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A lawmaker Challenges FTC to Stop Credit Report “Scam”

By Faye Mergel
Published: Friday, November 6th, 2009

Television viewers often see that commercial with three guys wearing silly costumes singing about free credit reporting services offered by a website. The ad is using humor to attract viewers but Senator Charles Schumer takes the scruffy trio more seriously. In a public statement, the Democrat from New York referred to such ads by commercial sites a “long-running scam.” Schumer called out to the Federal Trade Commission to take extra measures to prevent consumers from being misled by those websites.

A lawmaker Challenges FTC to Stop Credit Report “Scam”Schumer said those websites deceive millions of American consumers by claiming that they offer free credit reports. People then subscribe to those sites, with the hope of being able to monitor their credit better. Consumers said they did get their report but monthly bills soon followed.

Subscribers reported that they were billed after signing up, and some of them paid hundreds of dollars for a year after being unable to cancel their subscription. They added that they paid about $15 each month for credit monitoring services, which alerts a consumer, whenever there is a change in his credit report. Experts said that checking a consumer report is necessary, but doing it once or twice a year is enough to protect themselves from fraud or inaccuracies.

To keep unwanted bills away from consumers, Schumer proposed that any company claiming to provide a free credit report must inform consumers that they do not have to pay for their services in order to get a credit report.

The lawmaker said those companies must tell consumers that their rights entitle them to a free credit report once a year. He also suggested that companies inform consumers where they can get their reports for free and disclose in their advertising that they are not the free credit reporting source that federal law created.

Additionally, Schumer proposed that those websites show the credit report of consumers before asking for their credit card information. That way, they can choose whether or not to avail the monitoring services offered. The lawmaker commented that people are spending too much on services they do not need. He cited a report saying nine million consumers spend about $650 million to $700 million each year on monitoring services.

Schumer said if any company claims that it is providing consumer reports for free, they should not bill subscribers for it. The senator added that such scam has been going on for years, and the Federal Trade Commission should implement more regulations to give consumers an honest choice. He further said that those companies are taking advantage of the very real worries of Americans about identity theft and deliberately mislead them in order to make a profit.

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