Scam Alert: When Free Credit Reports Are Not Free - AARP Bulletin Scams & Fraud
When Free Credit Reports Are Not Free
Company sidesteps new rules by adding a $1 charge
Have you seen those slackers singing about their credit woes at a Renaissance fair and on a roller coaster? FreeCreditReport.com’s TV commercials certainly are catchy. But there’s long been a catch. As soon as you request your report, you’re automatically enrolled in a credit-monitoring service that will cost you $14.95 a month unless you cancel within seven days. It’s another example of a fine-print “gotcha.” In response, new federal rules went into effect April 1 requiring more up-front information from online credit-monitoring services that offer free credit reports. The rules require such sites to tell you clearly on every page that there is just one place where you can get —the federally mandated AnnualCreditReport.com. There also have to be clickable links to that site and to the , which enforces the rules. So guess what the singing slackers’ website has done? It has started charging $1 for the reports, and donating the money to charity. Its owner, the credit bureau Experian, says this means the new federal rules don’t apply. “Given the changes to Experian’s marketing approach—namely offering consumers their credit report for $1—we are no longer required to display the disclosures,” Experian explained in an e-mail to Scam Alert. It also plans to keep the word “free” in the site’s name. FTC officials decline comment on this move by Experian, the latest maneuver in a long Washington legal fight. In the past five years, Experian has paid the federal agency $1.25 million to settle charges that its ads are misleading. Among other things, the FTC alleged that the company ran ads for free credit reports without adequately disclosing that consumers would be charged $80 for a credit-monitoring program. Last year, the FTC created its own , which mimicked FreeCreditReport’s jinglers and warned consumers: “Beware of the others, there’s always a catch. They claim to be free. But strings are attached.” Bait for Monitoring Services Free credit reports, as well as free credit scores, have long been used as bait in marketing credit-monitoring services, a $650 million per year business. Experian, the biggest player in this industry, reportedly spends about $70 million per year on FreeCreditReport.com ads. Some 9 million Americans have monitoring services—sometimes unwittingly—which provide real-time alerts to changes in their credit files. The services can be useful for people who know their identities have been stolen, tipping them off when fraudulent credit accounts are opened in their names. But many consumer advocates say the services are unnecessary for consumers who keep careful watch over their finances and credit reports. The new rules, part of the Credit CARD Act of 2009, also control how the three main credit bureaus—Experian, Equifax and TransUnion—can advertise on AnnualCreditReport.com, where consumers are entitled by law to three free reports over the course of twelve months. The rules specify that ads for the bureaus’ credit monitoring and other add-on services can appear on visitors’ computer screens only after they have received their free credit reports. That way, officials hope, consumers coming to the one site where reports truly are free won’t be confused into thinking that they have to first buy an add-on. At AnnualCreditReport.com, you can order all three reports at once, or stagger them. For most consumers, it’s usually best to access one report every four months to track activity over an entire year. Getting a report from a different bureau each time could reveal errors that may appear in only one company’s file. While your credit report is free from AnnualCreditReport.com, your numerical credit score that is generated from the information is not. You generally have to pay about $16 . You can get your score from the three credit bureaus for about $16—or “free” as part of a credit monitoring service. Or you can , the most widely used by lenders, for about $16. Sid Kirchheimer is the author of Scam-Proof Your Life (AARP Books/Sterling). Cancel You are leaving AARP.org and going to the website of our trusted provider. The provider’s terms, conditions and policies apply. Please return to AARP.org to learn more about other benefits. Your email address is now confirmed. You'll start receiving the latest news, benefits, events, and programs related to AARP's mission to empower people to choose how they live as they age. You can also by updating your account at anytime. You will be asked to register or log in. Cancel Offer Details Disclosures
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