FreeCreditReport.com: Not So Free -- Still

FreeCreditReport.com is the not-so-free offer that just won’t go away.

Over the past three years ConsumerInfo.com, a division of credit bureau Experian, has paid the federal government more than $1.2 million in settlements over allegations that it deceptively marketed "free" credit reports through its web site, FreeCreditReport.com. The issue: To receive a report that’s truly free, consumers must first provide their credit-card information. Unless they cancel before a free-trial period expires, they will be billed $14.95 a month.

Despite being admonished by the Federal Trade Commission in 2005 and again in 2007, FreeCreditReport.com's peddling of "free" credit reports continues -- and recently it has reached a fever pitch. Amid the nation's economic meltdown and with consumers more worried than ever about their credit profiles, the company has been flooding the airwaves with ads.

FreeCreditReport.com spent a little more than $19 million on advertising during the third quarter, an increase of 28% from the same period in 2007, according to TNS Media Intelligence. A vast majority of that money -- roughly $14 million -- was spent on television ads.

The ad campaigns – familiar to many TV viewers -- include a 20-something guy who sings about how he has to take a job as a waiter dressed as a pirate in a seafood restaurant since his identity was stolen. More recently, FreeCreditReport.com has created web videos (which can be found on YouTube) starring former Johnny Carson sidekick Ed McMahon rapping about his financial woes.

Consumers who request a free credit report at the web site must sign up for a seven-day trial membership of the company’s Triple Advantage credit-monitoring product. If you fail to cancel the service within the trial period (they actually give you nine days), you'll get charged $14.95 a month until you do. (The other two credit bureaus, Equifax and TransUnion, offer similar subscription services but have not made the high-profile advertising push of the Experian service.)

Under federal law, consumers are entitled to one free credit report a year through government-sanctioned web site AnnualCreditReport.com. But thanks to those catchy commercials, the FreeCreditReport.com address is far better known among many consumers than the government site. In fact, the FreeCreditReport.com service boasts five million members.

Critics continue to blast the service for its liberal use of the word “free.” “It’s inherently deceptive,” says Ed Mierzwinski, consumer program director for the National Association of State Public Interest Research Groups. He and other consumer advocates believe the company shouldn't be allowed to use “free” in its name if it’s going to charge money.

In October 2006, FreeCreditReport.com landed on the radar of the Florida Attorney General, which is investigating the company for a number of issues including a misleading domain name, deceptive advertising and failure to honor cancellations, according to a spokeswoman for the attorney general's office.

Experian says there’s nothing deceptive about its service. The credit-monitoring program and cost is spelled out clearly on its web site (it also has a lengthy disclaimer on its homepage that tells consumers that they can get a free credit report at AnnualCreditReport.com) and if someone cancels the membership within nine days, he can still get his free credit report, says Charles Harris, a spokesman for FreeCreditReport.com.

But some consumers claim that canceling the service -- or getting a refund -- at FreeCreditReport.com is difficult. Of more than 6,700 complaints about ConsumerInfo.com, and in turn FreeCreditReport.com, on the Better Business Bureau web site within the last 36 months, 4,539 of them were about not receiving a full refund.

Ben Lowery, a software engineer from Syracuse, N.Y., says he had a difficult time trying to terminate his membership. After five requests (with the same customer service rep), Lowery eventually managed to close his account, he says. FreeCreditReport.com’s Harris says the company monitors its call centers and all of its representatives are trained not to argue with customers who want to cancel their memberships.

Judy Kanter, of Fort Bragg, Calif., says she knew about the $14.95 fee. But the 61-year-old retired school teacher says she was charged an added $29.95 when she followed a link in an email from FreeCreditReport.com that said her updated credit report was available for viewing. When she tried to dispute that charge, the company refused to refund her money. FreeCreditReport.com’s Harris says he's not familiar with every complaint, but said that the company wants to make sure every customer experience is a good one.

Despite the consumer complaints and the ongoing investigation in Florida, the company and its clever marketing campaign march forward.