Is That 'Free' Credit Report Really Free?
MICHEL MARTIN, host:
Im Michel Martin, and this is TELL ME MORE from NPR News.
Coming up, new guidelines for breast cancer screening divide the medical community and could leave millions of women confused about whats best for their health. Well try to clarify all this in a moment.
But first, we want to tell you about an ongoing battle between the Federal Trade Commission and the company behind that credit monitoring service, freecreditreport.com.
Now, if you watch any TV at all, we bet youve seen those rather catchy ads. Three guys in pirate gear, in a barely functioning car, in a basement singing about how their current financial burdens could have been avoided if they had only kept tabs on their credit score through the online service.
(Soundbite of commercial)
Unidentified Male#1: (Singing) They say a man should always dress for the job he wants, so why am I dressed up like a pirate in this restaurant? Its all because some hacker stole my identity, now Im in here every evening serving chowder and iced tea. Should have gone to freecreditreport.com. I could have seen this coming at me like an atom bomb. They monitor your
MARTIN: You get the idea. But what those guys are selling the FTC is not buying. The FTC, which is an agency chart for protecting consumers and eliminating anti-competitive business practices is taking issue with Experian, the credit reporting agency that owns freecreditreport.com because the agency says the service really is not free.
The agency says the company charges its customers for a service that is unneeded. And now the Trade Commission has launched a spoof of the Experian ads to push people toward the government-run site annualcreditreport.com.
(Soundbite of TV commercial)
Unidentified Male #2: (Singing) Annualcreditreport.com, the one you can depend upon. Beware of the others, theres always a catch. They claim to be free but strings are attached. Their ads can be funny, so dont be deceived. Hold on to your money. Theres one site you need.
MARTIN: Confused? Well, here to help sort things out is Ron Lieber. He writes the Your Money column for the New York Times. Also with us is Nat Wood, who is an assistant director in the Bureau of Consumer Protection at the Federal Trade Commission. He came up with these spoof ads. Welcome to the program. Welcome to you both.
Mr. RON LIEBER (Columnist, The New York Times): Thanks for having me.
Mr. NAT WOOD (Assistant Director, Bureau of Consumer Protection, Federal Trade Commission): Thank you for having us.
MARTIN: First of all, Ron, if you just set the table for us. Whats in a credit report? And why do you need one? And I understand that theres an argument over whether who actually does need one which well get to in a moment. But whats in it and why would you need one?
Mr. LIEBER: Well, a credit report is just youre sort of permanent record of your financial transactions over time. And the most important thing is it contains is a record of the payments that youve made to lenders and perhaps people like cell phone companies and others, so that future lenders or people who might want to lend you money can see how youve performed in the past, or youve been late, for instance, that will show up. Also things like bankruptcies and possibly arrests. Its basically everything that a lender would need to know in order to figure out whether they wanted to give you a loan and what sort of interest rate to charge?
MARTIN: So when do you want one?
Mr. LIEBER: Its definitely a good idea to get a hold of your credit report, preferably all three credit reports because there are three major credit bureaus that keep reports on you. Before youre doing a big transaction, say, taking a loan out of for home, thats, you know, one of the biggest financial transactions, maybe the biggest youll ever make. And so, you dont want to be surprised by whats on your credit report. So, better to check it, you know, preferably months ahead of time so that you can see if there are any errors and see if theres anything else you need to clean up.
MARTIN: So, I logged on to the freecreditreport.com Web site and theres a disclaimer there. It says when you order your free report here, youll begin your free trial membership in Triple Advantage SM Credit Monitoring. And says, if you dont cancel your membership within the seven-day trial period, you will be billed $14.95 for each month that you continue your membership. So, Nat, whats wrong with that?
Mr. WOOD: Well, Im not sure that Id say that thats terrible, but it could be better. In fact, one of the reasons why that language is there and is so prominent is because of a past settlement with the Federal Trade Commission. What weve heard from consumers is that many still miss that and that they sign up for what they believe is a free service and instead theyre signed up for a paid service. So, they do get access to their credit reports. But in the long run, its not free because they have been enrolled in a costly credit monitoring service.
MARTIN: As I understand it, one is eligible to have a free annual credit report through annualcreditreport.gov. How does that work?
