“It Pays to Check Your Credit Report” Says FTC’s Bureau of Consumer Protection

You should really check your credit reports at least once a year. If you’re still not convinced, you should review the results of the Federal Trade Commission’s (FTC) latest study, which shows just how error-prone and inaccurate the credit report files from Experian, Equifax, and TransUnion can be.

The FTC looked at credit reports for 1,001 U.S. consumers and found that one-in-four (26%) people identified at least one material error among their credit reports from the three bureaus. These errors were not minor, but “material” in that the FTC says these alleged errors are in regard to information used to generate credit scores, including the number of collections accounts, the number of inquiries on a credit file, the number late or missed payments, among others. In other words, errors that will only cost you more money for the use of credit.

The FTC report is the first major study that looks at all the primary groups that participate in the credit reporting and scoring process: consumers; lenders/data furnishers (which include creditors, lenders, debt collection agencies, and the court system); the Fair Isaac Corporation, which develops FICO credit scores; and the national credit reporting agencies (CRAs).

Overall, the study found that around 5% of consumers saw corrections to their credit reports that resulted in a credit score swing of at least 25 points, putting them into a better credit risk tier and making them more attractive to lenders.

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Do a Total Background Check on Yourself – Annual Consumer Reporting Agencies

The Federal laws FCRA and FACTA, which govern the credit bureaus Experian, Equifax, and TransUnion, also regulate a whole universe of other corporations known as “nationwide specialty consumer reporting agencies” and include hundreds of companies, such as: the Medical Information Bureau Inc. (MIB), OPTUMInsight (formerly Ingenix Inc.), Milliman Inc., LexisNexis C.L.U.E. Insurance Reports, the Insurance Services Office (ISO – A Plus Property Reports), ChexSystems Inc. (FIS), CoreLogic, Inc., CBC Innovis, Early Warning Services, TeleCheck, and Equifax Workforce Solutions – The Work Number (TALX).

In fact, just as financial companies rely on “credit reports” to establish credit for customers, others companies also utilize credit report files to assess consumers and charge higher prices in the markets of personal insurance (life, health, disability, and long-term care), residential housing and rentals, employment and income history, banking and checking account history, and property insurance (home, rental, other property, automobile, motorcycle, boating). There are an estimated 400 nationwide specialty consumer reporting agencies collecting and selling personal data on 350 million Americans.

For example, health and life insurance corporations rely on some of these nationwide consumer specialty reporting agencies to provide powerful technologies for evaluating and pricing individual insurance applicants: personal “medical report” files.  The Washington Post says that “medical reports” are “like credit reports for your health records” and have been created on more than 200 million Americans.

The Top 25 Most Requested Annual Credit Reports

Here is a comprehensive list of websites, telephone numbers, and mailing addresses for the top 25 most frequently requested annual consumer reports available to you from the nationwide consumer reporting agencies under the Fair Credit Reporting Act (FCRA). Through these reports, these consumer reporting agencies extensively monitor your personal medical, insurance, employment, rental, and banking history.

Federal law entitles all consumers to check and verify each report, once every year because these reports significantly impact your options and costs of credit. Use the information below to do a total background check on your credit reporting agency files. As The Consumerist advises, “Be sure to check them out and correct any errors, before a crisis hits.”
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New Laws Affecting Credit Cards, Credit Reports, and Gift Cards

The Credit Card Accountability, Responsibility and Disclosure Act of 2009 (also known as the Credit CARD Act) established sweeping changes intended to help limit deceptive marketing of practices, excessive credit card fees, and hefty interest rate increases.  Starting in 2010, certain corporations will be required to make more disclosures and they face new limits on certain credit card practices.

Every person is entitled to a free credit report every 12 months from each of the four nationwide financial consumer reporting agencies Equifax, Experian, Innovis, and TransUnion.  By Feb. 22, 2010, the Federal Trade Commission must formalize the rules governing this access to prevent deceptive marketing of the credit reports.

The FTC has one proposal that would prohibit the credit bureaus from offering any product or service until after consumers get their free reports.  The law currently permits the credit reporting agencies to advertise their proprietary products and services through the centralized source, in this case AnnualCreditReport.com.

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New Credit Card Law Will Curb FreeCreditReport.com Ads

The credit card reform bill signed into law by President Obama on May 26, 2009 attempts to put a stop to several unfair practices of the credit card industry — it also targets misleading advertisements for phony “free” credit reports.

The “free credit report” advertised non-stop on cable television, it bears repeating, isn’t free at all.  The law calls for the Federal Trade Commission to issue new rules that will force free credit report advertisers to inform consumers that the only place for a free credit report is AnnualCreditReport.com.

Television and radio ads will also be required to include a pretty deflating statement: “This is not the free credit report provided for by Federal law.” (more…)

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Experian Consumer Direct Settles FTC Charges over Consumerinfo.com & FreeCreditReport.com

On August 16, 2005 , the most prolific marketer of paid credit report services, Experian Consumer Direct, has settled Federal Trade Commission charges that it deceptively marketed “free credit reports” by not adequately disclosing that consumers automatically would be signed up for a credit report monitoring service and charged $79.95 if they didn’t cancel within 30 days, in violation of federal law. The settlement requires Consumerinfo to pay redress to deceived consumers, bars deceptive and misleading claims about “free” offers, requires disclosure of terms and conditions of any “free” offers, and requires the defendant to give up $950,000 in ill-gotten gains.

