Gotcha! Wanna pay for a ‘free' credit report?

If you've been the victim of identity theft, watch out—not just for the thief but also for the credit bureaus you turn to for help. They might use your bad luck to pitch hundreds of dollars a year in services. That's one finding from a recent Federal Trade Commission study of almost 700 identity-theft victims.

Under the federal Fair and Accurate Credit Transactions Act of 2003, victims of identity theft may ask one or more of the three major credit bureaus—Equifax, Experian, and TransUnion—to place a free fraud alert on their credit report. (When you place an alert at one bureau, it must be forwarded to the others.) Lenders who pull a credit report with an alert typically take extra steps to ensure that the credit applicant is not an imposter.

When victims file a fraud alert, they can also request a free copy of their full credit report to check for fraudulent accounts. (That report is in addition to the free report to which consumers are entitled each year, available at annualcreditreport.com.)

But some victims in the FTC study said that credit-bureau representatives pressured them to pay for a credit report or additional services such as credit monitoring and identity-theft protection. The cost: about $130 to $240 a year. In recent years the commission has punished some purveyors of ID-protection services, including Experian's FreeCreditReport.com, for deceptive sales practices and misleading claims.

The agency found other gotchas, though it cautioned that it hasn't verified the merit of individual complaints:

• Six percent of victims who requested a fraud alert stated that at least one credit bureau didn't place it.
• Only half of those who asked for a free fraud-alert-related credit report said that they received it.
• About a third of victims disputed information in their credit report, but 29 percent of those said the information was not corrected. Among victims whose erroneous information was corrected, 51 percent said it took two to five tries.
• Just one in five victims invoked their right to block false credit information related to ID theft. Generally, if a person tells authorities about fraudulent info on his or her credit report, credit bureaus must stop showing it. But 27 percent of the victims who tried to have such data blocked said one or more credit bureaus didn't comply.