Are Free Credit Report Ads Misleading?
Of course everyone has seen the ads advertising free credit reports, they certainly are memorable with their catchy jingles. I’m sure even a few people out there have caught themselves singing one of the songs in the shower. The government though is not amused. They allege that these ads are misleading and intended to draw people away from the government’s own credit report website which is truly the only site that offers a completely and totally free credit report.
The New York Times has an excellent article on the government’s campaign against the so called misleading ads entitled “A Free Credit Score Followed by a Monthly Bill”. The author Ron Lieber seems to take government’s side that the ads are purposefully misleading consumers. While I’ll admit that the ads might be a little slanted, I don’t think the site really misleads people in anyway.
The Federal Trade Commission is not amused. It has long believed that the company that owns freecreditreport.com is deliberately diverting people from a government-mandated site where consumers can get free credit reports by law, and using the reports as a lure for a $14.95 monthly service that alerts subscribers to important changes in their credit status.
The way the freecreditreport.com website and many others like it work is that you do get a free credit report with a score as long as you sign up for a trial of their credit monitoring service. Now you will need your credit card to sign up for the trial. This trial can be canceled before the trial period is up and you will not be charged. However, if you decide to keep it or forget to cancel it then your card will begin to be charged a monthly fee for the service.
Credit monitoring is indeed a service and has emerged as a booming industry. Sales of credit monitoring are fast approaching the $1 billion dollar mark.
The government’s site, annualcreditreport.com, does indeed provide you with a free credit report, but that’s all you get. If you want to get an actual score than that is something that you’re going to get charged for. With the other sites, the score is included. Your going to have to either pay to get that score or give them at least the possibility of some future money.
I do like one of the ways that the government has decided to attack this allegedly misleading practice. The government has decided to spoof the freecreditreport.com commercials by producing a similar video featuring 3 musicians that takes shots at the freecreditreport.com people. This to me is perfectly fine and acceptable. All is far in love, war and advertising after all.
Credit monitoring provides customers with real-time updates about changes to their credit files that might affect how lenders see them. These services can be useful for identity theft victims, for example, who want e-mail alerts about new accounts that thieves might have opened in their name.
Yet for the vast majority of consumers whose credit status doesn’t change quickly or drastically, a monitoring service is a waste of money, these critics say. Keeping a close eye on your bills and checking your credit report several times a year is enough.
Can you really fault people though for offering a service that might not exactly be necessary? A whole lot of the services that people pay for might not exactly be vital, but they are after all services. If people want to pay for them then they have that right. That’s really the basis for our whole free enterprise system.
Ty Taylor, president of Experian’s Consumer Direct division, said the company’s process was transparent. “You get a free credit report and free score for test-driving our product,” he said, referring to the credit monitoring service. “We’ve always felt that it’s been very upfront and a fair opportunity for the consumer to become more aware and comfortable with the credit reporting concept.”
Some might call it overkill and paranoia, but if you want to know whenever something changes on your credit report than I say go ahead and do it. I don’t think these companies are misleading people at all. If your dumb enough to not understand what your entering into, and enter into it anyway, then maybe you deserve to get charged.
What I really think is happening here is that the government is kicking itself by getting outdone by someone with a better idea. freecreditreport.com is certainly more catchy and memorable than annualcreditreport.com, that probably is indeed responsible for some people not getting to the site they intended too. However, I don’t think that’s reason enough to go after the people. Unless their outright lying to people which is certainly not the case, I don’t think their really doing anything wrong.
It really is an interesting debate as I’ll admit there’s often a fine line between simply creative advertising and misleading advertising. That’s something that might be hard to determine. What it basically comes down to in my opinion is how smart do you think the average consumer is. For someone to pluck down their credit card number for something and not read exactly what their getting into, is just plain idiotic in my opinion. Do we have to constantly provide safeguards to protect people from their own stupidity. I sure hope not. Credit monitoring is a service that these companies are providing, it is something that some people might like and find useful. Its not wrong to try and lure some people into it by offering them a little free incentive to try it out. It really is just Capitalism at its finest.
The above commentary states that credit monitoring services “provides customers with real-time updates about changes to their credit files that might affect how lenders see them.” They do. Unfortunately the notification comes after someone has accessed the credit report and credit may already have been extended and used.
The consumer paying for credit monitoring services is now responsible for notifying the three credit reporting agencies that there are fraudulent charges and accounts appearing on their credit report. The consumer may also be responsible for notifying the businesses and institutions that extended the fraudulent credit and filing police reports before the businesses will waive any fraudulent charges.
It should also be noted that the credit reporting agencies assume no responsibility for any fraudulent extension of credit that was based upon the information they provided.
There is hope for consumers, but is doesn’t come from the credit reporting agencies. Consumers have three powerful tools to monitor their credit reporting activity, and also limit who can see it.
The first is to request their free credit reports from each of the three credit reporting agencies from http://www.AnnualCreditReport.com. Consumers can request a free annual from a different credit reporting agency every four months to keep informed about their credit reporting activity informed.
The second option for consumers wanting to protect their credit report history is to request a Fraud Alert from each of the three credit reporting agencies. The fraud alert is good for ninety (90) days. The credit reporting agencies require a Fraud Alert to be renewed every 90 in the hopes that the consumer will forget
While the credit reporting agencies are supposed to notify the requestor via e-mail each time someone requests a credit report or a credit inquiry in their name is made about the consumer’s credit history, they assume no responsibility if they fail to notify the consumer of new credit being extended or requested in the consumer’s name.
The third option of activating a Credit Freeze (sometimes called a security freeze) provides rigorous protection of the consumer’s personal and payment information. A Credit Freeze remains in force until the consumer has it lifted temporarily or permanently.
An active credit freeze requires the credit reporting agencies to reject all requests for the dissemination of any consumer credit report information, except those requested by appropriate law enforcement authorities with the correct warrants. A Credit Freeze allows creditors to report payments, or other financial activity such as late payments or non-payments, to the credit reporting agencies.
The inability of a business or individual to receive a valid credit report because of the Credit Freeze generally results in a denial of any request for credit. This helps protect the consumer who requested a Credit Freeze from fraudulent attempts to execute unauthorized credit transactions or open unauthorized credit accounts.
What is surprising and depressing is that the financial institutions, the financial columnists and media, and the credit reporting agencies that all pretend to be interested in the protection of personal credit, address, along with address and Social Security Number information rarely mention the advantages of the free Fraud Alerts and Credit Freezes that are available at no cost to the consumer, and only infrequently talk about the (really) free credit reports available on the Internet at http://www.AnnualCreditReport.com/.
DebtGazette,
I appreciate your account of this story- so many others have left out that even the government site charges for an actual credit score. There is so much more to this than meets the eye. Personally, I wasn’t thrown off by this news because I always knew that FreeCreditReport.com wasn’t free. But not that you are saying annualcreditreport.com isn’t free either, who is?
This story presented some new and interesting points: http://www.newsy.com/videos/ftc_clamps_down_on_free_credit_report_scams
Feel free to check it out.
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