The Federal Trade Commission has announced new rules to help consumers avoid being misled by companies that shout "Free credit report!" but whisper "Actually, this could cost you."
The FTC's new guidelines require the companies' Web sites, telemarketing calls, and print and television ads to disclose more prominently that the services they are pitching differ from the government-approved AnnualCreditReport.com, which offers free credit reports with no strings attached.
The commission was required to adopt the new rules as part of the Credit CARD Act of 2009, the bulk of which went into effect Feb. 22. The move is the latest step in the government's increased control over the advertising practices of companies that offer credit reports. The changes could further encourage consumers to examine the accuracy of their credit reports, which are used by credit card issuers, mortgage lenders, employers and others to make decisions.
The reports are typically offered as part of a free trial of pay services that monitor changes in people's credit scores. But consumers often fail to spot the fine print announcing the charges or forget to cancel their free trials before being charged.
Consumer groups cheer
Consumer groups applauded the FTC's move."Increased education is never a bad thing," said Alison Southwick, a spokeswoman for the Better Business Bureau, which has received more than 11,000 complaints on the topic in recent years. "A lot of these companies, they do say some of the terms and conditions in fine print, but increased disclosure never hurts anyone."
Perhaps the best known such service is FreeCreditReport.com, a subsidiary of Experian, one of the three major credit-reporting bureaus. It has run snappy television ads featuring pirate waiters and other down-on-their-luck characters who sing that they wish they had checked their credit scores so they would have been alerted to identity thieves.
In 2005, the FTC filed suit against the site, alleging deceptive marketing practices. The commission later collected more than $1.2 million in settlements.
In a statement March 30, Experian said it was reviewing the rules "to determine the appropriate actions to support our business." It added, "We remain committed to clearly and conspicuously disclosing to consumers that the free report we offer is not the free annual credit file disclosure provided by federal law." FreeCreditReport.com is now charging $1 for credit reports.
Plenty of companies also pitch so-called free credit reports. Type "credit report" into any Internet search engine, and in addition to the credit bureaus and the government-approved site, you'll find a multitude of sites that tout "free" credit reports and warn against identity theft. In small print toward the bottom of their home pages, they make clear that they're offering trial subscriptions to services that cost $12 to $30 a month.
Continued: Changes in effect now
