The New AnnualCreditReport.com Disclaimer Goes Too Far

You know those Surgeon General’s Warnings found on cigarette packages?  “Smoking causes lung cancer and heart disease.”  “Smoking will cause nobody to ever want to make out with you because you smell bad.”  “If you smoke while pregnant, your kid will probably become horribly deformed.”

Well, add one more warning to the list.  As of April 1st of 2010, every website offering “free credit reports” must advertise annualcreditreport.com, the only government-authorized source of said reports, at the very top of the page.  Am I the only one who thinks this is a tad ridiculous?

The FTC Has Gone Too Far

First off, who cares if annualcreditreport.com is the only government-authorized source of free credit reports?  Since when does the government have a monopoly on consumers’ credit?  They don’t have anything to do with actually collecting, sorting, or calculating anybody’s credit score.

I admit, freecreditreport.com’s advertising campaign is a bit deceptive.  But then again, it is technically possible to get your free credit reports and then unsubscribe from the service without paying anything.  Plenty of people manage it every day.  Obviously, the site’s business model relies on a certain percentage of people forgetting to cancel in time, but there’s nothing outright fraudulent about that.  After all, if you forget who you gave your credit card to, how is that anybody else’s problem?

What it comes down to is this:  I’m a business, trying to make money.  I have employees to pay, taxes to pay, and shareholders to keep happy.  The last thing I want to do is give free advertising to the competition.  Can you image General Motors running a Ford commercial, or Boeing taking out a full-page ad in the Wall Street Journal (Get The Wall Street Journal for 75% off!) praising the reliability of Air Bus jets?  Of course not:  that would be idiotic.  Yet that’s exactly what these free-credit-report websites are being forced to do.  That’s nothing but outright coercion, and coercion is the bane of free-market capitalism.  Regulations are all well and good, but only when it actually helps the general public, which brings me to my  next point…

Disclaimers Don’t Work Anyway

Has anybody ever produced convincing evidence that disclaimers such as these actually work to curtail behavior?  Sure, smoking has decreased significantly since health warnings first started appearing on cigarette packaging, but that doesn’t mean said warnings had anything to do with the decrease.  I think it far more likely cigarette use has decreased as a result of increasing levels of social pressure against smoking and smokers.  Seeing a warning on a package won’t convince me to quit, but being unable to smoke in any of my favorite bars or restaurants probably would.  So would having to pay extra to rent an apartment (if they would rent to me in the first place:  many landlords won’t).

There’s obviously a market for credit monitoring services just as there’s a market for free credit reports.  If the government wants to corner the market on free credit reports, they’re going to have to do it the old-fashioned way:  by getting the word out and offering better service than the competition.  If Experian can make it simpler to get a free report than annualcreditreport.com can (and annualcreditreport.com can be a bit confusing to the uninitiated), why shouldn’t Experian’s free credit report service not get the lion’s share of the business?  Consumers are used to the whole free-trial-to-get-a-free-gift shtick.  It’s been a marketing staple for literally centuries.  Consumers know what’s up.  If a few of them forget to cancel and end up paying for a subscription they don’t need, nobody has really lost here.  Society hasn’t crumbled, and even the “victims” come out wiser for the experience.  In any event, such a subscription won’t force them into foreclosure or anything like that.

So FTC, listen up:  do your own damn marketing and leave the poor credit bureaus alone.  Nobody likes a bully.