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Credit report site settles with feds will pay the Federal Trade Commission $950,000 after dispute over whether its services were really free, as advertised.

WASHINGTON--A subset of a major credit reporting company, which allegedly promised free reports but then billed customers $79.95 for a "credit monitoring service," has agreed to settle charges of deceptive marketing practices.

The Federal Trade Commission had alleged that, which also runs a site called, deceived customers about its credit reports and later failed to distinguish its services from a government-sanctioned site designed specifically for such services. Experian Consumer Direct, ConsumerInfo's parent company, is one of the "big three" credit reporting agencies that last year helped to set up that government-sanctioned site at

The terms of the settlement, filed Monday in the U.S. District Court of the Central District of California, prohibit ConsumerInfo from making misleading claims about its products in the future and give specific instructions on how disclaimers should be displayed on its site and advertisements. ConsumerInfo must also continue providing refunds to qualified customers and hand the FTC $950,000 in "ill-gotten" revenue, which may go to "consumer education," the agency said in a statement.

Between November 2000 and mid-September 2003, ConsumerInfo advertised, via the Web, television and radio, offers for "free" credit reports, the FTC complaint said. Customers who signed onto the deal were then automatically enrolled in ConsumerInfo's credit report monitoring service and billed $79.95 for the year's subscription if they didn't cancel within 30 days, the FTC said. When signing up, customers had to provide their credit card numbers and other detailed personal information but were told the data would be used only to establish their account.

The Web site's only mention of the subscription fees occurred in "very small text" in its "Privacy Policy Notice" on the second page of the credit report order form, the FTC complaint said. Company ads, by contrast, made liberal use of the word "free" in capital letters, as evidenced by an excerpt in the FTC's complaint: "FREE! FREE! FREE! Get your FREE Credit Report Online in Seconds!!!!"

ConsumerInfo said in a statement Tuesday that the terms of its subscription have "always been clearly and completely published" and that the settlement's terms "largely involve the location and frequency of notices to consumers about the terms of the free trial offer."

By the time Congress passed the Fair and Accurate Credit Transactions Act of 2003, which guaranteed free annual credit reports to American consumers, ConsumerInfo had "significantly improved" its disclosures about the subscription charges and begun providing refunds to those who requested them, Lydia Parnes, director of the FTC's Bureau of Consumer Protection, said at a press conference Tuesday.

But it still wasn't in full compliance with FTC rules, the complaint alleged. From December 2004 to at least March 2005, the complaint charged, ConsumerInfo failed to disclose "adequately" that its free credit report offerings were not associated with the government's new free credit report Web site at

Peg Smith, Experian's executive vice president, said in a phone interview Tuesday that the company continues to adamantly deny the allegations and that it posted "voluntary" disclosures on its site beginning in December 2004.

"We certainly regret any concern this may have caused," she said.

Parnes said the FTC was unable to determine how many consumers may have been deceived in the process. ConsumerInfo has indicated that some 9 million free reports have been ordered from November 2000 to the present, and 1.6 million of those customers remain subscribers, she added.

The agency recently sent warning letters to 130 sites that use URLs similar to, Parnes said. The letters caution site owners to review their sites and "take any actions necessary to ensure compliance with the law," including putting up prominent disclaimers. The FTC plans to revisit the sites and check for compliance "soon," though no date has been named.

The agency will also be purchasing sponsored links on search engines, Parnes said, so that when Web surfers type in key words such as "free credit report," they will encounter a warning ad about "imposter" sites and a link to the FTC credit report site.