Free Credit Score Claims Deceive Consumers

Everyone has seen the ads for freecreditreport.com that feature a musical group of slackers lamenting the financial mishaps that befell them when they failed to track their credit on the site. Although the ads have become a hit with consumers, the FTC and the federal government are not quite as amused.

The FTC believes that freecreditreport.com has intentionally tried to divert consumers from the government-mandated website, annualcreditreport.com, where consumers can request one free credit report per year by law. According to the FTC, freecreditreport.com lures consumers in with the promise of a free report or free credit score only to begin charging them for a $14.95 per month credit monitoring service.

In a counterstrike against the deceptive ads, the government has unveiled its own ads that parody those of freecreditreport.com. The ads warn consumers, using the same band-of-slackers format, of sites that claim to offer free credit services but later begin charging for a service they never requested.

Although the government has spoken out against the ads, it has not addressed the provision of credit monitoring services, a burgeoning new field. Credit monitoring services now boast about $1 billion in sales and millions of subscribers. The main issue with these services, critics say, is that the majority of consumers simply do not need them.

A credit monitoring service gives consumers instant updates about any changes to their credit score or credit report. Credit monitoring is often helpful for victims of identity theft, for instance, who would like to see email notifications of new accounts the thief has opened in their names.

For the average consumer whose credit score does not often change quickly or substantially, credit monitoring is nothing more than a glorified waste of money according to critics. Reviewing your credit card bills and requesting your credit report multiple times per year is sufficient, and consumers can do so for free through the government’s site.

“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?” questioned Edgar Dworsky, the founder of ConsumerWorld.org and a past member of the consumer advisory panel at Experian, referencing credit monitoring services. “That’s paranoia.”

The main player in the field of credit monitoring is Experian, one of the nation’s three major credit bureaus. Experian is behind the singing-slacker commercials and spent over $54 million in 2008 to saturate the airwaves with the ads.

The government has come after Experian over the deceptive free credit report claim. In fact, the company recently paid $1.25 million in order to settle charges levied by the FTC. The FTC argued that Experian deceived consumers who wanted to order a free report on annualcreditreport.com but instead got stuck paying for a credit monitoring subscription on freecreditreport.com.