 188

 F 82, 85, 92, 108. 189

 F 87-89, 93-94. 190

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to make firm offers of credit in prescreen promotions. When Trans Union sells a target 185

marketing list, it is selling a list of people who have at least one tradeline; a list of people who

have one tradeline is a series of consumer reports, and the recipient of the list must have a

"permissible purpose" in order for Trans Union lawfully to furnish the list. The Court of 186

Appeals has already held that target marketing is not a "legitimate business purpose under the

Act." Trans Union, 81 F.3d at 233-34. Therefore, Trans Union’s sales of target marketing lists

constitute furnishing consumer reports to those who do not have a permissible purpose to receive

them, in violation of Sections 604 and 607(a) of the FCRA. 15 U.S.C. §§ 1681b, 1681e(a).

Trans Union’s target marketing customers can get a list of consumers who have an open

bank card tradeline. The same criterion is used by credit grantors in their eligibility decisions, 187 188

based on consumer reports, and, Trans Union’s sale of such a list to a target marketer who has no

permissible purpose to receive the consumer reports is a violation of the FCRA. Similarly, Trans

Union’s SOLO and TIE use credit eligibility factors. They are marketed by Trans Union for 189

both target marketing and credit eligibility.190

F. Trans Union’s Constitutional Rights

Trans Union asserts First Amendment and Equal Protection arguments in its defense. The

Commission, in its September 28, 1994 opinion, rejected Trans Union’s constitutional arguments. 

(118 F.T.C. at 879-890.) The Court of Appeals did not reach Trans Union’s First Amendment

claim, but signaled its views. The Court stated:

Trans Union raises a serious First Amendment claim with respect to

the Act’s application. Its target marketing list competitors who

aren’t consumer reporting agencies under the Act can use any

information they gather -- including credit information -- in the

preparation of their lists. In fact, because of its interpretation of

"collected . . . for the purpose . . ." in the Act, the Commission

would evidently permit Trans Union to sell its target marketing lists
 The Commission has not been unfairly discriminatory in applying the FCRA to the sale 191

of target marketing information by competing credit reporting firms. Trans Union’s practices go

beyond the activity allowed by the TRW consent order. (F 357.)

Respondent argues that credit grantors disseminate information about their customers for

target marketing though it is just as invasive of privacy as anything done by PerformanceData. 

E.g., to a lesser degree, TRW used credit attributes from its consumer reporting database,

aggragated to a nine digit zip code. (F 360.) Administrative agencies, however, have the

prosecutorial discretion to go after one law breaker at a time. Moog Industries, Inc. v. FTC, 355

U.S. 411, 413 (1958); FTC v. Universal-Rundle Corp., 387 U.S. 244 (1967). This implies the

right to shape remedies, to some extent, to meet the eccentricities of negotiated settlement of

litigation. (F 360.)

Respondent also decry that its competitors in the sale of target marketing lists obtain their

data from public records such as telephone books (“separately obtained” information). The

record in this case shows that the target marketing lists from that information is not as effective as

the lists sold by respondent which are from the credit report database.

 The Congressional purpose in the FCRA is that “the banking system is dependent upon 192

fair and accurate credit reporting. Inaccurate credit reports directly impair the efficiency of the

banking system, and unfair credit reporting methods undermine the public confidence which is

essential to the continued functioning of the banking system.” 15 U.S.C. § 1681(a)(1).

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if the data were "separately obtained for target marketing

purposes." 

Trans Union, 81 F.3d at 235.

Trans Union argues that it has been denied equal protection rights by the Commission’s

enforcement action, but any difference in treatment between Trans Union and its list 191

competitors who aren’t consumer reporting agencies is attributable to the FCRA, not to the

Commission’s enforcement policy. The FCRA was designed to stop unfair information practices

in the credit reporting industry that were harming consumers and undermining confidence in the

banking system.192

1. PerformanceData Lists Are Commercial Speech

Complaint counsel argue that PerformanceData lists are a product, not speech, and are not

protected by the First Amendment. But the lists are part of commercial transactions, providing

"information of import to significant issues" serving as a vital part of the process to "inform the

public of the availability, nature, and prices of products and services," and performing "an

indispensable role in the allocation of resources in a free enterprise system." Bates v. State Bar of

Arizona, 433 U.S. 350, 364 (1977).
 PerformanceData has provided a list to a wholesaler whose client was the National 193

Republican Committee, which used the list to solicit consumers to make campaign contributions

(CX 22; Tr. 308-09); the predominant use of the lists, however, is for commercial purposes. 

TU 171-73, TU 175; TU. 307-08, TU-315-19, TU-1317-21.

