The US Government and the Federal Trade Commission are cracking down on the not so free credit report services. New rules and possible legislation are currently being worked on to prevent consumers from being misled into paying for a service they can get for free.
In 2003, the Fair and Accurate Credit Transactions Act was passed by Congress. This act allowed every consumer to obtain one free credit report annually from each of the three main credit reporting companies.
These companies are Experian, Equifax and TransUnion. The free reports can be obtained through the government website, annualcreditreport .com.
Since the passing of the act that allows everyone to get free credit reports, credit reporting companies have played off this in their ads. Specifically, Experian with it's freecreditreport .com ads.
The catchy freecreditreport .com ads and website name, often confuses many consumers in thinking that is where to go to obtain their free credit report. Unfortunately, if the consumer is not careful then they will be signed up for a monthly credit reporting service that is not free.
That is why Congress is making the FTC issue new rules addressing what many call deceptive advertising. The FTC is currently working on these new rules and the public can submit their comments on the subject till November 30th.
Now New York's Senator Charles Schumer is asking for the FTC to tighten up even more on such not so free credit report practices. Schumer is even willing to introduce legislation if he needs to help protect the consumers.
What Schumer wants to force the credit reporting services to disclose on all of their ads the same disclosure they are required to do on their website and their printed materials. That disclosure is that the consumer can get the report for free at the government site.
Schumer wants the credit reporting companies to disclose that their offer for a free credit report has strings attached more clearly than what they currently are. They will also have to start showing the free credit report they are offering to the consumer before the consumer is asked to enter their credit card information in.
In a statement released by Schumer he states; "If these companies want to say - or sing for that matter- that they are giving people free credit reports, then they can't charge people $15 a month, simple as that."
Consumer credit reporting started back in the 1990s. ConsumerInfo .com started offering the service to the public and acquired the website domain name, freecreditreport .com.
Through the website, ConsumerInfo offered a free credit report with a subscription to their monitoring services. In 2002, Experian purchased ConsumerInfo. Since then, television and radio ads have their catchy freecreditreport .com gingle to where it is a song most consumers can sing.
Between the freecreditreport website name, catchy gingle and online ads, many people feel that it is the website for their free credit report. In reality it is not free.
Once on the website there is fine print that states by receiving the free credit report, the consumer is signing up for Experian's credit monitoring service and will be charged $14.95 a month for the service. Many feel that most people do not realize this and that this is actually a bait-and-switch advertising technique.
The website asks for the consumer's credit card information, but some consumers think this is just for identity verification. The consumer can cancel the service in seven days without being charged and allowed to keep the credit report. Unfortunately, many consumers either forget to cancel or do not realize they are being charged until after the charge shows up on their credit card bill.
For years the FTC has claimed the ads and practices of the credit reporting companies are confusing the public and misleading them away from the free credit report service available on the government website. It is estimated that nine million Americans spend around $700 million a year on credit monitoring services.
Experian has been fined $1.2 million by the FTC over the past five years. The revenue from the freecreditreport site has been worth it for Experian to pay the fines.
The credit monitoring industry is seeing major revenue increases over the past year with the economic concerns many consumers are facing. Experian is almost double the size of all other credit monitoring services together.
The FTC has tried to get Experian to give up the freecreditreport .com domain name to keep the consumers from being confused. Experian is planning on keeping the site.
FTC has also created another website freecreditreport .gov to try to help with the public confusion. Also to get the word out about the questionable practices of the not so free credit report website, the FTC is creating their own ads based off those from Experian.
You can see one of the ads from the FTC here.
For most people the three free credit reports through the government website is all the credit monitoring they need. It is recommended that the average consumer request one of their free credit report through the government website once every four months. To obtain your free credit report with no strings attached, go to annualcreditreport .com.
Written by Denise Clay
Exclusive to HULIQ
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