If you read the New York Times, or keep up with Federal Trade Commission rulings, or follow the Florida Attorney General’s investigations, you probably already know that Experian’s widely advertised offers of F-R-E-E credit reports aren’t free—at least after the seven-day trial period of the credit monitoring service.

What? You’ve never heard about that last part? Well, get out the magnifying glass and read the really, really, really fine print. Hence, the hot water the corporation seems to be in perpetually with all the agencies named above, as reported earlier this week by the New York Times.

But what about those wildly popular commercials featuring the lovable, curly-haired, cutie-pie slacker with the rotten credit? How could such a nice guy get caught up in such sleazy misadvertising? Has yet another tragedy befallen our hero?

First, the poor guy married his dream girl, but her credit was so lousy they had to move into her parents’ basement. Then his identity was stolen, and he had to take a job in a cheesy seafood restaurant, his humiliation compounded by the ridiculous pirate costume he had to wear. (And, after he told the world about his wife’s credit problems, you know she had no sympathy.)

His problems continued when he tried to buy a new convertible or an SUV, and had to settle for a ratty subcompact. If you’ve seen the latest commercial, you know he ends up riding a bike and working as a waiter at catered parties for rock stars.

Though America loves, pities, and maybe even identifies with the poor schmoe, it turns out he actually has a gig that suits him perfectly—shilling for a company that advertises free credit reports, and then makes it darn near impossible to get out of the $79.95 monitoring service.

This man is not who he says he is: He’s not American; he’s Canadian and has a French accent! He’s not married, and he doesn’t live in anyone’s basement! He’s not even singing all those catchy little jingles in the commercials–he’s lip synching!

Save your pity. The man’s an impostor and he’s been toying with our emotions. If he ends up with a deadbeat wife, two crappy jobs and a used single-speed Schwinn, I say he deserves it!

Millions of people have fallen in love, only to find out later that the object of their affections was an impostor. For more information about how Life Lock can help keep sleazeballs from becoming an unfortunate chapter in your credit history, go to LifeLock.com. Use promo code Defense and receive a discount.

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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.

What’s wrong with this ad? The free credit reports Experian advertises aren’t free; they’re a teaser for Experian’s credit monitoring service, Triple Advantage. When callers requested their “free” credit reports, they were asked for credit card information and assured it was necessary only to establish their accounts, but would not be charged…and then they were enrolled in Triple Advantage and their cards were charged $79.95.

Adding insult to injury, Experian again used the credit card information to renew accounts without notification or consent, a violation of federal law.

In 2003, the Electronic Privacy Information Center (EPIC) asked the Federal Trade Commission to investigate Experian. When the investigation was completed in 2005, the FTC had determined that Experian deceptively marketed their credit reports and credit monitoring service in radio, TV, email and internet ads.

The FTC ordered Experian to make refunds to customers signed up from 2000 to 2003. They also had to pay $950,000 (which the FTC referred to as “ill-gotten gains”) to pay for consumer education on how to obtain genuinely free credit reports from annualcreditreport.com.

Apparently, $950,000 is chump change to Experian. In 2007 the FTC fined them an additional $300,000 for violating the previous settlement agreement by continuing to run the ads, and for their continued failure to adequately disclose to consumers that they would be charged $79.95.

Fast forward to 2008: Experian’s most recent TV advertising features three guys singing a catchy little jingle with the lyrics “F-R-E-E, that spells free. Credit report dot com, baby.”

That wasn’t the first time – or even the second time – Experian has run afoul of the FTC. In 2000, Experian, along with Equifax and TransUnion, was ordered to pay a total of $2.5 million for violating a Fair Credit Reporting Act (FCRA) provision requiring credit bureaus to have a toll-free phone number for consumers with questions about errors on their credit reports.

The FTC found that Experian and the others had blocked millions of calls, or deliberately kept callers on hold for unreasonably long periods of time. Between 1997 and 2000, more than a million callers either got busy signals or were only able to reach a recording telling them to call back another time.

Even if they somehow manage to stay clear of the FTC for their ongoing advertising, their “F-R-E-E” credit reports have created other problems for them. The Florida Attorney General’s office has been investigating Experian since October 2006. You can probably guess what they’re looking into: Experian’s failure to adequately disclose the option of not enrolling in the credit monitoring service when requesting a “free” credit report, deceptive advertising, misleading domain name, and failure to honor cancellations.