 Though not yet explicitly overruled, the Central Hudson test for commercial speech 194

must be used with some apprehension. 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484 (1996)

held a state ban on price advertising of alcoholic beverages to be impermissible under the First

Amendment, and the varying opinions of the Court show minority support for the Central Hudson

test and adumbrate change. Sean P. Costello, Strange Brew: The State of Commercial Speech

Jurisprudence Before and After 44 Liquormart, Inc. v. Rhode Island, 47 Case W. Res. L. Rev.

681, 685 (1997). Nevertheless, Central Hudson continues in use. International Dairy Food Ass’n

v. Amestoy, 92 F.3d 67, 72 (2d Cir. 1996); Anheuser-Busch, Inc. v. Schmoke, 101 F.3d 325,

327, 330 (4th Cir. 1996); Miller v. Stuart, 117 F.3d 1376, 1382 (11th Cir. 1997), cert. denied,

139 L.E. 2d 753, 118 S.Ct. 852.

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Target marketing lists are the means by which direct and telemarketers tell consumers

about their business. Information on home sales and mortgages are found in these lists (Tr. 2657-

59), as is information on automobile ownership, F 38, bank cards, F 44, department store cards,

F 52, finance loans, F 55, mail order buyers, F 71, student loans, F 10, and upscale retail credit

cards, F 74. Target marketing lists are as much a part of the process of speech as loudspeakers,

Saia v. New York, 334 U.S. 558 (1948); public sidewalks, United States v. Grace, 461 U.S. 171

(1983); or free standing newsracks used to distribute free magazines, City of Cincinnati v.

Discovery Network, Inc., 507 U.S. 410 (1993). Target marketing lists involve information taken

from the database gathered and used in the sale of credit reports. They constitute commercial

speech.193

2. Commercial Speech Law

The sale of consumer reports receives limited First Amendment protection as “commercial

speech.” Dun & Bradstreet, Inc. v. Greenmoss Builders, Inc., 472 U.S. 749, 762, n.8 (1985). 

“‘[C]ommercial speech [enjoys] a limited measure of protection, commensurate with its

subordinate position in the scale of First Amendment values,’ and is subject to modes of

regulation that might be impermissible in the realm of noncommercial expression.” Board of

Trustees of State Univ. of N.Y. v. Fox, 492 U.S. 469, 477 (1989). Restrictions on truthful

commercial speech will be upheld if the government asserts a substantial interest, the regulation

directly advances that interest, and the regulation is narrowly drawn. Florida Bar v. Went For It,

Inc., 515 U.S. 618, 623 (1995); Central Hudson Gas & Electric Corp., v. Public Serv. Comm’n of

N.Y., 447 U.S. 557, 564 (1980).194

a. Privacy Interest in the FCRA
 F 316-19, 325, 353-55. In Ohralik v. Ohio State Bar Ass’n, 436 U.S. 447, 465 n.25 195

(1978), the Court held that an in-person solicitation by an attorney visiting a potential client in her

hospital bed recovering from an accident was intimidating and invaded her privacy. In Shapero v.

Kentucky Bar Ass’n, 486 U.S. 466, 476 (1988), the Court held that there was no invasion of the

potential client’s privacy by a lawyer’s solicitation letter, but the Court stated that the invasion of

privacy, if any, occurred when the lawyer discovered the recipient’s legal affairs, not when he

confronts the recipient with the discovery. In this case, the invasion of privacy occurs when

respondent takes information from the credit report database, puts it in the target marketing lists,

and sells the lists to direct and telemarketers.

 Alan Westin, Privacy and Freedom 163-165 (Athenaeum 1967). 196

 F 325-26. Fair Credit Reporting Hearings on H.R. 16340 before the Subcomm. On 197

Consumer Affairs of the House Comm. On Banking and Currency, 91st Cong., 2nd Sess. 31

(1970) at 109; Hearings on S. 823 before the Subcomm. On Financial Institutions Of The Senate

Banking and Currency Comm., 91st Cong., 1st Sess. 92 (1969) at 359, 433.

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The FCRA protects consumers’ privacy by prohibiting consumer reporting agencies from

communicating information covered by the Act to marketers for impermissible purposes. 

Protecting the privacy of consumers may be a "substantial" governmental interest. Florida Bar v.

Went For It Inc., 515 U.S. at 621 (substantial government interest in protecting the privacy of

personal injury victims against invasive contact by lawyers).

