On January 10, the FTC filed a complaint in the U.S. District Court for the Northern District of Illinois against Credit Bureau Center LLC and three individuals for allegedly luring consumers into signing up for credit monitoring services using fake rental property ads and offers of free credit reports.

The complaint alleged that all the defendants, doing business as eFreeScore.com, CreditUpdates.com, and FreeCreditNation.com, placed Craigslist ads online for rental properties that did not exist or that they did not have the authority to rent.  These ads would allegedly lure consumers into signing up for a negative option seven-day trial of a credit monitoring service, after which many consumers were charged $29.94 monthly.  Consumers who responded to the ads for rental properties would receive emails from fake landlords that directed them to the defendants’ websites.  The FTC said that after consumers received their credit report and attempted to contact the landlord to submit the report, they received no response or their emails were returned as undeliverable.  According to the agency, many consumers did not know they had been enrolled in the defendants’ monitoring service until they saw the charge on their bank or credit card statements.

The FTC claims the scheme generated more than 500 consumer complaints and has cost consumers millions of dollars.  The agency sought to temporarily stop the defendants’ business from operating and permanently end violations of the FTC Act, the Fair Credit Reporting Act, the Restore Online Shoppers’ Confidence Act, and the Free Reports Rule.  The complaint also seeks remedies for consumers, including refunds of monies paid to the defendants.

The district court entered a temporary restraining order on January 11 to halt the defendants’ business operation.  Under the order, Credit Bureau Center and the individual defendants are temporarily enjoined from misrepresenting material facts, including that a residential property described in an online ad is currently available for rent from the person named in the ad and that a residential property will be shown to consumers who obtain their credit reports and scores through Credit Bureau Center’s website.  In addition, the defendants must disclose material terms and conditions of any offer for a product or service, including that consumers will be automatically enrolled in a negative option continuity plan and would have to affirmatively cancel the plan before the end of a trial period to avoid additional charges.

The order provides that Credit Bureau Center is temporarily enjoined from operating any website offering free credit reports without displaying across the top of each page the prominent disclosure required by the Free Reports Rule, informing consumers of their right to obtain a free credit report from AnnualCreditReport.com or by calling a toll-free number.  The order also includes an asset freeze affecting Credit Bureau Center and each of the individual defendants.