While consumers in the Western United States became eligible Dec. 1 to exercise their right to a free credit report once annually from each major credit bureau, the data providers have begun using the requirement as a marketing opportunity for their other credit-related products and services.
In December 2003, President Bush signed the Fair and Accurate Credit Transactions Act, which amended the Fair Credit Reporting Act. The new rules entitle consumers to a copy of their credit reports from each national credit bureau — Equifax, Experian and TransUnion — once a year.
Rollout of the rule began Dec. 1 in Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming. Eligibility will be staggered nationwide until it is complete Sept. 1 with the Eastern states.
Consumers may request the reports from all three bureaus through www.annualcreditreport.com, by telephone via a toll-free number or by mail. The service is run as a joint effort among the three credit bureaus under rules provided by the Federal Trade Commission. The FTC rules require the bureaus to have a Web site, phone number and mailing address for consumers to request their credit reports, but they also allow a certain amount of marketing by the bureaus.
“Each of the three credit bureaus are permitted to advertise on the Web site when consumers are signing up for their free credit reports, but the rule prohibits them from interfering with the consumers' ability to get their free report,” FTC spokeswoman Jen Schwartzman said.
Pop-up ads and other obtrusive advertising that gets in the way of consumers trying to proceed with getting their reports are not allowed, she said.
“We did realize that these are three independent and competitive businesses and the law is causing them to lose a source of their profits,” Schwartzman said. “Rather than forbidding all advertising, the rule does permit them to promote their other credit-related products and services.”
The credit bureaus also are permitted to send marketing messages in the envelopes along with the free credit reports requested by telephone or mail.
Though the three bureaus collaborated on the Web site and rollout, each is free to do marketing as it chooses under the FTC rules. The home page of annualcreditreport.com has no advertising. Eligible consumers go through a separate authentication process for each bureau from which they wish to obtain their report. Only after a consumer is authenticated do marketing offers appear.
“If you check Equifax, you get taken to an authentication page where you answer a series of questions that are what I consider non-wallet information — in other words, not easily accessible by somebody who maybe would have picked up your wallet,” said David Rubinger, spokesman for Equifax, Atlanta.
Once consumers pass authentication, they go to a screen that will take them to their free credit report. That is where Equifax offers consumers their FICO credit score for $6.95. It is an opt-in box. If consumers check it, they must fill out their credit card information to get their score with the report. However, even if a consumer buys his FICO score, Equifax does not consider him an Equifax Personal Solutions customer and does not market further to him.
Two other marketing offers on the page do opt consumers in to Equifax Personal Solutions customer status, Rubinger said. The first is an offer to store their credit report for 30 days on the Equifax Personal Solutions Web site for free. The other is a free Equifax credit ranking compared with other consumers in a given region or area.
“If you choose to accept either of these free offers, you become an Equifax Personal Solutions customer,” he said.
Regarding offline marketing, he said direct mail offers would be tested when free credit reports requested by telephone or mail are sent out.
“Frankly, there haven't been that many requests by mail yet but it may pick up,” said Donald Girard, spokesman for Experian, Costa Mesa, CA. “We will probably test sending offers by mail, too, though.”
On the Web, Experian has a strategy somewhat similar to Equifax. Once a consumer goes through Experian's unique authentication process, the credit report appears on the screen with marketing offers off to the left side of the report, Girard said.
One offers consumers their credit score for $5, and another is for Experian's Triple Alert product, which costs $4.95 monthly. Triple Alert notifies consumers of credit being requested in their name on any of their three credit reports. The consumer gets two methods of notification in the form of e-mails and text messages that direct the consumer to a personal message center on the Web to see the inquiry on their file.
Once consumers opt in and provide their information and credit card number, they become Experian customers.
Free educational offerings also are made to consumers with their credit reports, but accessing these does not opt them in as Experian customers. There is information on how to read a report, how to interpret a credit score and topics.
“For those consumers who just say, 'Look, I get this free credit report. All I want is the free credit report. I'm in. I'm out. I'm done,' it's a very quick process,” Girard said.
He noted that all data typed in by consumers to access their free credit reports are erased once they close their browser.
Unless a consumer opts in to a marketing offer, all the data they provided to get their report are strictly off limits.
“The credit bureaus are prohibited from using any of the authentication data that consumers give them for any reason except to fulfill the request,” Schwartzman said.
Though Chicago-based TransUnion did not respond to requests for comment, it is likely that its direct marketing efforts resemble those of Equifax and Experian. On its Web site, TransUnion offers products such as ID Fraud Watch, an identity theft alert tool for $10.95 per quarter, as well as a credit score and custom debt analysis for $14.95.
The credit bureaus are not disclosing any information about the number of free credit report requests that have been received since Dec. 1, except to say that volume is heavy. It is unlikely that the bureaus will share the results of their marketing efforts through this initiative.
“We worked together on this, but now we're back to being competitors,” Girard said.
Kristen Bremner covers direct marketing for DM News.com. To keep up with the latest news subscribe to our free e-mail newsletter DM News Daily by visiting //www.dmnews.com/cgi-bin/newslettersub.cgi