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“Free” Credit Reports reformed

By Faye Mergel
Published: Monday, April 19th, 2010

AGERM-00061742-001“Free” Credit Cards now face the possibility of being free. To bring around reforms on advertisements bringing in customers under false pretences, the Federal Trade Commission orders Credit Bureaus to state in their advertisements that the approved site for credit reports is annualcreditreport.com only.

The bill passed is to prevent companies from hoodwinking customers into taking “free” credit reports by misleading them with mass media ads that grab customers with promises of “free” credit reports. The FTC said “Consumers were duped into monthly fees for credit monitoring and other services that many didn’t want or didn’t know they were signing up for.”

John Ulzheimer said customers keep enquiring “Why am I being charged when all I wanted was a free credit report? It’s either because they didn’t read the fine print or didn’t cancel or opt out of the trial membership (for fee-based credit services),” John Ulzheimer is consumer-education president for credit.com. All websites are required to mention that www.annualcreditreport.com is the only site which offers free credit reports. September 1st onwards this rule must be implemented in mass media ads or by phone at 877-322-8228.

Federal law, states that each consumer is to receive a free credit report per year. The consumers can get one free credit report from the three credit bureaus, TransUnion, Equifax and Experian. Each credit report costs $15 and more.

Experian was penalized by the FTC in 2005 and 2007.FreeCreditReport.com, owned by Experian had to pay an additional $1.2 million even after being the worst effected by this rule as returns to customers who wanted free credit reports and were enrolled in other services.

The advertisements said consumers would not be debited during the free trial period. The consumers were not aware of the $79.95 they were charged, for not cancelling their accounts within 30 days, as an annual membership. The FTC said the consumer did not have full clarity over the free credit report.

Tiffany George an FTC attorney said “To alleviate consumer confusion, there’s now a ban on any advertising popping up from Experian, Equifax or TransUnion until after a person has completed their request for a free credit report”. Tiffany George said consumers were confused about the offers available on the site. Consumers should not be made to accept agreement to receive a free credit report. “It’s all designed to remove any barriers to consumers receiving their free reports; It’s supposed to be an unfettered right”, she stated.

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