'Free credit report' offers busted by Government
This ruling by the Federal Trade Commission takes aim squarely at Experian's FreeCreditReport.com and other products that reel in consumers with the promise of a free credit report, then rope them into a pricey credit-monitoring service many don't even realize they've signed up for until they notice the charge appear on their credit card. The FTC's "Free Credit Reports Rule" stipulates that any website promising a free credit report as a marketing tool for a subscription service must now put at the top of the page in type large enough to read easily the following warning:
You have the right to a free credit report from AnnualCreditReport.com
or 877-322-8228, the ONLY authorized source under federal law.
"It's really targeted at institutions that were intertwining a free credit report and monitoring," says Adam Levin, co-founder and chairman of Credit.com. "Credit and fraud monitoring are important tools. But if you want them, you should be aware of what you're getting," he told WalletPop in an interview. "A lot of the disclosures hadn't been as bright and bold as they should have been."
Of course, if you're worried about identity theft or card fraud, you could always put a fraud alert on your credit report, take the more drastic step of requesting a credit freeze (which can prove to be a hassle if you need to open a new account quickly for any reason), or just check your accounts on a daily basis or several times a week. For some people, though, credit-monitoring might seem like it's worth the money. But no one wants to be roped into paying for a service they didn't want and weren't aware of, so this new legislation is an important consumer protection.
For now, TV ads like the ones with the slackers singing that catchy jingle are still legal; come September, television and radio ads will also have to change their language to be more clear about what's required of consumers if they sign up for this "free" report. Levin tells WalletPop many of the companies offering these services have already begun changing their tune, offering a free trial of the monitoring service instead as a marketing hook.