/ Mark Frauenfelder / 4:05 pm Mon Apr 5, 2010

"Free" credit report site disclosures now mandatory

It pleases me to learn that a new Federal Trade Commission regulation went into effect requiring those sleazy sites like Freecreditreport.com to display this disclosure:
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.
The regulation went into effect on April 2, but Freecreditreport.com doesn't have the disclosure on its home page. It does have a curious notice in the form of a gif (no text), though:
Cobrand Images Remix 5449 Fcr 62 1 9Dsc 243X256 Charity-Set1

So, for starters, Freecreditreport.com isn't even free anymore. But, more than that, this notice doesn't make a lot of sense. The company says it can no longer provide a "free" credit report (thanks to the mean ol' gubmint) and must now charge a dollar. But then it says it will give the dollar to charity. Huh? I have a feeling something else is going on here. I'm only guessing, but I suspect the real reason they charge a dollar is to make sure the credit card number it asks for (before giving you your report) is valid. (Freecreditreport.com uses the card number to charge you $14.95 a month for its lame "Triple Advantage" program). It could be that some people had been signing up using phony credit card numbers that they generated from a site like this. These numbers will pass a local pre-validation check, but will fail when a merchant actually tries to process a charge against the card number. So now the company is charging a dollar to make sure the card is valid. Do you have a better theory? I'm all ears.

UPDATE: In the comments, Thalia makes the point that by charging $1, Freecreditreport.com can avoid FTC's new disclosure regulation for "free" credit reports. This is a much better theory than mine.

Note: I post stories about money for credit.com, which offers something called CreditReportCard that actually is free. I wrote about Credit Report Card here.

"Free" Credit Report Site Disclosures Now Mandatory

Previously:

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  1. Astounding. But I guess this shows you how these site will find all sorts of ways to deal with new legislation and still make a buck.

  2. It’s actually because the FTC rule says that if you provide a “Free credit report” you must put the above disclaimer. By charging $1, they can say that they are not providing a “Free credit report” and therefore aren’t within the scope of the new regulation.

      1. But not more sleazy than I expected.

        Maybe the rule the FTC needs to pass has nothing to do with free credit reports. Maybe the rule needs to be “If you ask for a credit card number, you may not bill a recurring subscription to it until after you have stated clearly to the customer that their card will be billed a recurring subscription fee and the exact amount of that fee and you may not bill more than the stated amount.”.

  3. I think #2 has it. Since freecreditreport.com isn’t providing a free credit report, they don’t have to comply with the FTC’s rule.

  5. From the FTC rule you can find here: http://www.ftc.gov/os/2010/02/100223facta.pdf

    Free credit report means a file
    disclosure prepared by or obtained,
    directly or indirectly, from a
    nationwide consumer reporting
    agency (as defined in section 603(p) of
    the Fair Credit Reporting Act), that is
    represented, either expressly or
    impliedly, to be available to the
    consumer at no cost if the consumer
    purchases a product or service, or
    agrees to purchase a product or
    service subject to cancellation.

    I do believe the $1 charge puts these guys outside the scope of the law. There is an argument that based on their name, they are still extending such an offer to the user, but I think it’s a much harder case to make.

    1. I’m guessing their lawyers have been up and down that one already. But I agree with you, Thalia. The site’s domain name and overall branding with their commercials etc. should count for a lot here.

  6. But then by not being free aren’t they false advertising as “freecreditreport.com”?

  8. The initial report is free, but the subscription you inadvertently opt into is not. What really kills me is that they promise you a free “credit score”. The report is furnished, but where is the score? Nowhere. And this is with the reputable agencies that have to give you the free report once a year. They advertise the score, but don’t come through. That costs extra. Making the sleazebags disclose their game simply is not enough. When Experian or Equifax says “Learn your credit score for free”, they really should be made to give you that score instead of just the report sans score. The report alone won’t tell you everything you need to know. Pretty worthless without that mythical score.

    1. I’m pretty sure that freecreditreport.com is a front for Experian, so the term “reputable” has to be loosely interpreted. These guys are all slimeballs.

      Another trick: the scores that you get from the three major reporting companies are not actually your FICO (Fair Isaac) scores. They are generated by Experian, who doesn’t want to pay Fair Isaac so they just reverse-engineered the FICO algorithm. The Experian number is usually higher.

  9. I don’t know how one goes about getting an “internet debit/credit card” in the US but my bank in Poland issued me a VISA-stamped card with no mag strip that I can easy load with a bit of cash from my primary bank acct, do my online shopping and the unload the remainder. Each time the card is loaded or unloaded I get an SMS confirmation to my phone that I need to enter into the bank’s web site to complete the request. Takes about 2 minutes to login, make the request, get the SMS and complete the request. Since I usually just make one purchase at a time (and know the total needed before the merchant tries to hit my card) there’s normally nothing left to unload because I put the exact amt needed on the card.

    Can’t get unexpectedly charged if there’s no money in your account! I highly recommend this sort of thing.

  10. Umm…. I’m not trying to insult anyone, but I’ve always thought it was painfully obvious that ‘free’ and ‘credit’ do not belong in the same sentence.

  11. Who thought the phishy AnnualCreditReport.com domain name was better than something simpler and less phishy like CreditReport.gov?

    1. #14: AnnualCreditReport.com is not a government site, it’s operated by the credit bureaus to comply with regulations. This competes with the bureaus’ paid services so they naturally try to make it as unattractive and phishy as possible. This is also why ACR reports don’t give you credit score numbers.

  13. Paypal lets you create a “single use” credit card number for things like this. The company can get their dollar (or you can use it for the free report sites), but after that initial use the card number expires.

