Consumer Finance Insights
November 2, 2017

FTC Obtains $6.8 Million Judgment Against Two Individuals in “Free” Credit Report Scheme

On October 30, the Federal Trade Commission (FTC) announced that it had obtained a stipulated order for a permanent injunction and monetary judgment against two individuals for allegedly using fake rental property ads to lure consumers to visit websites promising “free” credit reports.  When consumers visited those websites, the individuals allegedly deceived them into signing up for a negative option seven-day trial credit monitoring service, after which consumers were charged $29.94 monthly without their authorization.  The FTC alleged that the scheme violated Section 5 of the FTC Act, generated more than 500 consumer complaints, and caused millions of dollars in consumer loss.

The stipulated order partially resolves a complaint filed by the FTC in January 2017 against three individuals and the owner of the website.  The two individuals who agreed to the stipulated orders have not admitted any wrongdoing, but have agreed to a $6.8 million judgment that will be partially suspended upon payment by one individual of $117,000 and by the other of $645,000.  The individuals are also prohibited from misrepresenting material facts about any related product or service and are required to monitor any affiliate marketers in the future.  Litigation continues against the other two non-settling individuals.

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