Profiting Off Debt
I feel like I see ads for the deceptively-named "Free Credit Report" more and more and more, as if the worse the economy gets, the more companies seek to prey on those who are struggling.
As you may know (but obviously not enough do), Free Credit Report is a bait-and-switch campaign from the private credit bureau Experian. The omnipresent ad campaign offers the debt-ridden a "free" credit report service to help them regain good credit, barely mentioning that it only comes with enrollment in the never-explained "Triple Advantage" program. Also never explained is that, thanks to 2005 federal law, anyone can get an actual free credit report from AnnualCreditReport.com.
Consumerist recently reported an anecdote showing how the scam sucks money out of the unwitting:
Jesus from South Texas signed up for credit monitoring at the notoriously scammy FreeCreditReport [dot] com. He never received the confirmation email and wasn't able to access his account, so he never used it, but forgot to call to cancel it. After three months he realized he was being charged $15 a month as per their terms of service, so he went to their site to retrieve his login credentials and was told the account didn't exist. After that, it took him 4 calls to get the account canceled, and they would only refund him for one month of service. One of their CSRs tried to scare Jesus into keeping the account open because there had been some "suspicious activity" in his credit history that he'd be wise to monitor. Then they told him there is no phone number or email for their "customer satisfaction department"--it can only be reached through snail mail.
MSNBC.com's Red Tape Chronicles gave a definitive take down of the scam in 2006, one year after Experian was "slapped on the wrist by the Federal Trade Commission for misleading consumers." Reporter Bob Sullivan said, "it's amazing that FreeCreditReport [dot] com is allowed to continue operating." Perhaps it's not so amazing that MSNBC, like several other cable channels, continues to air those misleading Free Credit Report ads, ad naseum.
What's particularly noticeable about the latest phase of the ad campaign is the relentless focus on young men (i.e. "I didn't know that my credit was whack").
Clearly, the company sees a huge market opportunity in 20something males struggling with debt. Not middle-aged folks hit with a sudden, cyclical economic downturn. But folks stuck in a hole essentially from the beginning of adulthood -- fleeced by credit card companies, weighed down with student loans and faced with diminishing economic opportunities.
That speaks to a fundamental problem with how our economy is functioning. That we are not in a mere rough patch that will work itself out. But the economy is structurally out of whack -- starved for public investment in education, health care, technological research and physical infrastructure. And having a government acting not as corporate watchdog, but corporate lapdog.
If we are to get our economy truly back on track, we need to return to investment in the next generation and our infrastructure, and return to real oversight of corporate behavior.
In the meantime, make sure you never ever ever use Free Credit Report [dot] com.
Cross-posted at Campaign for America's Future
Follow Bill Scher on Twitter: www.twitter.com/billscher
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JUST CONTACT CREDIT REPORTING AGANCIES AND TELL THEM YOU WERE TURNED DOWN FOR A CREDIT CARD.
THEN CHECK FOR WHAT EVERYONE HAS PUT ON YOUR CREDIT AND GET IT REMOVED.
So why aren't the Democrats in Congress introducing bills to stamp such deceptive ads? All they want to do is raise taxes.
Don't they already have something to cover those deceptive ads? I thought the FTC or some other branch was there to oversee that type of criminal behavior. What we need is a Congress who will enforce the protections we already have in place for so many of the things that have come to a head to to lack of enforcement. But those cops are there to bust anyone without a seatbelt, aren't they?
While I agree that Free Credit Report is a racket and it should be regulated to the extent that subscribers should easily be able to cancel their subscriptions, the real problem is with the lack of financial education of the vast majority of the American public. Consumers need to have knowledge and armed with that knowledge should be allowed to make their own decisions and deal with the consequences of those decisions.
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My first year of college, I worked at a hair salon. I managed to get a table in the student union to sell salon packages. $30 got you the works, a hair cut, color, condition, 3 free tanning sessions, 10% off of products, and half off on your next cut/color. For each one I sold, I received $5. I sold 300 that week, using that money for books, bus passes, and food.
The table next to me had a very attractive, older woman. She was dressed to kill, and she was giving away free candy, water bottles, etc. to sign up for a credit card. She noted how well I did, and I paid her the same compliment. When she asked what I was making, I told her. She said I should contact her boss and make some real money. For every application filled out she got $5, and for every approval, she got $25. She said she had already signed up over 850 students, netting her $4,250 just in application fees. On average, she says around 50% get approved, earning $10,625, Her upfronts were the giveaways and table fees. She sucked me in, and I regret it ever since. She said I could use the income from my job.. Voila, $1000 limit. Most of these kids she signed up were freshmen, with no jobs. About 10% she estimated already had several cards, and would be up to their ears in student loans and credit card debt.
I heard on the radio this morning in LA an ad for ' car title loans ' when your short of cash. A company that will loan you some money and hold the title of your car until you pay them back. What a scam on poor people.
I read recently that they are relaxing the FICO scoring process so that our debt-ridden society can get more credit.
Another slap in the face are all the Countrywide Mortgage advertisements--ALL OVER THE INTERNET! One of the best ways that citizens can help each other out that is even better than handing out welfare checks and food stamps--refuse to do business with companies who have shown their propensity to take advantage of their fellow Americans. This kind of support would go a long way. DON'T POST ADVERTISING FOR "FREE" CREDIT REPORTS AND DON'T POST ADVERTISEMENTS FOR COUNTRYWIDE MORTGAGE--they are only looking for more lambs for slaughter. I think we all pretty much know that by now...
It's not just young men its old grannys too. We're competing with some slick out fits, that had all nighters figuring how to screw the young and the old. Try the reverse mortgage plan! Pricription Drug plan! Medicare impossible plan! Or the fat ladys rip off in 2x sizes, an extra 12 dollars for little or material. Think of the billions fat people pay. Knowone ever talks about these things. Thank you for your candid report.
One of the reasons -- perhaps the major reason -- Experian is pushing its FreeCreditReport product is that when signing up for it, people have to give their current contact information, which Experian then turns over to the individual's creditors and to debt collection services for a fee.
This service is valuable to creditors and their debt collection agents since obtaining current contact information is one of the major stumbling blocks encountered when hounding people to pay up, or else.
Since the FreeCreditReport product is targeted toward a segment more likely to be having credit problems, Experian is getting a double-dip on the product.
the "vultures" of the free enterprise.
damn, even jesus was bent over by the credit card companies
Republicans call this free market capitalism.
I don't see how this is a Republican/ Democrat issue. Our business concepts were developed long before our current political parties came into thier current state of being. While I agree it's shameful to deceive the public like these adds do, I also think it's up to us as individuals to use our brains a little and not give these people our money. Unfortunately the general public is not always that bright.
It is the new indentured servitude. Grab them while they are young and optimistic about their lives. Its the same ploy the tobacco companies have used for years to snag them when they don't know any better and will pay for not knowing better for decades.
Line up when they turn 18 with credit offers and the more they pay their bills on time the more you offer them till they hit the tipping point. Then the over the limit fees and late fees and doubled interest can make them pay for decades. It gets even BETTER if the little twerps get families because children can pull the process along at an accelerated rate.
And yes, I know, superior people will say "well they shouldn't overspend" and they are right but the sad news is while you are learning this lesson in your twenties it may take the next 20 years to dig out of the pit they put you in.
Great post.
How 'bout a FreeCreditReport on the UnitedStat
Very important post, Mr. Scher. Thank you. I see those ads endlessly, but hadn't realized the focus of them is consistently on young men. Now I'll watch them with a different "eye" - and inform my college students!!
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