Many free credit reports still aren't free

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 filed a complaint with the Federal Trade Commission alleging deceptive marketing practices in connection with the firm's ConsumerInfo.com and FreeCreditReport.com 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 www.FreeCreditReport.com'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 ConsumerInfo.com. 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

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