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When Free Credit Reports Are Not Free

Company sidesteps new rules by adding a $1 charge.

Have you seen those slackers singing about their credit woes at a Renaissance fair and on a roller coaster?’s TV commercials certainly are catchy.

But there’s long been a catch. As soon as you request your report, you’re automatically enrolled in a credit-monitoring service that will cost you $14.95 a month unless you cancel within seven days.

It’s another example of a fine-print “gotcha.” In response, new federal rules went into effect April 1 requiring more up-front information from online credit-monitoring services that offer free credit reports.

The rules require such sites to tell you clearly on every page that there is just one place where you can get credit reports for free with no strings attached—the federally mandated There also have to be clickable links to that site and to the Federal Trade Commission, which enforces the rules.

So guess what the singing slackers’ website has done? It has started charging $1 for the reports, and donating the money to charity. Its owner, the credit bureau Experian, says this means the new federal rules don’t apply.

“Given the changes to Experian’s marketing approach—namely offering consumers their credit report for $1—we are no longer required to display the disclosures,” Experian explained in an e-mail to Scam Alert. It also plans to keep the word “free” in the site’s name.

FTC officials decline comment on this move by Experian, the latest maneuver in a long Washington legal fight. In the past five years, Experian has paid the federal agency $1.25 million to settle charges that its ads are misleading. Among other things, the FTC alleged that the company ran ads for free credit reports without adequately disclosing that consumers would be charged $80 for a credit-monitoring program.

Last year, the FTC created its own spoof ads, which mimicked FreeCreditReport’s jinglers and warned consumers: “Beware of the others, there’s always a catch. They claim to be free. But strings are attached.”

Bait for Monitoring Services

Free credit reports, as well as free credit scores, have long been used as bait in marketing credit-monitoring services, a $650 million per year business. Experian, the biggest player in this industry, reportedly spends about $70 million per year on ads. Some 9 million Americans have monitoring services—sometimes unwittingly—which provide real-time alerts to changes in their credit files.

The services can be useful for people who know their identities have been stolen, tipping them off when fraudulent credit accounts are opened in their names. But many consumer advocates say the services are unnecessary for consumers who keep careful watch over their finances and credit reports.

The new rules, part of the Credit CARD Act of 2009, also control how the three main credit bureaus—Experian, Equifax and TransUnion—can advertise on, where consumers are entitled by law to three free reports over the course of twelve months.

The rules specify that ads for the bureaus’ credit monitoring and other add-on services can appear on visitors’ computer screens only after they have received their free credit reports. That way, officials hope, consumers coming to the one site where reports truly are free won’t be confused into thinking that they have to first buy an add-on.

At, you can order all three reports at once, or stagger them. For most consumers, it’s usually best to access one report every four months to track activity over an entire year. Getting a report from a different bureau each time could reveal errors that may appear in only one company’s file.

While your credit report is free from, your numerical credit score that is generated from the information is not. You generally have to pay about $16 to get your score. You can get your score from the three credit bureaus for about $16—or “free” as part of a credit monitoring service. Or you can buy your FICO score, the most widely used by lenders, for about $16.

Sid Kirchheimer is the author of Scam-Proof Your Life (AARP Books/Sterling).