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Credit report ads now more transparent

Marketplace Staff Mar 26, 2010
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TEXT OF INTERVIEW

Tess Vigeland: You know all those Web sites that offer you a free credit report? Well, most of them aren’t truly free. You have to pay some kind of fee. Or they sign you up for a service to monitor your credit.

Well, starting April first. Yes, April first, you won’t get fooled again. The Federal Trade Commission has issued new rules for how credit report companies advertise. We got some details from Adam Levin, co-founder of Credit.com.

Adam, welcome to the show.

Adam Levin: The way it changes them is it’s going to require that any site that’s actually offering a free credit report has to prominently display a statement, which clearly indicates that if they’re looking for the free credit report that the government has mandated, they will have an opportunity to click on a link and then go directly to AnnualCreditReport.com, which is a government-mandated site. You have to have the button that takes people to the government site.

Vigeland: OK. You know this industry of selling credit report products really has grown in the last few years. I wonder if you can explain what made it so popular. I mean, there seems almost to be a consumer obsession with this number. I guess that’s a natural customer base.

Levin: Oh, were that to be true. Credit.com ran a survey a few months ago that showed that almost 50 percent of the public either had never seen a credit report or hadn’t seen their credit report in the past year.

Vigeland: Really.

Levin: Yeah, and that’s just not good policy. One of your obligations as a consumer is to step up your game in terms of financial literacy, and one of the critical elements of financial literacy, is getting a credit report and understanding what’s on your credit report.

Vigeland: But given that you now can get your credit report for free from this government Web site, AnnualCreditReport.com, why would you pay for it? And why are you being asked to pay for it anywhere?

Levin: Let me put on my identity theft 911 hat for a moment. It is so important to be in touch with what’s going on in your credit life. And you can get one free copy of your credit report each year from three of the credit reporting agencies, or you’re enrolled in a monitoring program that monitors credit activity, as well as a public records monitoring program. If you’re going to buy anything, you should be buying that helps you not only understand where you are, but detect as an early warning sign if you’re having an issue and then also giving you a gateway to damage control, if you have a problem. That makes more sense than just simply buying a credit report with nothing attached to it.

Vigeland: Do you agree with the FTC’s decision to implement these new rules?

Levin: I think it’s a good idea. If that’s what you want, a free credit report and that’s it, you should have every opportunity to go to the government-mandated site. I think what happened with a lot of people who are out there advertising, they really created the impression in people’s mind that all they were doing is getting a free credit report. And you know, the fine print is a killer. And that’s why it was important that people have a pathway to get exactly what they want and if they want something different, that’s great too, but it’s freedom of choice.

Vigeland: Adam Levin is the co-founder of Credit.com. Thanks so much for your time.

Levin: My pleasure.

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