Trans Union sells information from its consumer credit database to target marketers who

engage in the direct promotion. Trans Union invades consumers’ privacy when it sells

consumers’ credit histories to third-party marketers without consumers’ knowledge or consent;

that privacy interest is substantial.195

The FCRA is based on “a need to insure that consumer reporting agencies exercise their

grave responsibilities with fairness, impartiality and a respect for the consumer’s right to privacy." 

Section 602 of the FCRA, 15 U.S.C. § 1681. Congress aimed at the risks to privacy from

unregulated use of personal information; the dissemination of credit reports for purposes other 196

than granting credit was the problem.197
 F 325. 198

 F 331. 199

 F 329. A prescreen (“firm offer”) is only permissible if the consumer reporting agency 200

offers the consumer an election to be excluded from marketing lists of potential borrowers and

publicizes this option to consumers. Section 604(c) and Section 604(e)(1) and (5). The statute

now limits the type of information that may be disclosed to the credit or insurance grantor

(Section 604(c)(2)) and requires that the solicitation disclose that information contained in the

consumer’s consumer report was used and inform the consumer of the right and procedure to

opt-out. Section 615(d).

 F 367. 201

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b. Public Confidence in Credit Reporting

Congress also intended to assure the integrity of the credit reporting system and the

public’s confidence in the credit reporting system. Credit reporting is vital to the United States 198

economy and to consumers, and "unfair credit reporting methods undermine the public confidence

which is essential to the continued functioning of the banking system." Section 602 of the FCRA,

15 U.S.C. §1681. 

c. Citizens’ Concerns

Citizens worry about "secondary" uses of their personal information. (F 316-18, 325-26.) 

In 1996, Congress narrowed disclosure of credit report information for "legitimate business need"

by adding that a "business transaction" must be consumer-initiated. Section 604(a)(3)(F)(I). A

permissible purpose to obtain a consumer report without the consent of the consumer exists only

for firm offers of credit or insurance and only with notice and an “opt-out” privacy safeguard.199

A firm offer of credit is needed to make a prescreen offer permissible. Congress deleted the 200

proposed Senate language authorizing credit report information to be used in target marketing.201

d. Government Interest Directly Advanced

The Order here must advance an interest “in a direct and material way." Florida Bar, 515

U.S. at 625-6. There, the Court relied on a survey of the effects of lawyer advertising on public

opinion, to show that Florida’s 30-day ban on solicitation directly advanced the interests of

consumer privacy. 515 U.S. at 625. This record contains uncontradicted evidence of consumer

privacy interests supporting limitation on uses of consumer credit information beyond those
 F 316-19. 202

 F 318. 203

 "[W]e find no resemblance between target marketing and [the Act’s permissible] 204

purposes: extension of credit, employment, underwriting of insurance, and license eligibility . . . If

Trans Union’s provision of lists derived from its ‘base list’ for target marketing is to be lawful

under the Act, it must be because the information is not so sensitive as to rise to the level of a

consumer report." Trans Union, 81 F.3d at 234.

 F 6-12, 16-19, 21, 325-26. 205

 F 328-29, 331. 206

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"permissible" uses specified in the Act. Consumers have a privacy interest in the use of 202

information from CRONUS for compiling target marketing lists.203

The FCRA and the Order entered here directly advance the governmental interest in

protecting consumers’ right not to have covered information communicated by consumer

reporting agencies to target marketers without a permissible purpose. Trans Union, 118 F.T.C. at

884-85; 81 F.3d at 230. Consumer reporting agencies warrant special restrictions because of 204

their unique position as comprehensive repositories of consumer information and their critical role

for the nation’s economy.205

The Order must be narrowly tailored to achieve its goal. Florida Bar, 515 U.S. at 632. 

Since the Order follows the statute, the issue is whether the statute is tailored to achieve its goal. 

Further, the opt-out procedure required by the FCRA does not cure the problem. While the right

to opt-out theoretically allows the consumers to request their names to be removed from target

marketing lists (F 334), most consumers are unaware of this procedure (F 336). Although Trans

Union complies with the notice requirement for opt-out under the FCRA (F 342), there is no

credible, direct evidence of the success rate of opt-out actually stopping direct mail or

telemarketing calls (F 343, 348).

In enacting the FCRA Congress addressed consumers’ concern that the information in

their credit histories be protected from misuse. The FCRA is reasonably tailored to achieve the

governmental interest in consumer privacy. The FCRA emphasizes controls on the use of credit

report information rather than controls on collection of data. Recipients must have a "permissible

purpose" to obtain the information.

The FCRA does not outlaw the secondary use of credit information for target marketing;

it merely requires credit reporting agencies to include consumers in the decision to use their

information. The limitation on secondary use of credit information imposed by the Act is no 206
 Certain data from the consumer files are used for identification rather than as an 207

element in credit determination (name, telephone number, mother’s maiden name, address, zip

code, year of birth, age, any generational designation, social security number). (F 357, but see

F 360.)