According to the FTC complaint, the defendant drove consumers to their www.freecreditreport.com and www.consumerinfo.com Web sites with radio, television, e-mail and Internet ads that promised free credit reports and a bonus – free trials of a credit-monitoring service. Ads made claims such as:

FREE! FREE! FREE! Get Your FREE Credit Report Online in Seconds!!!!
Click here to get a FREE copy of your online Credit Report Instantly!
And that’s not all. . . along with your INSTANT credit report, we’ll give
you 30 FREE days of the Credit Check Monitoring Service at no obligation.

Consumers were required to provide detailed personal information and a valid credit card account number to get their credit report. They were assured that, “Your card will not be charged during the free trial period. However, valid credit card information is required to establish your account.”

According to the FTC’s complaint, Consumerinfo’s advertising and Web sites failed to explain adequately that after the free trial period for the credit monitoring service expired, consumers automatically would be charged a $79.95 annual membership, unless they notified the defendant within 30 days to cancel the service. Consumerinfo billed the credit cards that it had told consumers were “required only to establish your account,” and, in some cases, automatically renewed memberships by re-billing consumers without notice. The FTC charged that the defendant’s failure to adequately disclose the automatic billing and to get consumers’ consent to bill their accounts violated federal law.
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No ‘Free’ Lunch on Credit Report Sites

From the Consumers Union Webwatch, a research study citing the problematic use of ‘Free’ in advertising creates confusion over rights to consumer credit data.

“”Web sites aggressively advertising “free” credit reports are charging consumers for services they are unlikely to need, while drawing attention away from the site created by law to provide consumers with free credit data every year, says a Consumer Reports WebWatch study.

The report notes that the proliferation of Web sites offering “free” credit reports may confuse consumers. Some of those sites even appear to disparage the information on offer from annualcreditreport.com.

“It seems disingenuous for the same credit reporting companies who were required by the federal government to provide free credit reports to be so heavily engaged in selling these reports to consumers bundled with other credit-related services,” says Robert Mayer, professor of consumer studies at the University of Utah, author of the report.

Of the 24 sites analyzed, nine were owned by or closely connected to TransUnion and eight were owned by or otherwise closely connected to Experian, the largest advertiser on the Web. This concentrated market structure has potentially negative consequences for competition and aspects of market performance (e.g., price, quality, choice, and innovation), the report’s author concludes.The Fair and Accurate Credit Transaction Act of 2003 (FACTA) entitles consumers to obtain, once a year, a free copy of their credit reports from each of the three major credit reporting bureaus–Equifax, Experian, and TransUnion. The site set up to deliver those reports is www.annualcreditreport.com.

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FTC on Your Access to Free Credit Reports – Fair Credit Reporting Act (FCRA) & the Fair and Accurate Credit Transactions Act (FACTA)

The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. The FCRA promotes the accuracy and privacy of information in the files of the nation’s consumer reporting companies. The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the FCRA with respect to consumer reporting companies.

A credit report includes information on where you live, how you pay your bills, and whether you’ve been sued or arrested, or have filed for bankruptcy. Nationwide consumer reporting companies sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home.

Here are the details about your rights under the FCRA and the Fair and Accurate Credit Transactions (FACT) Act, which established the free annual credit report program.

Q: How do I order my free report?

A: The three nationwide consumer reporting companies have set up a central website, a toll-free telephone number, and a mailing address through which you can order your free annual report.

To order, visit annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. The form is on the back of this brochure; or you can print it from
ftc.gov/credit. Do not contact the three nationwide consumer reporting companies individually. They are providing free annual credit reports only through annualcreditreport.com, 1-877-322-8228, and Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

You may order your reports from each of the three nationwide consumer reporting companies at the same time, or you can order your report from each of the companies one at a time. The law allows you to order one free copy of your report from each of the nationwide consumer reporting companies every 12 months.

A Warning About “Imposter” Websites

Only one website is authorized to fill orders for the free annual credit report you are entitled to under law — annualcreditreport.com. Other websites that claim to offer “free credit reports,” “free credit scores,” or “free credit monitoring” are not part of the legally mandated free annual credit report program. In some cases, the “free” product comes with strings attached. For example, some sites sign you up for a supposedly “free” service that converts to one you have to pay for after a trial period. If you don’t cancel during the trial period, you may be unwittingly agreeing to let the company start charging fees to your credit card.

Some “imposter” sites use terms like “free report” in their names; others have URLs that purposely misspell annualcreditreport.com in the hope that you will mistype the name of the official site. Some of these “imposter” sites direct you to other sites that try to sell you something or collect your personal information.

Annualcreditreport.com and the nationwide consumer reporting companies will not send you an email asking for your personal information. If you get an email, see a pop-up ad, or get a phone call from someone claiming to be from annualcreditreport.com or any of the three nationwide consumer reporting companies, do not reply or click on any link in the message. It’s probably a scam. Forward any such email to the FTC at spam@uce.gov.

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