How Experian makes their money

Experian didn’t make $4.1 billion in 2007 just by selling consumers their own credit records or hoodwinking them into the credit monitoring services. Like all credit reporting agencies (CRAs), Experian makes most of their money selling consumers’ information to other companies.

They collect all that credit data, plus your name, address, employment, and information on any lawsuits, arrests, judgments and bankruptcies. They make their money by selling your information.

For an additional fee, they even provide what’s called an “investigative consumer report.” Oddly, an investigative consumer report doesn’t include consumer information; it includes subjective information on your character, reputation, personal characteristics, or mode of living obtained through personal interviews with neighbors, friends or associates.

Marketing companies also buy lists of consumers based on surveys, demographic sources and public records. Ever wondered how an unfamiliar insurance company knew to send you a special offer, just weeks before your auto warranty expired? Mystery solved: they probably bought your information from Experian who also maintains records on driver’s licenses, auto registrations and insurance policies.

Another revenue source is their notorious $79.95 credit monitoring service which might – or might not – be the impetus for a lawsuit Experian brought in February of this year against LifeLock, an identity theft protection service.

What you need to know about Experian and their lawsuit against LifeLock

It’s almost like the story of David and Goliath…only in reverse. Credit reporting giant Experian sued an upstart identity theft protection company, purportedly, in an effort to protect consumers from exploitation and false advertising.

The allegations are based on Experian’s interpretation of the FCRA, and the availability it provides for fraud alerts. A fraud alert is a simple statement placed in a consumer’s credit file that says the consumer either has been, or is concerned they may become a victim of identity theft.

Like other identity theft protection services, LifeLock contacts one of the three credit reporting agencies, and requests that a fraud alert be placed on each customer’s credit file. Because fraud alerts expire every 90 days, LifeLock automatically renews them for their customers, unless the customer notifies them not to.

The idea behind fraud alerts is that prospective creditors checking the consumer’s credit report will then take precautions to confirm the credit applicant’s identity. The statutes providing for the placement of fraud alerts state that “upon the direct request of a consumer, or an individual acting on behalf of or as a personal representative of a consumer, who asserts in good faith a suspicion that the consumer has been or is about to become a victim of…identity theft, a consumer reporting agency …shall include a fraud alert in the file of the consumer.…”

Experian claims to have lost millions of dollars because of LifeLock’s filing “bogus” fraud alerts for their customers. They assert that the fraud alerts are “bogus” for two reasons:

• LifeLock is not “an individual,”
• Fraud alerts are intended to protect only people who have been or fear they will become victims of identity theft. According to Experian, the customers LifeLock represents aren’t entitled to fraud alerts, and LifeLock is perpetually “crying wolf” by renewing the fraud alerts every 90 days.

Experian also alleges that LifeLock is exploiting consumers by making them pay for fraud alerts they could receive at no charge. It should be noted that neither Equifax nor TransUnion, who also post fraud alerts for each of LifeLock’s customers, has filed complaints against LifeLock.

LifeLock’s side of the story

LifeLock feels that they’re acting in accordance with the spirit of the law, and in the interests of the consumer. And, because data breaches have compromised the personal information of roughly 250 million Americans since 2005, any reasonable person should have a fear of becoming a victim of identity theft.

Finally, LifeLock asserts that their customers are paying for the convenience of their service; even the most concerned consumer may prefer to let someone else place and renew fraud alerts. Davis likens it to paying for oil changes.

For a fee of $10 a month, LifeLock takes several other steps to protect their customers from identity theft, including reducing junk mail and pre-approved credit offers and assistance in canceling credit cards and replacing official documents in the event of lost or stolen wallets.

LifeLock CEO Todd Davis claims he wasn’t surprised by the lawsuit, filed in the US District Court for the Central District of California. According to Davis, there are two reasons Experian has come after them, and neither of them has anything to do with consumer protection. He says the lawsuit is all about competing identity theft protection services, and the fact that LifeLock’s service is making it harder for Experian to sell consumer information.

