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'Free' credit reports aren't, except from AnnualCreditReport.com

by Broderick Perkins

(03/12/2010) Experian's FreeCreditReport.com band of goofs will be signing a different song later this year, when the feds clamp down on it and other companies offering "free" credit reports, but do so only after selling consumers other services.

First, and foremost, the only web site where you can really get a free credit report, cost free, for absolutely no charge, is the Federal Trade Commission's (FTC) official AnnualCreditReport.Com.

Go elsewhere for a "free" credit report and you are likely to get snookered into buying credit scores and other credit report services you don't want or need.

That's the impetus behind the FTC's latest mandate for further disclosures from companies purporting to offer free credit reports, but have no intention of providing anything for free.

Effective April 1 this year, any firm advertising "free" credit reports will be required to specifically disclose prominently that consumers have a right to a truly free, no-strings-attached, credit report from AnnualCreditReport.com or by calling 877-322-8228.

The notice must read: "THIS NOTICE IS REQUIRED BY LAW. Read more at FTC.GOV. You have the right to a free credit report from AnnualCreditReport.com or 877-322-8228, the ONLY authorized source under federal law."

Web sites will be required to include the disclosure at the top of every page that mentions free credit reports. Also, web site disclosures must include clickable buttons (hot links) to three locations "Take me to the authorized source"; "AnnualCreditReport.com"; and "FTC.GOV."

Effective Sept. 1, radio and television commercials likewise will have to include the disclosures.

A previous rule only required web sites and advertisers to include the phrase: "Free credits reports are available under Federal law at: AnnualCreditReport.com."

Since 2004, under the Fair And Accurate Credit Transactions (FACT) Act, an amendment to the Fair Credit Reporting Act, consumers actually have been entitled to three free credit reports a year, one each from the three major credit report agencies -- Equifax, Experian and TransUnion, but from the beginning there's been confusion because of misleading advertisements.

The FTC, in the past five years has wrenched $1.25 million in fines from Experian, which owns FreeCreditReport.com, to settle charges that its ads were misleading.

As part of the FTC's war against misleading advertisements, the federal agency even spoofed FreeCreditReport.com ads to make the point about misleading tactics.

Go to any website other than AnnualCreditReport.com and you'll likely pay for credit monitoring services or other services you may or may not need or want before obtaining a "free" credit report.

Unfortunately, credit bureaus participate in the management of AnnualCreditReport.com so they've also used it to pitch sales of credit scores and other services, which are not free.

That's also confused consumers, who've diligently gone to the official free credit report web site only to be sold a bill a goods.

The new rule, hopefully, also will address this problem.

"The amended Rule also restricts practices that might confuse or mislead consumers as they try to get their federally mandated free annual credit reports. For example, the amended Rule requires nationwide consumer reporting agencies — Equifax, Experian, and TransUnion — to delay any advertising for products or services on AnnualCreditReport.com until after consumers get their free credit reports," according to the FTC.

We'll see.

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