  14. Here’s the deal, it’s a trick. You click on the link to get your credit report. You fill out a form on the first page with your name and e-mail. It then puts up a second page for you to fill out with your billing and address. over on the right side in faint letters is the “privacy statement”. buried in the middle of this privacy statement is this:

    Privacy Policy Notice
    ConsumerInfo.com, Inc.’s policy on how your personal information is used and disclosed is contained in our Privacy Policy and Ad Targeting Policy. This product is Web-based and you agree to accept this notification, revisions, and the provision of an annual notice electronically through this website, if required.

    This offer is not related to the free credit report that you are entitled to under Federal Law. To obtain that free report, you must go to http://www.annualcreditreport.com

    Due to New York state law restrictions, the Triple Advantage Guarantee cannot be offered to residents of New York.

    Suprise! the form you just filled out signs you up for the expensive credit watch service trick. if you just wanted a credit report then well you need to go somewhere else.

  15. Mark says “I hate it when giant institutions have information about me that I don’t have ready access to.” But, how many people are even aware that this free disclosure law only covers the major Consumer Reporting Agencies (Experian, Equifax, and TransUnion) but not the dozens of smaller “nationwide specialty consumer reporting agencies” (as defined by FCRA 603(w))?

    For example, the Medical Information Bureau Inc. (MIB) is a cooperative data exchange formed by the North American insurance industry more than 100 years ago. Today, the MIB operates the most extensive database of medical information on individuals who have previously applied for health, life, disability income, critical illness and long-term care insurance. According to the Federal Trade Commission, “in addition to an individual’s credit history, data collected by Medical Information Bureau, Inc. may include medical conditions, driving records, family history, criminal activity, drug use, sexual orientation, and participation in hazardous sports, among other facts.

    Likewise, most consumers and even many insurance agents are unaware that insurers such as Humana, UnitedHealth Group , Aetna (AET), and Blue Cross plans, have ready access to applicants’ prescription histories. These online reports, available in seconds from a pair of little-known intermediary companies, typically include voluminous information going back five years on dosage, refills, and possible medical conditions. The reports also provide a numerical score predicting what a person may cost an insurer in the future. https://www.annualmedicalreport.com/denied-insurance-because-of-a-medical-coding-error-in-her-mib-report-video/

    An investigation last year by the Federal Trade Commission found that the two companies supplying these pharmacy profiles—MedPoint and IntelliScript—violated federal law for years by keeping the system hidden from consumers. But the FTC has merely required disclosure if prescription information causes denial of coverage or some other adverse action; the agency imposed no penalties. Disturbingly, the new laws do not require the Medical Information Bureau Inc., Ingenix Inc., or Millliman Inc. to offer consumers a safe, online source to request their medical report files; they only have “1-800” numbers.

  16. Now it actually has a disclaimer at the top that admits to what it’s doing:
    IMPORTANT INFORMATION:
    When you order your $1 Credit Report and free Score here, you will begin your 7-day trial membership in Triple Advantage. If you don’t cancel your membership within the 7-day trial period**, you will be billed $14.95 for each month that you continue your membership. You may cancel your trial membership anytime within the trial period without charge.

    ** Monitoring with Experian begins within 48 hours of enrollment in your free trial. Monitoring with Equifax and TransUnion takes approximately 4 days to begin, though in some cases cannot be initiated during your trial period. You may cancel your trial membership any time within 9 days of enrollment without charge.

    And it says “Free 7-day trial” in big letters in the middle.

    I guess they finally caved!

  17. “We’ll donate 100% of the proceeds”– reading between the lines, I suspect there will be .00001% of that $1.00 that will actually go to charity.

  18. Another thing to watch out for with this company is unauthorized charges. Over a year after I opted out of the trial, they started charging me the monthly fees, without any notice.

  21. Has anyone heard of creditkarma.com? It is funded through advertisements, which is kind of annoying, but IS free.

  22. It’s free!

    That’s why they have to charge you…and they want your credit card number.

    Bah, humbug.

  23. Is there a source for medical reporting bureau reports that is free of charge to the consumer? I went to annualmedicalreport.com and they want $30 for reports from three bureaus. This is more per report than the credit reporting bureaus charge past the first free one.

  24. Corporate and bureaucratic prevarication aside (and that FTC ruling was a classic example of the latter), if looks like dog poop and smells like dog poop, it’s probably dog poop. “Free”creditreport.com has the word “free” IN THE NAME OF THEIR BUSINESS AND MAIN CUSTOMER INTERFACE, which is also heavily advertised on TV. Combine this with the vague knowledge among the public that they can get a free credit report and can any impartial observer really believe that “free”creditreport.com’s intent is not to deceive the consumer? Has anyone you know ever actually gotten a credit report from “free”creditreport.com without paying? This type of “business model” is not new or unique. There are numerous websites that charge for government forms and documents that are available on line from .gov’s for free. What’s galling about “free”creditreport.com is that they are owned by Experian, one of the credit agencies that is supposed to give you a free report once a year (still trust them with your credit information?) and that they spread what is, let’s face it folks, a lie so heavily on TV. Anybody who believes in consumer protection or curbing unethical business practices should tell anyone they know not to go to “free”creditreport.com.

    For the record, I have never been scammed by “free”creditreport.com, because I found out where to get the free one right away and they never passed my BS detector. This is not sour grapes. I’m just someone raised in the heyday of what was then called “consumerism” (anybody remember that?), when it was more widely known that consumers needed to be careful and aware and when calling out companies for unethical practices was not considered tantamount to calling for a Communist Revolution.

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