Experian wants the court to make LifeLock reimburse them for all their expenses relative to LifeLock’s fraud alerts, and a “disgorgement” of any profits that LifeLock may have earned as a result. Experian is also seeking unspecified punitive and compensatory damages, plus an injunction barring LifeLock from continuing to engage in its allegedly false and misleading advertising.

So, why the lawsuit against LifeLock?

Maybe it’s because just weeks before the lawsuit was filed, LifeLock announced they’d received $25 million in backing from Goldman Sachs. Maybe it’s because LifeLock has experienced phenomenal growth, and their service is in direct competition with Experian’s credit monitoring service. Or, maybe it’s because all those fraud alerts make it harder for Experian to sell consumer information. That, after all, is their real bread and butter.

Whatever the reason, the lawsuit has produced one final irony: Experian’s stock value fell when they announced the lawsuit. Since the lawsuit, LifeLock—a privately held company–has enjoyed a 50 percent increase in customer enrollment.

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Today’s New York Times features an article on Experian and their commercials touting free credit reports. The article focuses on Experian’s wildly popular commercials that feature catchy tunes with the lyrics “Free credit report dot com,” or “F-R-E-E that spells free.”

The first problem with these commercials is that when you order your “free” credit report from their website, freecreditreport.com, you’ll be enrolled in a $15 a month credit monitoring program. The Federal Trade Commission has already fined Experian almost $1 million for misleading advertising, but the commercials continue, and there’s another one coming out this week.

Experian calls this “aggressive marketing,” in spite of their previous legal problems and continued complaints to the FTC by consumer protection agencies United States Public Interest Research Group, ConsumerInfo.com and Consumer Action.

The Florida Attorney General’s office is also investigating Experian’s advertising.

Secondly, consumers are legally entitled to free annual credit reports (genuinely free) from all three credit reporting agencies (CRAs), without ever having to contact the CRAs directly. This right was established by Congress and is guaranteed.

Thirdly, credit monitoring does little to protect consumers from identity theft. Consumers who enroll in credit monitoring services (knowingly or otherwise) are only notified after the identity theft has occurred. It’s like closing the barn door after the cows are out.

Finally, there are a number of steps consumers can take to minimize their chances of becoming identity theft victims. These steps range from shredding mail to limiting documents they carry in their wallets.

LifeLock is the industry leader in identity theft protection, and they offer extensive services that genuinely protect consumers. Their services include some things that a consumer could do themselves free of charge, but LifeLock includes them along with other low-tech and high-tech services for optimal convenience and protection.

With hundreds of millions American’s vulnerable to identity theft because of data breaches, doesn’t it seem cynical to take advantage of them when their trying to protect themselves?

Find out more about the covenience and security of LifeLock’s identity theft protection services by visiting LifeLock.com. If you decide to enroll in LifeLock’s services, be sure to use promo code Defense for the best discounts available.

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Credit Bureaus are businesses.

There is a common misconception that the credit bureaus are government entities, or at the very least, not-for-profit agencies, created and regulated to act and conduct business in the best interest of the consumers they represent.

In fact, they are very much for profit. In fact, in the case of Experian, they make their money selling the information they collect on 215 million consumers around the world. As of 2006, Experian had revenue of $3.1 billion, and a net income of $520 million. That money comes from several different products and services, but the raw material is the consumers’ information.

For example, one of their products is a credit monitoring service that includes an annual credit report. In 2004 the federal government mandated that the consumer credit reporting agencies must, once a year, give Americans a free copy of their own credit reports.

Experian now offers consumers their credit reports as part of their Triple Advantage package for $79 a year. Experian advertises this service on their widely-advertised website www.freecreditreport.com, which is frequently confused with www.annualcreditreport.com, the website where you can really get a “free” credit report “free.”

And, that’s gotten them into trouble with the Federal Trade Commission and the Florida Attorney General’s office; apparently they frown on advertising something as free if it actually costs $79.

So how else does Experian make money from all that personal information? They sell it to other companies. Experian records your name (including nicknames and previous surnames), every credit purchase, your bills and payments, your jobs and salaries, your spouse’s name and SSN, your marriages and divorces, current and previous addresses, phone numbers (including cell phone, fax, business, pager and even pay phone) ,drivers license, year of birth, civil actions (including liens and bankruptcies), and then sells all these demographic details to other companies.

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