If you’ve had a pulse for the last few years, chances are you’ve seen one of Experian’s ads for FreeCreditReport.com.
I have to admit that most of the spots are generally engaging, funny, and memorable. The fact that YouTube users have voluntarily viewed them millions of times is saying something.
Still, the method Experian uses to hawk its product is fairly sleazy, and it just got sleazier.
The reason, of course, is that federal law mandates that everyone has a right to receive a free credit report once per year from each of the 3 primary consumer credit reporting agencies in the US. The site is annualcreditreport.com, and it is administered (by direction of the government) by the 3 credit reporting agencies themselves.
The issue with Experian’s ads is that the free credit report they’re promising is not part of the federally-mandated program, but rather as a teaser deal in conjunction with a subscription to the company’s $14.95/month ‘triple advantage’ credit monitoring service. Whether or not triple advantage is worth its costs is not the point here; the issue is offering a so-called ‘free’ product (which is in fact free from another site, with no strings attached) which actually can end up costing $180/year if the service isn’t canceled within an unreasonably short 7 day window.
Experian would argue that they have disclosed the strings attached to their offer. “Disclosure” in this case has typically included an announcer’s speed reading “free with enrollment in triple advantage” in the last 1 second of the TV commercial, or a small mention/text link on the freecreditreport.com’s site.
Ok, slightly sleazy, right? But it gets worse.
For a while now, the FTC has only mandated minimal disclosure for these “free with strings attached” offers. But a few weeks ago the FTC mandated significantly more prominent disclosures, including large messages on the homepages of sites like freecreditreport.com which direct consumers to the government-mandated site.
Experian dodged the bullet, though. Now, they charge $1 for their ‘free’ credit report (and even that $1 is donated to charity). By charging a nominal amount, they are no longer offering the credit report for free, and thus (so they reason), they can also avoid those pesky consumer-friendly disclosures which would hurt their bottom line.
A message on FreeCreditReport.com 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.” The company is also beginning to change its advertising to direct consumers to freecreditscore.com. Unlike credit reports, credit scores have not been federally mandated to be available to consumers for free each year.
I will say this: Experian’s massive advertising for FreeCreditReport.com no doubt raised awareness about credit reports in a way that a government agency could never afford. And this is the free market in action. The other observation is that this is a great example of how quickly the free market can skirt the government’s attempts to regulate advertising & marketing practices.
Does anyone in Experian’s marketing department really feel good about what they do?
Small wonder they are fighting and adapting to retain profitable marketing initiatives. Experian is a UK-based company, but their latest half year results indicate that North America accounts for 54% ($1 billion) of revenues and 64% ($307MM) of EBIT.
Here’s an excellent summary of the issue by the SF Chronicle.