Mr. WOOD: Well, it may be useful to step back and think about why credit reports exist in the first place. And thats so that, theoretically, theres an objective way that financial companies can make a decision about whether to grant credit and enter into other financial transactions with people. So, theres a useful reason why this information is collected. Its collected by private companies. Theres no government database that fuels these. Credit reports are collected by national credit reporting companies and there are three major ones of those.
If you go to annualcreditreport.com, those companies will provide you with a snapshot of your financial record, your financial history, which is your credit report. This discussion is about whether that is truly free.
MARTIN: But, Ron, why - and this might be a silly question because Im sitting here right now drinking a bottle of water, when I could easily have walked to the water fountain and filled up my cup. So, maybe its a silly question, but why are people buying something that they can get for free?
Mr. LIEBER: Well, could be happening for a number of reasons. It could be happening because they arent aware of that annualcreditreport.com exist. It also could be that theyre vaguely aware that it exist and theyre confusing the annualcreditreport.com site, which the, you know, government sort of ordered into existence with the freecreditreport.com site that Experian runs. And its possible that Experian is capitalizing on those users, you know, kind of sense of confusion about where the official place is to get the reports.
MARTIN: Well, Ron, you also write in your column while the government has taken issue with the ads, it has had little to say about credit monitoring services themselves, a rapidly expanding niche approaching $1 billion in sales, for which millions of people have signed up often unwittingly. The problem, say critics, is that most people dont really need it. Why not?
Mr. LIEBER: Well, heres the confusing thing here, right? I mean, what this company is advertising is a free credit report, right? Thats what all the jingles are about, thats what the name is and the URL. Thats what people think theyre going there for. But what theyre actually doing is settling a paid credit monitoring service, which is something that, you know, sends you alerts every time theres an important or significant change in your credit report that might impact how lenders see you.
Oddly though, the company has not, you know, in their television advertisements at least, talked or bragged about the monitoring service. All theyre talking or bragging about is the free credit report, which is in fact available elsewhere. So, you know, I tried to take a company in its word and say, okay, well, actually what theyre really selling here is a monitoring service. But this monitoring service, you know, do you really need to pay $15 month for it?
And thats where I try to, you know, raise so many questions. You know, maybe for people who have been victims of identity theft, you might want to wash her credit on an everyday basis just as somebody is opening, say, a new account in your name. But even for those folks, monitoring is not foolproof. There are all sorts of ways that people can steal your identity that would not show up on a credit report and would not be made known to you through monitoring service.
MARTIN: And when - would this monitoring service give you all three credit reporting agencies or just the one they own?
Mr. LIEBER: It depends on the monitoring service. Some will give you all three. And some will give you only the one that they own.
MARTIN: And, Nat, can I just ask you is the report that, let set the monitoring aside, is the report that you can get from the free government site different from the report that you would get by singing up with this agency?
Mr. WOOD: No, its exactly the same. Its the complete report. In fact, youre getting it from the same source. The companies themselves provide the information at anunalcreditreport.com. So, you may not have to pay for credit monitoring service to pay close attention to your credit. You can stagger your orders for the free reports from anunalcreditreport.com, so that you get one every few months. If youre an identity theft victim and youve placed a fraud alert on your credit file, that entitles you free copies of your credit reports as well.
MARTIN: How often?
Mr. WOOD: You could get the free credit reports from anunalcreditreport.com. If you get one from each company each year, thats one every four months, if you want to stagger them. The fraud alert credit report you could get as frequently as every 90 days.
MARTIN: Now I was looking for your ad. So, I know, to be honest, if you remember how I first saw them. Are the FTCs ads also available in the same place that the freecreditreport.com ads are available - which is to say just on television, widely available - or do you have to go looking for them? Do you have to go online, for example, looking for them?
Mr.�WOOD: You have to go looking for them, and we hope people will share them with their friends. You can find them at FTC.gov/freereports or at our YouTube channel, youtube.com/ftcvideos. We try to make it as easy as possible for people to share them, but we don't have the big advertising budget to have them on pay TV.
MARTIN: Nat Wood is an assistant director in the Bureau of Consumer Protection at the Federal Trade Commission. He was kind enough to join us from his home office outside of Washington, D.C. Ron Lieber writes the Your Money column for The New York Times, and he joined me from New York. If you want to read Ron's articles that we've been talking about and see the link to the ads that we've been talking about, we'll have links on our Web site. Just go to npr.org. Go to programs, and click on TELL ME MORE. Gentlemen, thank you both so much.
Mr.�WOOD: Thank you.
Mr.�LIEBER: Thank you.
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