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Many free credit reports still aren't free

On June 1, consumers living in the south will have the right to get a free copy of their credit report.  But if they aren’t careful, they might end up paying the credit bureaus for the reports instead.

On June 1, consumers living in the south will have the right under a federal law to get a free copy of their credit report.  But if they aren’t careful, they might end up paying the credit bureaus for the reports instead. 

An independent research firm has found that there are dozens of Web sites with names like which claim to offer free reports, but instead steer consumers to sign up for subscription-based services sold by credit bureaus.  Often, these paid sites are  easier to find than the Congressionally-mandated site,

For example, visitors to Google’s search engine who type in “free credit report” get a list of links for Web sites that ultimately sell services from Experian and Trans Union., the only place to get a free credit report, doesn’t make the first page of search results.

Javelin Strategy & Research, which conducted the study, said it found 16 so-called "free credit report" sites connected to Experian and nine to Trans Union.  Javelin found no such sites connected to the third bureau, Equifax.

At, an Experian site, visitors get the message “Free! Free! Free!  Get your FREE Credit Report Online in Seconds!!!” But clicking on “Free report” sends users to a sign-up page. At the bottom of that page, in small print, is the message that a credit card is required and a fee will be charged.

“The low monthly fee of $9.95 will automatically be charged to your credit card after the trial period ends. What a small price indeed for financial peace of mind!” It says.

"This whole thing is really ugly," said Pam Dixon, a consumer advocate at World Privacy Forum, who published a report with similar findings in February. "We're getting a lot of complaints from consumers and they are furious." 

Consumers who sign up are enrolled in credit monitoring services sold by the credit bureaus. For a monthly fee, usually around $10, the bureaus let consumers see their credit reports an unlimited number of times to check for signs of ID theft.  They also send alerts to consumers when there is activity in their credit reports. The free service only allows a consumer to check his or her credit rating once a year.

James Van Dyke, author of the Javelin study, characterized the pay sites as "obstructionist."

"It dismays me when you type free credit report keywords and consumers are obstructed by a list full of hits of sites that aren't really free credit reports," he said. He did offer praise for Equifax, which apparently doesn't engage in the sales tactic. "They've kept their nose clean," he said. He also said several online banks link consumers directly to the correct free credit report site.

Colleen Tunney, spokeswoman for Trans Union, denied the company was intentionally misleading consumers. "I would take issue with anybody who says we are trying to confuse consumers...Trans Union has been consistent and that there is one place to go to get your (federally mandated free) credit reports," she said.  "We have no intention of confusing consumers about that. But we are in the business of selling credit-related products to consumers, and that's what you see at ("

She said the Trans Union's Web sites indicate clearly that consumers must pay for services ordered there.

Don Girard, a spokesman for Experian, said his company had given away millions of free credit reports as part of free trials of its services, and generally, consumers are happy with the firm's products. He also said disclosures on the company's Web sites were clear.

"Consumers who have come to Experian sites don't seem to have too much trouble figuring out how to get a free credit report," he said.  "Can we improve the site? Of course.  Do we strive to make it clearer to consumers every day? Yes. "  

He acknowledged the company has received some complaints, but said Experian has a "liberal refund policy."

FTC watches the mimickers
Joel Winston, assistant director of financial practices at the Federal Trade Commission, says the agency is monitoring sites that are mimicking the AnnualCreditReport site, "and if we determine that consumers are being deceived into paying for something they should be getting for free, we are prepared to act against it."

One reason for the low ranking of in the Google search was that, until recently, the site was built to prevent links from outside Web sites.  The credit bureaus said the decision was made for security reasons. But that policy changed Feb. 28, according to Dixon. AnnualCreditReport has since climbed to No. 20 on the Google list. 

Google's Eileen Rodriguez said the site results were based on "relevance and importance."

"If you search for [annual credit report], is one of the leading results.  A search for [free credit report] returns as one of the leading results.  Google's results are based on a number of technological factors, including relevance and importance," she said.

Many complaints in the past
This is not the first time someone has complained about credit monitoring sales tactics. Last February, Dixon's suggested consumers shouldn't use the Internet to get their free credit reports because of all the confusion created by free credit report sites. She suggested consumers call toll-free phone numbers provided by the bureaus instead.

At the time, Dixon's report said about 50 sites were offering free credit reports that ultimately required subscriptions.

"The credit bureaus are blurring the lines between what is free for consumers and what is available for a cost,"  Dixon said. "This is really a mess...It's a ridiculous thing for consumers to have to go through to simply get their free credit report."

Complaints about Experian have an even longer history, and predate the Fair and Accurate Credit Transaction Act, which last year gave consumers the right to an annual peek at their credit report. In 2003, the Electronic Privacy Information Center with the Federal Trade Commission alleging deceptive marketing practices in connection with the firm's and sites.

At the time, EPIC's Chris Hoofnagle argued that television commercials marketing the site make no mention of paid subscriptions. Fees are only mentioned in small print at the very end of the sign up process, the complaints says.

"Even a reasonable consumer would be misled by's offer," it reads.

The Federal Trade Commission did not act on the complaint.

With the widespread focus on identity theft, credit monitoring has become big business. The recent rash of high-profile data thefts at firms like ChoicePoint and LexisNexis has been a boon for the industry. Typically, firms that have lost data have offered to pay for a year's worth of credit monitoring services for consumers.  Terms of those arrangements have not been disclosed, but the services have been offered to millions of affected consumers in recent months.

Thousands of BBB complaints
While the firms don't reveal revenues for the credit monitoring services, there have been high-profile investments in the category. In 2002, Experian paid $130 million for The firm says it now has about 2 million subscribers.

But that site has also repeatedly irked consumers. The Better Business Bureau of the Southland, based in Colton, Calif., says it has received more than 2,000 complaints against the Web site, and gives it an "F" grade.

"Complainants allege the company charges for credit reports which are advertised as free," the agency's Web site says.  "This company uses a questionable marketing method known as negative option cancellation....Customers complain they go online to order a free copy of their credit report and later discover they unknowingly signed up for a credit report monitoring membership. Many are unaware of the membership until they notice a $79 unauthorized charge on their credit card."

While many consumers are able to get refunds, the site says, "the company generally fails to address the allegations regarding their misleading advertisements for free credit reports."

The FTC's Winston says with all the advice recently to check their credit reports, "the key for consumers is to make sure they go to the one official Web site for free annual reports. There's only one," he said.

Bob Sullivan is author of Your Evil Twin:  Behind the Identity Theft Epidemic