Sep. 12, 2006 at 7:00 AM ET
You know the jingle if you've ever watched late-night television: "Free ... Credit Report DOT com."
What you might not know is this: There's nothing free about FreeCreditReport.com. Like so many other come-ons you hear on late-night TV, you just can't trust that word "free."
I'll explain the Web site's misleading advertisements in a moment, but first, here's what you really need to know: When you want to see your credit report, you want to use AnnualCreditReport.com. There, you can actually get your credit report for free. Congress gave you the right to see your report every year for free, so there's no reason to visit any pay sites – like FreeCreditReport.com – to plunk down money for it.
In fact, this month marks the one-year anniversary of the liberation of your credit report by Congress. In September 2005, every consumer in America was granted the right to obtain a free copy of his or her credit report every year.
If you obtained your free credit report at this time last year, here's a reminder that you can get a fresh version now at AnnualCreditReport.com.
Also one year ago, credit bureau Experian was also slapped on the wrist by the Federal Trade Commission for misleading consumers at its FreeCreditReport.com Web site. The FTC said Experian didn't make clear to consumers that they would be charged $79 for an annual subscription after they signed up at FreeCreditReport.com.
What the FTC didn't say (but was abundantly clear to anyone with a brain) was that FreeCreditReport.com and Experian were benefiting from confusion over news stories telling consumers were entitled to a free copy of their credit report every year. And the site was designed to add to the confusion.
While not admitting wrongdoing, Experian agreed last August to give consumers refunds and make the terms of its product clearer. One year later, how is the company doing? The television ads are as misleading as ever. On the other hand, the Web site itself is improved, with a disclaimer featured fairly prominently. But it would be a stretch to say the terms are clear, the price is clear and consumers are being treated fairly.
Given all the confusion, and the legal action, it's amazing that FreeCreditReport.com is allowed to continue operating. I know it continues to cause mix-ups. Earlier this year, during the hubbub about the missing Veterans Administration laptop, I heard experts testifying before Congress point to the wrong site by accident. In April, an ID theft expert speaking to students in Tacoma, Wash., pointed the teenagers to the wrong site, and was quoted in the local Tacoma News Tribune. The newspaper was flooded with complaints. Here's what those readers were complaining about:
The television ad
"I'm thinking of a number ...," the smiling host says in one version of the FreeCreditReport.com television advertisement. He sits director-style on a chair, then brags about how high his number is -- his credit score -- and how much money it saves him when he gets a new card loan or mortgage. Nothing misleading there: A good credit score is good for you.
But the advertisement shows the word free repeatedly, and the host says it. There is no indication of any cost. In fact, during the 30-second spot there is only one indication that there is a catch: a disclaimer, read at lightning-fast speed, in the commercial's final seconds as it fades to black.
"Free credit report requires enrollment in Triple Advantage."
The disclaimer is so short that I've seen occasions when it is cut off by a returning television program. But even when it plays in full, notice what isn't there: Any indication that FreeCreditReport.com costs money.
The Web site
The good news is consumers who are misled by the ads will encounter a relatively prominent warning when they go to the FreeCreditReport.com Web site to sign up
"When you order your free report here, you will begin your free trial membership in Triple AdvantageSM Credit Monitoring," it says. "If you don't cancel your membership within the 30-day trial period, you will be billed $12.95 for each month that you continue your membership."
The site also includes a link to the genuinely free site, AnnualCreditReport.com.
But even with that disclaimer, Experian's Web site is still designed to mislead. The disclaimer is written in small, light blue type on a dark blue background – hardly the choice of someone designing for clarity. And the print is understated compared to the huge "Get Yours Now" button on a white background in the center of the site. Once consumers click there, the chance to see the disclaimer is gone.
And even in the disclaimer -- right next to the link to the real free credit report site -- there is yet another link that says "Get your free credit report and credit score," which is a link to the form consumers fill out to buy the paid service. Click on that second link by accident and you find yourself on stuck the toll road instead of the free highway.
I could go on; but suffice to say that Experian's effort to comply with the FTC ruling looks like a minimal-effort homework assignment done by the most reluctant student in class, only after he was sent home with notes to his parents, then given a bad grade, then threatened with expulsion. It's just enough to keep the kid in school, but certainly not enough to earn a passing grade.
Millions have obtained their free credit report
Straightening out the free credit report mess is important. Millions of Americans are now aware that they must keep track of their credit report and score. New research from consulting firm Gartner indicates that nearly 50 million Americans say they've signed up for their free credit report, and that about another 40 million plan to. Those polled didn't indicate if they had used AnnualCreditReport.com or FreeCreditReport.com – or some other site -- to obtain their reports.
Researcher Avivah Litan, who derived the numbers from a recent poll, said that about 70 percent of American adults are aware of their right to obtain a free copy of their credit report, an incredibly high awareness rating. In fact, you'd have to call the marketing efforts around free credit reports a great success story.
Now, if we could just make sure all those people are going to the right site.
Have you noticed any other free products or services that aren't really free? Submit your ideas below.