The Federal Trade Commission yesterday announced new rules that require prominent disclosures in advertisements for "free credit reports." The guidelines require companies marketing these services to be more clear that they differ from the government-approved Web site AnnualCreditReport.com, which offers free reports with no strings attached, according to the FTC.
The FTC was required to adopt the new rule, which takes effect April 1, as part of the CARD Act. Most of the key provisions of the CARD Act were implemented on Monday.
"Free credit report" offers often force consumers to spend money on credit monitoring or other products or services. Under the new rule, any Web site offering free reports must disclose, across the top of each page that mentions free credit reports, the following: "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." The disclosure must include a link: "Take me to the authorized source" and other links to AnnualCreditReport.com and ftc.gov.
The CARD Act requires a slightly different disclosure between now and April 1: "Free credits reports are available under Federal law at: AnnualCreditReport.com."
The FTC proposed amending the rule last October. Thousands of consumers have complained about being duped by offers for "free credit reports." The reports are often offered as part of a free trial of pay services that monitor changes in credit scores. But consumers often fail to spot the fine print announcing the charges, or forget to cancel their free trials before being charged. After the rule change was proposed, the FTC received more than one thousand comments from consumers, consumer reporting agencies, consumer report resellers, business and trade organizations, state attorneys general, consumer advocates, lawyers and members of Congress.
The changes are designed, in part, to encourage consumers to examine the accuracy of their credit reports, which are used by credit card issuers, mortgage lenders, employers and others to make lending decisions.
The Better Business Bureau has received more than 11,000 complaints on the topic in recent years.
Experian, in a statement, said it is reviewing the rules "to determine the appropriate actions to support our business. We remain committed to clearly and conspicuously disclosing to consumers that the free report we offer is not the free annual credit file disclosure provided by federal law.
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.
