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FTC combats 'free credit report' ads

Agency creates own goofy ads, seeks comments on new rules.

By Teresa Mears Nov 3, 2009 2:01PM

We’ve all seen those silly commercials where the two goofy guys get bad jobs because they didn’t monitor their credit reports at (tell your dad, tell your mom).


The Federal Trade Commission (FTC) is not amused, The New York Times reports. Because not only is the site competing with the government approved, the credit reports are not really free. They require you to sign up for a credit-monitoring service at $14.95 a month. The only way you can get your report for free is to sign up for the service, get the report and cancel within seven days.


The FTC has used several tactics to brand its own site as the official free credit report site, including the unusual step of making spoof videos featuring its own trio of slackers. In song, they warn: “Other sites may turn your head; they say they’re free, don’t be misled. Once you’re in their tangled web, they’ll sell you something else instead.”


As part of the CARD credit reform laws, the FTC is seeking public comment through Nov. 30 on new rules that would delay any advertising or marketing until after consumers have obtained their reports.


Michelle Singletary, the Washington Post Color of Money columnist, sees the new rules as necessary but not tough enough.


On one important rule, the FTC has it only partly right. It wants to prevent the credit bureaus from offering any product or service until after consumers get their free reports. The law currently permits them to advertise their proprietary products and services through the centralized source,
Once you’ve followed directions and entered personal data, you encounter advertising for credit scores and credit monitoring services. Then you have to decline the offers before obtaining your credit report. I had to click through two Web pages of such marketing before getting to my report for one bureau.


Singletary believes the FTC should remove all advertising before, during and after the process of getting a free credit report. “People should be able to get their reports and exit the website without having to go through a gauntlet of sales pitches,” she writes.


Nickel, at Five Cent Nickel, notes that, which is owned by the credit reporting service Experian, does make it clear you are signing up for a $14.95-a-month monitoring service. He outlines in detail exactly how the service works. Once he got his Experian credit score and looked at his report, he was able to cancel the service with a three-minute phone call.

Others are not quite as savvy, and the FTC says it has received thousands of complaints. In the last five years, Experian has paid $1.25 million to settle FTC. charges that it misled consumers, The Times reported.


Credit monitoring is big business. Nine million people spend $650 million to $700 million annually on such services, Carter Malloy, a Stephens Inc. analyst, told The Times.


The flap over the marketing of credit monitoring raises another question: If you can get free credit reports once a year from each of the three bureaus (so you could get one report every four months), do you really need to pay $179.40 or more a year for credit monitoring?


Many consumer advocates say no.


“Does the average person really need to see their credit reports more than once every four months? Do you need to look at it daily?” asked Edgar Dworsky, founder of and a former member of Experian’s consumer advisory panel, told The Times. “That’s paranoia.”


After all, not seeing one’s credit report only causes problems for people who have credit problems or errors on their reports. Just seeing the report wouldn’t have gotten those goofy guys a better job, Seth Stevenson of Slate noted in his Ad Report Card column.


By the way, there's something I've never understood about the ads: How exactly would the guy's circumstances change if he'd known in advance that his credit was bad? Until he repairs his credit, he'll still get negged on that car loan for a "cool convertible." And, unless he's a cold and heartless person, you'd expect him to stay with his self-professed "dream girl" even after discovering that her credit was less than stellar. If I ever get him as my waiter at the local pirate restaurant, I'm going to ask him about this.


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