Credit CARD Act - Section 205

Posted by Steve Van Beek

Section 205 of the Credit CARD Act amends Section 612 of the Fair Credit Reporting Act (FCRA) by adding subsection (g).  Here is a link to the FCRA (prior to amendments). 

This section of the Credit CARD Act requires those advertising "free credit reports" to include a disclosure that free credit reports are available at AnnualCreditReport.com.  

Television and Radio Advertisements.  If the credit union advertises a "free credit report" in a TV commercial, the disclosure "This is not the free credit report provided for by Federal law" must be included in the audio and visual part of the commercial.  For radio advertisements, the same language must be provided orally.  

FTC Regulations.  Section 205 requires the Federal Trade Commission (FTC) to issue final regulations by February 22, 2010.  The FTC's regulations will need to address:

• The specific wording to be used in advertisements;
• For internet ads, whether the disclosure should be in the ad itself or on the website it directs consumers to (or both).     

If the FTC does not finalize regulations by February 22, 2010, advertisements - other than those over TV or radio - made public after February 22, 2010 would need to include the following disclosure: "Free credit reports are available under Federal law at: 'AnnualCreditReport.com'."  After the FTC regulates, advertisements would need to follow their final regulations. 

Note:  If the credit union advertises the credit reports allowed under Federal law - such as in a newsletter, on a periodic statement, or on its website - these requirements would not come into play as the credit union would be directing members to AnnualCreditReport.com.  

Bottom line: Congress did not like it when businesses used "free credit reports" as a gimmick to have consumers sign up for their credit monitoring services.  After February 22, 2010, businesses advertising these "free credit reports" will need to clearly disclose the fact that consumers are entitled to their credit reports from AnnualCreditReport.com without signing up for any services.