Fed Announces Rule Changes for Marketing Free Credit Reports

The confusion over the marketing of free credit reports by companies that require a subscription to a credit monitoring service or other related products and services to receive the free credit report has resulted in intervention by the Federal Trade Commission. 

Numerous consumers have seen advertisements touting free credit reports.  Most of these advertisements have small disclaimer that explain that there is a requirement that the consumer sign up for a credit monitoring service or similar service that has a monthly charge in order to receive the free credit report(s).

The primary reason why there is a cost to the consumer over this confusion is that there has been no change regarding a consumer’s ability to receive a free credit report annually from each of the big three credit reporting agencies.  Federal law mandated that the big three credit reporting agencies make available one credit report per year, with the no-strings-attached. 

With the passage of the 2003 Fair and Accurate Credit Transaction Act (FACTA), all U.S consumers are entitled to one free credit report from each of the three major credit reporting agencies, Equifax, Experian and TransUnion upon request every 12 months.  The credit reports are available by mail or at AnnualCreditReport.com or by calling 877-322-8228.

A new rule established by the FTC is designed to restrict procedures and actions that might confuse or mislead consumers as they try to get their federally mandated free annual credit reports and end up paying for an unnecessary service.

The FTC press release regarding the new rule changes states that, starting April 1, advertising for “free credit reports” will require new disclosures to help consumers avoid confusing “free” offers – which often require consumers to spend money on credit monitoring or other products or services.

The Federal Trade Commission’s Free Credit Reports Rule will require prominent disclosures in advertisements for “free credit reports.”   The FTC example states that any Web site offering free credit reports must include a disclosure, across the top of each page that mentions free credit reports.  The notice will read:

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 Web site must also include a link to AnnualCreditReport.com and FTC.GOV.

The amended rule established by the FTC becomes effective April 1, 2010, except in the case of television and radio advertisements, in which the new rules will take effect on September 1, 2010.