The Free Credit Report Rip Off
We've all seen their cute ads on TV: the endearing slacker lad beset by difficult life circumstances, forced to work in a pirate-themed restaurant or at a Renaissance Faire, and all because he didn't avail himself of this company's offer for a free credit report.
Here's what you might not know: when you sign up for one of those free credit reports, you are also signing up for another product being pushed by the company, a credit monitoring service.
The first week of this credit monitoring service is free, but unless you read the fine print you may not know you are being enrolled in a credit monitoring service - until that you finally notice monthly $14.
95 charge on your credit card statement.
In plain and simple terms, you are being ripped off.
If credit monitoring is such a valuable service, then why does this company have to trick you into signing up for it? Since identity theft became a major issue, consumer paranoia has run high.
Credit monitoring is a rapidly expanding niche, with between $650 million to $700 million annually in sales.
Millions have signed up for it - although, through schemes like the one described above, many may have signed up unknowingly.
But even for people who sign up willingly, credit monitoring may not be providing a valuable service.
Credit monitoring services provide consumers with immediate information about changes in their credit reports.
For some consumers - recent victims of identity theft, or someone in the process of rebuilding his or her credit history - these instantaneous communications may provide a real service.
For the vast majority of consumers, however, it does not because their credit history does not change quickly enough to justify the scrutiny.
These consumers can keep tabs on their credit simply by checking their credit reports a few times each year, and keeping a careful eye on their credit card statements.
The company that makes those catchy ads has been the defendant in two major lawsuits charging deceptive marketing and business practices.
In the last five years, it has had to pay $1.
25 million to settle charges brought by the Federal Trade Commission.
The recently enacted credit card reform law contains measures directing the Federal Trade Commission to exert pressure on this company and others engaging in similar practices to be more transparent about the product they are selling.
In the meantime, the wise consumer is the one who is cautious when dealing with companies that engage in misleading business practices.
Here's what you might not know: when you sign up for one of those free credit reports, you are also signing up for another product being pushed by the company, a credit monitoring service.
The first week of this credit monitoring service is free, but unless you read the fine print you may not know you are being enrolled in a credit monitoring service - until that you finally notice monthly $14.
95 charge on your credit card statement.
In plain and simple terms, you are being ripped off.
If credit monitoring is such a valuable service, then why does this company have to trick you into signing up for it? Since identity theft became a major issue, consumer paranoia has run high.
Credit monitoring is a rapidly expanding niche, with between $650 million to $700 million annually in sales.
Millions have signed up for it - although, through schemes like the one described above, many may have signed up unknowingly.
But even for people who sign up willingly, credit monitoring may not be providing a valuable service.
Credit monitoring services provide consumers with immediate information about changes in their credit reports.
For some consumers - recent victims of identity theft, or someone in the process of rebuilding his or her credit history - these instantaneous communications may provide a real service.
For the vast majority of consumers, however, it does not because their credit history does not change quickly enough to justify the scrutiny.
These consumers can keep tabs on their credit simply by checking their credit reports a few times each year, and keeping a careful eye on their credit card statements.
The company that makes those catchy ads has been the defendant in two major lawsuits charging deceptive marketing and business practices.
In the last five years, it has had to pay $1.
25 million to settle charges brought by the Federal Trade Commission.
The recently enacted credit card reform law contains measures directing the Federal Trade Commission to exert pressure on this company and others engaging in similar practices to be more transparent about the product they are selling.
In the meantime, the wise consumer is the one who is cautious when dealing with companies that engage in misleading business practices.
