Experian Pays $950,000 in 'Free Credit Reports' Flap

Experian settled a Federal Trade Commission complaint involving the “free credit reports” offered at its ConsumerInfo.com and FreeCreditReport.com sites, both parties said yesterday. The complaint came under section five of the FTC Act prohibiting unfair or deceptive business practices.

The FTC alleged that Experian drove consumers to the aforementioned Web sites for free credit reports and free 30-day trials of its credit monitoring service. At the sites, consumers were required to provide credit card information but told that their card would not be charged during the trial period. However, according to the FTC, the sites did not adequately explain that a $79.95 annual membership fee would be charged to the consumer if the service was not canceled in 30 days.

The complaint also claimed Experian failed to disclose the difference between its free credit reports and those available through www.annualcreditreport.com as part of the Fair and Accurate Credit Transactions Act, which amended the Fair Credit Reporting Act. The service is run as a joint effort among the three credit bureaus under rules provided by the FTC.

The new rules entitle consumers to a copy of their credit reports yearly from each national credit bureau: Equifax, Experian and TransUnion. Rollout of the rule began Dec. 1 in Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming. Eligibility was staggered nationwide and will be complete Sept. 1 with the Eastern states.

Under the settlement, Experian agreed to pay $950,000 to the FTC for consumer education. The Costa Mesa, CA, company also agreed to pay redress to consumers enrolled in its ConsumerInfo.com credit monitoring service between 2000 and 2003. And Experian agreed to abandon deceptive and misleading claims and to provide clear disclosure of the terms and conditions of all offers.

The FTC also plans to send letters to the operators of more than 130 Web sites that mimic the FTC-sanctioned www.annualcreditreport.com to let them know that deceiving consumers is against the law.

Kristen Bremner covers list news, insert media, privacy and fundraising for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters

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