Starting April 1, advertisements peddling “free credit reports” will require new disclosures to help consumers avoid confusing offers – which often require customers to spend money on credit monitoring or other products or services, the Federal Trade Commission said today.
Consumers may not realize that they are entitled to a “no-strings-attached” free credit report at AnnualCreditReport.com, the FTC said.
As part of the sweeping reform laws that took full effect yesterday, the Credit CARD Act, the FTC was required to finalize a rule regarding the sometimes misleading “free credit report” ads that also make for light-hearted and frequent television commercials featuring a band of slackers belting out a catchy tune.
The FTC’s amended rule will require new prominent disclosures. For example, the FTC said, any website offering free credit reports must include such a disclosure across the top of each page:
“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.”
“For years, these companies have said with a smile that they will provide a free credit report,” said Sen. Charles Schumer, D-New York, who urged the FTC last year to crack down on credit monitoring firms with the deceptive pitch. “… And then suddenly, months later, consumers get a bill in the mail for their credit monitoring services. The FTC has done exactly the right thing to shut down this scam and give consumers some honest choices.”
The FTC said it proposed amending the rule in October 2009, and received more than 1,000 comments from consumers, consumer reporting agencies, consumer report resellers, business and trade organizations, state attorneys general, consumer advocates, law firms, members of Congress and academics.
“The amended rule requires nationwide consumer reporting agencies – Equifax, Experian, and TransUnion – to delay any advertising for products or services on AnnualCreditReport.com until after consumers get their free credit reports,” the FTC said.
Each of the nationwide credit reporting companies is required to provide consumers with a free copy of their credit reports once every 12 months upon request, the FTC said. Consumers can learn more about their right to a free credit report under federal law at http://www.ftc.gov/freereports.
