Companies that offered free credit reports appear to be skirting a new federal disclosure requirement designed to crack down on misleading advertising.
Under the requirement, companies that advertise free credit reports in connection with the sale of credit monitoring or other products must prominently disclose that consumers can get a truly free credit report from the government-authorized Web site annual creditreport.com.
A limited disclosure requirement for all media started in February. A final, more explicit disclosure requirement took effect Friday for print, direct mail, telemarketing and Web advertising. The final rule for TV and radio ads applies Sept. 1.
Rather than make the new disclosure, many companies changed their marketing. Instead of offering free credit reports, some are charging a small fee or promoting free credit scores, which are not covered by the new rule.
Freecreditreport.com, known for its pirates, minstrels and catchy jingles, is doing both. Its Web site now says, "Check your report for $1 and get your score free! Plus, we'll donate your dollar to charity."
The company is owned by Experian, one of three credit reporting agencies required by law to offer consumers a free credit report, with no strings attached, once a year at Annualcreditreport.com.
The company "is cleverly taking advantage of gaping loopholes in the law," says John Ulzheimer, president of consumer education at Credit.com.
If it kept the $1, it might be criticized because it has "free" in its name. By donating the dollar to charity, it blunts criticism and looks generous, he says.
The company's Web ad implies that the government put a stop to its free reports. It says, "Due to federally imposed restrictions it is no longer feasible for us to provide you with a free Experian Credit Report."
Frank Dorman, a spokesman for the Federal Trade Commission, says, "We know of no federal restriction that would prevent a company from offering free credit reports; the rule simply requires those companies that do offer free reports to include prominent disclosures."
Ulzheimer says Experian has changed its signage in sports venues from Freecreditreport.com to Freecreditscore.com.
Experian says it is no longer advertising Freecreditreport.com on television but "will utilize different TV campaigns to advertise our suite of other products including www.freecre ditscore.com andÂ www.protectmyid.com." It had no other comment on its advertising.
Other companies that once advertised free credit reports and scores - including Truecredit.com, owned by credit reporting agency TransUnion - are now promoting free scores only.
The new rules were part of last year's sweeping credit card act. The FTC says it is monitoring compliance with the new rules but cannot comment on any company's advertising.
Starting in February, companies subject to the law had to state, in all advertising, that "Free credit reports are available under federal law at: Annualcreditreport .com."
By last Friday, more explicit disclosures applied to print and Web ads.
Web advertising must say: "THIS NOTICE IS REQUIRED BY LAW. Read more at FTC.GOV. You have the right to a free credit report from Annualcreditreport.com or (877) 322-8228, the ONLY authorized source under federal law." The disclosure must include hyperlinks to the two sites.
Starting Sept. 1, TV and radio ads must say, "This is not the free credit report provided for by federal law" in the audio and visual portion.
The law also imposes new restrictions on annualcreditreport.com, the government-authorized site operated by the three credit reporting agencies.
The first page of this site can no longer have links to the agencies' Web sites. In the past, they could.
"When people clicked on those, they were taken to a site without realizing they were no longer on annualcreditreport .com," says FTC attorney Tiffany George.
Also, this site can no longer advertise any products until after the consumer has received a free credit report.