March 10, 2009 at 7:28 PM ET
You're the federal agency charged with protecting consumers. You have a $250 million annual budget, subpoena power and the ability to refer cases to the Justice Department for prosecution. So what do you do when one of America's biggest companies continually flouts the law?
You challenge the company to a joke-off.
At least, that's what the Federal Trade Commission has done. On Tuesday it released two videos that spoof the popular FreeCreditReport.com commercials and their trademark catchy tunes.
The government's ads never mention FreeCreditReport.com by name, but the target is clear.
"Beware of others, there's always a catch," the singer croons in one ad that's a dead-ringer for the FreeCreditReport spot set in a restaurant. "They claim to be free but strings are attached."
FreeCreditReport.com is owned by credit bureau Experian, which has been engaged in a decades-long battle with the Federal Trade Commission over alleged misbehavior. Most recently, in 2005, the FTC settled charges with the firm that it intentionally misled customers with its FreeCreditReport.com Web site. The FTC said in its lawsuit that the company was confusing consumers who were looking for their congressionally mandated free annual peek at their credit reports. Experian agreed to refund customers, but admitted no wrongdoing.
Even after the settlement, it kept right on marketing FreeCreditReport.com, where consumers must sign up for a $15-a-month service in order to get their credit reports. The lead singer in the ads has even become a cult figure on the Web, as my colleague Helen Popkin explained recently.
But the ads are a frequent target for consumer advocates. The Internet -- and my inbox -- is awash with complaints from consumers who were charged unexpectedly by the service, and have difficult canceling to avoid automatic renewal charges.
Consumers who wish to see their credit report for free should visit AnnualCreditReport.com
Experian did not respond to a question about the FTC spoof ads, but issued a statement arguing that consumers who sign up at FreeCreditReport.com receive valuable services.
"While AnnualcreditReport.com provides a free credit report once every 12 months, FreeCreditReport.com provides paying members with continuous access to their credit report and credit score with a paid membership," it said. "It also monitors a consumer's credit report at the three national credit-reporting companies and alerts members via e-mail if key changes are detected, like if a new account is opened in their name, which could help members identify potential identity theft early and take immediate action."
So why is the FTC making jokes instead of enforcing the law?
Nat Wood, a spokesman for the FTC, says the agency must work within "a legal framework." The FTC is actively monitoring Experian's compliance with the 2005 agreement, he said, adding that the agency "does not have the power to take arbitrary actions."
He also said the FTC has another mission: to educate consumers. The videos fit that bill, he said.
"We think education is an important resource and strategy for preventing bad things from happening to consumers," he said.
The ads, which were produced by California-based Aperture Films, are not designed for television. Instead, the FTC hopes they "go viral" and spread over the Internet, Wood said. Similar audio-only versions of the ad are being distributed to radio stations around the country in hope that they will run as free public service announcements.
The FTC is not buying any advertising time for the spoof. "We don't have that kind of budget," Wood said.
Experian spent $70 million dollars on advertising for FreeCreditReport.com in 2007, and even more in 2008, according to TNS Media Intelligence.
Last year, an Experian spokesman told the New York Times that FreeCreditReport ads had run 90,000 times in the previous year.
The FTC ads are hysterical. In a second spot, called "Apartment," the FTC band is playing in a basement apartment with someone's girlfriend cleaning the kitchen in the background, a clear parody of the similar FreeCreditReport spot. In this case, the singer urges consumers to visit AnnualCreditReport.com, then protests:
"All the others charge a fee. Read the fine print and you'll see. … I should know 'cause it happened to me."
The FTC ads will undoubtedly help cut through the "confusion marketing" that helps a company like Experian trick consumers into paying for something that's free, and that makes them an innovative tool for the FTC, and an effort that should be applauded. The agency says it has future video projects in the works.
But it says something eerie about the state of consumer protection in America that the federal agency charged with protecting us has resorted to satire. Given the size of advertising budgets at companies like Experian, I can't imagine the FTC can win a marketing war.
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