Site Settles Deceptive Credit Report Claims
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A Web site claiming to offer free credit reports agreed today to settle deceptive practices allegations by the Federal Trade Commission (FTC). Consumerinfo.com agreed to pay a $950,000 fine and to make restitution to deceived customers.
According to the FTC complaint, the Consumerinfo, doing business as Experian Consumer Direct, drove consumers to their Web sites with radio, television, e-mail and Internet ads that promised free credit reports.
In addition, the company offered what was billed as free trials of a credit-monitoring service. To qualify for the service, consumers were required to provide detailed personal information and a valid credit card account number.
The FTC claims that after the free trial period expired, consumers automatically would be charged a $79.95 annual membership, unless they notified the defendant within 30 days to cancel the service.
"Consumers were charged for services they did not want or desire," Lydia Parnes, director of the FTC's Bureau of Consumer Protection, said Tuesday morning. "It's unfair and deceptive to promise consumers something for free and then trick them into paying for products they didn't want in the first place."
The FTC complaint alleges that Consumerinfo billed the credit cards that it had told consumers were "required only to establish your account." The FTC also claims that in some cases, the company automatically renewed memberships by re-billing consumers without notice.
The FTC charged that the Consumerinfo's failure to adequately disclose the automatic billing and to get consumers' consent to bill their accounts violated federal law.
In addition to the fine and consumer redress, the settlement requires the company to create new disclosures designed to assure that Consumerinfo's negative-option or "free" offers do not contain misrepresentations, and that they disclose all terms and conditions of the offers.
Parnes also said Consumerinfo misled consumers about their association with the annual free credit report program for which U.S. consumers are eligible by federal law. A federal law enacted in December 2003, consumers the right to get one free credit report every 12 months from each of the three national consumer reporting companies.
Consumers can get their free reports by phone, mail or at one authorized Web site, www.annualcreditreport.com.
The FTC claims that Consumerinfo deceptively advertised and promoted its "free reports" at its freecreditreport.com Web site without disclosing that it was not associated with the official annual free credit report program.
"Consumers also need to be alert about impostor sites -- sites that misspell annualcreditreport.com or use sound alike names, but don't link to the authorized site," Parnes said. "We are sending letters to operators of more than 130 impostor sites to inform them that we know they are out there and that attempts to mislead consumers are illegal."