 On October 1, 1997 -- the first day that it would face potential civil penalty liability for 208

violations of the FCRA -- Trans Union reduced the information from its consumer credit database

that it makes available through its target marketing lists.

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more extensive than necessary to serve the substantial government interest in protecting

consumers from impermissible uses of their credit information. 

F. Summary

Trans Union’s target marketing lists are “consumer reports” as defined in the Fair Credit

Reporting Act. A tradeline in a consumer’s credit file used in Trans Union’s target marketing lists

is collected by Trans Union “to serve as a factor in credit-granting decisions.” Credit grantors

“used or expected it to be used for the purpose.” Trans Union Corp. v. FTC, 81 F.3d 228, 233

(D.C. Cir. 1996). Other elements from individual consumer credit files, used by Trans Union in

its target marketing lists, also are used in credit grantors’ decisions to grant credit, including

tradelines by type (bank card, finance company, mortgage, automobile loan), open date of

tradelines, high credit limit, current mortgage balance, and estimated individual income.207

The same elements from credit files at Trans Union are used as factors in credit grantors’

decisions to grant credit to consumers. Target marketing lists assembled from these elements are

“consumer reports.” Target marketing is not a permissible purpose for furnishing a consumer

report; sale by Trans Union of its target marketing lists thus violates the FCRA. Trans Union,

208

81 F.3d at 234.

The Fair Credit Reporting Act complies with First Amendment commercial free speech

and equal protection standards: the FCRA protects a substantial government interest in the

privacy of individual consumer information in credit bureau files; the law directly advances that

governmental interest in protecting consumer privacy and provides a reasonable fit to serve the

governmental interest. The record shows substantial citizen concern over the privacy of the

individual information collected, stored, and sold by credit bureaus. The FCRA affords privacy

protection tailored to the sensitive nature of the data collected by consumer reporting agencies

and their unique status as repositories of the data.
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CONCLUSIONS OF LAW

1. The Federal Trade Commission has jurisdiction over the subject matter of this

proceeding and over the respondent, Trans Union Corporation.

2. Trans Union is a corporation doing business under the laws of the state of Delaware,

with its office located at 555 West Adams Street, Chicago, Illinois 60661.

3. Trans Union assembles information on consumers to furnish consumer reports to

subscribers and consumers. Trans Union furnishes these consumer reports in interstate

commerce.

4. Trans Union is a consumer reporting agency. Section 603(f) of the Fair Credit

Reporting Act (FCRA), 15 U.S.C. § 1681a(f). 

5. Trans Union’s target marketing lists are consumer reports. Section 603(d)(1) of the

FCRA, 15 U.S.C. § 1681a(d)(1). Trans Union Corp. v. FTC, 81 F.3d 228 (D.C. Cir. 1996).

6. Trans Union furnishes consumer report information in target marketing lists to persons

who do not have a permissible purpose under Section 604 of the FCRA, 15 U.S.C. § 1681b;

Trans Union Corp. v. FTC, 81 F.3d 228, 233-34 (D.C. Cir. 1996).

7. By this conduct, Trans Union violates Section 604 and Section 607(a) of the FCRA. 15

U.S.C. §§ 1681b, 1681e(a).

8. An appropriate Order follows.
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ORDER

IT IS HEREBY ORDERED that respondent, Trans Union Corporation:

a) Cease and desist from distributing or selling consumer reports in the form of target

marketing lists to any person unless respondent has reason to believe that such person

either intends to make a firm offer of credit to all consumers on the lists or to use such

lists for purposes authorized under Section 604 of the FCRA.

b) Maintain for at least five (5) years from the date of service of this Order and upon

request make available to the Federal Trade Commission for inspection and copying, all

records and documents necessary to demonstrate fully its compliance with this Order.

c) Deliver a copy of this Order to all present and future management officials having

administrative, sales, advertising, or policy responsibilities with respect to the subject

matter of this Order.

d) For the five (5) year period following the entry of this Order, notify the

Commission at least thirty (30) days prior to any proposed change in respondent such as

dissolution, assignment, or sale resulting in the emergence of a successor corporation, the

creation or dissolution of subsidiaries, or any other change in the corporation that might

affect compliance obligations arising out of this Order.

e) Within one hundred and eighty (180) days of service of this Order, deliver to the

Commission a report, in writing, setting forth the manner and form in which it has

complied with this Order as of the date.

_____________________

James P. Timony

Administrative Law Judge