New Free Credit Report Rules Take Effect

By:: Kara Johnson | April 02, 2010

Starting today, companies advertising so-called “free” credit reports online must include prominent disclosures ensuring that their products are not confused with the official federally authorized source for free credit information.

The new rule, issued by the Federal Trade Commission, is a response to widespread consumer complaints about heavily advertised free credit reports that were actually tie-ins to fee-based services. In many cases, consumers did not realize they were signing up for a fee-based service until the charges started to appear on their credit cards, often at the end of a trial period during which free reports were provided.

Under the new rule, advertisements for any free credit services must provide a link to the official source for free credit reports, www.AnnualCreditReport.com, and a disclosure that the site is the only federally authorized source for free credit reports. A toll-free phone number, 877-322-8228, must be provided as well.

In addition, the AnnualCreditReport.com site, which is sponsored by the three major credit reporting agencies, will not display advertisements for other credit products until after consumers have obtained their authorized free credit reports. Consumers are entitled by law to one free credit report per year from each of the three major credit reporting agencies, which provide them through the authorized site.

A common source of confusion for many consumers is that their actual credit scores are not included with the free credit reports they are entitled to by law and must be purchased. Under the new rules, consumers will not be able to purchase their credit scores through the authorized site until after they have received their free credit reports; however, they will still be able to purchase their scores immediately by going directly to the web sites of the credit reporting agencies, Transunion, Equifax and Experian.

The rule takes effect April 2, 2010 for all advertising except television and radio, for which it will take effect Sept. 1.

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