Experian affiliate settles deceptive credit report marketing charges

Tuesday, August 16th 2005, 10:55 am
By: News On 6

WASHINGTON (AP) _ An affiliate of credit bureau Experian has settled government charges that it marketed free credit reports to trick consumers into paying for a credit report monitoring service, federal regulators said Tuesday.

The Federal Trade Commission said the affiliate, Consumerinfo.com Inc., has agreed to offer refunds to deceived consumers, stop misleading claims and pay $950,000. The money will go to the U.S. Treasury or be used for consumer education programs, the FTC said.

Lydia Parnes, director of the agency's Bureau of Consumer Protection, said Consumerinfo promised free reports but did not tell consumers in any of its advertising that they would automatically be enrolled in a credit report monitoring service.

Consumers, who were asked for their credit card number in order to get the credit report, were charged an annual fee of $79.95 if they didn't cancel within 30 days.

``It's unfair and deceptive to promise consumers something for free and then trick them into paying for products they didn't want in the first place,'' Parnes said.

Experian, which acquired Consumerinfo in April 2002, maintained that it did not knowingly mislead or deceive consumers.

``We regret any confusion that may have been caused to consumers as a result of the product offering,'' Executive Vice President Peg Smith said in an interview. She said the company has changed its Web site so that disclosures about costs are on the first page of the site.

The FTC did not have any figures on how many consumers may have been deceived. But as part of the settlement, Consumerinfo plans to contact about one million people who are eligible for refunds, Smith said.

The company promoted its ``free'' reports at its freecreditreport.com and consumerinfo.com Web sites, the FTC said.

In addition to misleading consumers about free reports, the FTC alleged Consumerinfo also falsely led people to believe that it was associated with the official annual free credit report program mandated by Congress. Experian denies that.

The agency said there is only one authorized site where consumers can get their free credit reports as part of the 2003 law. That site is www.annualcreditreport.com _ and it now has reports available for people in the Western and Midwestern United States, as well as much of the South.

The phased-in program will be expanded to cover the Eastern part of the country on Sept. 1.

The FTC said it planned to send warning letters to more than 130 imposter sites that either misspell annualcreditreport.com or use sound alike names. FTC's Parnes said the agency wants those sites to know that it's watching them and attempts to mislead consumers are illegal.