Site Settles Deceptive Credit Report Claims

A Web site claiming to offer free credit reports agreed today to settle
deceptive practices allegations by the Federal Trade Commission (FTC). 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

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

The FTC claims that Consumerinfo deceptively advertised and promoted its
“free reports” at its 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 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.”

News Around the Web