WILLIAM BLUMENTHAL 

General Counsel 

THOMAS J. SYTA Bar # 116286 

RAYMOND E. M~KOWN, Bar # 150975 

JENNIFER M. BRENNAN, Bar # 225473 

Federal Trade Commission 

Los An eles CA 906% 

f! 10]8!?4-4343 

310 824-4380 

Attorneys for Plaintiff 

FEDERAL TRADE COMMISSION 

UNITED STATES DISTRICT COURT 

CENTRAL DISTRICT OF CALIFOW 

SkL 0, nc an1 ~HS(MLGX) JyJ-uva --- \ 

FEDERAL TRADE COMMISSION 

Plaintiff, 

COMPLAINT FOR INJUNCTIVE ) AND OTEIER EQUITABLE RELIEF 

V. 

CONSUMERn\TFO.COM, INC., 

a corporation 

doing business as 1 I 

EXPEWJ CONSUTJIER DIRECT, QSPACE INC. 

and IFLA~E Mc. 

Defendant. I 

Plaintiff, the Federal Trade Commission ("FTC" or "Commission") by its I 

undersigned attorneys, alleges : 

1. The FTC brings thls action under Section 13@) of the Federal Trade I 

Commission Act ("FTC Act"), 15 U.S.C. 5 53(b), to secure a permanent injunction, 

preliminary relief, and other equitable relief against Defendant for deceptive acts or 

Page 1 of 11 
practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. 5 45(a). 

JURZSDICTION AND VENUE 

2. This Court has subject matter jurisdiction over the FTC's claims 

pursuant to 15 U.S.C. $5 45(a) and 53@) and 28 U.S.C. $5 l331,1337(a) and 1345. 

3. Venue in the Central District of California is proper under 15 U.S.C. 5 

53(b) and 28 U.S.C. 5 1391(b) and (c). 

PLAINTIFF 

4. Plaintiff, the FTC, is an independent agency of the United States 

government created by statute, 15 U.S.C. $5 41 et seq. The Commission enforces 

Section 5(a) of the FTC Act, 15 U.S.C. $ 45(a), whch prohibits unfair or deceptive 

acts or practices in or affecting commerce. The Commission may initiate federal 

n-l disk%ct zo-i$ pr=czz&~gs to enjohx vioia~oiis of tllc r i i Act to sec-i- such 

equitable relief as is appropriate in each case. 15 U.S.C. 5 53(b). 

DEFENDANT 

5. Defendant Consumerinfo.com, Inc., doing business as Experian 

Conswner Direct, QSpace, Inc., and Iplace, Inc. ("Consumerulfo"), is a California 

corporation that has its principal place of business at 1 8 5 00 Von Karrnan Ave., Suite 

900, Irvine, California 92612. Consumerinfo has conducted business since at least 

1995. Consumerinfo conducts business in the Central District of California and 

throughout the corntry. 

COMMERCE 

6. At all times material to ths Complaint, Defendant's course of business, 

including the acts and practices alleged herein, is and has been in or affecting 

commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. 5 44. 

DEFENDANT'S BUSINESS PRACTICES 

7. Consumerinfo's advertisements and promotional materials offer 

consumers the opportunity to obtain a cre&t report free of charge through 

Consumerinfo's websites located at www.consurnerinfo.com, 

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www. fi-eecreditreport. com, and other Internet addresses. Consumers who order their 

free report are automatically enrolled in a credit monitoring service ("Credit Check 

Monitoring Service"), a service that allows consumers to access their credit report 

and determine if inquiries, negative information, public record information, new 

accounts, or address changes have been added to the consumers' credit files. 

Consumers who order the fi-ee credit report receive a 30-day "free" trial membershp 

in the Credit Check Monitoring Service. If the consumer does not cancel hs 

membershp within the trial period, he is charged an annual fee of $79.95 (prior to 

December 2003) or a monthly fee of $12 (since January 2004). The fee is 

automatically charged to the consumer's credit or debit card, whch the consumer is 

required to provide to obtain hs free credit report, and renews each period without 

f~rther notice to the consumer oi- the need for fi-t'riel; action oa the consumer's part. 

8. Since at least November 2000, Consumerinfo's advertisements offering 

the fi-ee credit report opportunity have appeared in or on Internet websites, Internet 

pop-up and banner advertisements, e-mails, and in television and radio 

advertisements. For example, an online advertisement stated: 

"How's your credit? It might be worse than you tW. Find out how 

you rate with our free credit report. [Emphasis in original.] [This 

language appears next to a "Free" button symbol that states "FREE 

CREDIT REPORT Click Here" around its outer edge]." 

By cliclung on the link, potential customers were taken to the Consumerinfo 

"Welcome to the Credit Center" webpage, whch included a second "luik" that 

stated: 

"Get your FREE online credit report and see where your credit stands! 

Check for inaccuracies that may affect your 

credit rating. 

Protect yourself against fraudulent activity 

with online alerts. 

Page 3 of 11 
• Stay on top of your credit and increase your purchasing power." 

Another principal advertisement is found at Consumerinfo's website, 

www. consumerinfo. corn. One advertisement at that address stated: 

"FREE! FREE! FREE! Get Your FREE Credit Report Online in 

Seconds! ! ! ! Click here to get a FREE copy of your online Credit 

Report Instantly* ! [*Pending confirmation of your identity.] 

And that's not all ... along with your INSTANT credit report, we'll give 

you 30 FREE days of the Credit Check Monitoring Service at no 

obligation. 

So sign up today to have your FREE credit report delivered 

INSTANTLY online!" 

In rauch smalier type, the advertisement continued: 

"Sound too good to be true? Well, we're convinced that once you've 

tried the Creditcheck Monitoring Service on a FREE trial basis, you'll 

want to continue with ths vital service for staying on top of your creht. 

But if you don't, that's okay too-there's no obligation and no 

commitment. And your INSTANT credit report is yours to keep for 

you! Plus, you can rest assured that your credit rating will NOT be 

affected when Consumerinfo.Com pulls your FREE creht report for 

you! " 

Benefits of the Credit Check Monitoring Service 

Paid membershp includes UNLIMITED FREE CREDIT REPORTS, 

plus online monitoring alerts that inform you of important changes to 

your credit file, including: 

Derogatory Information 

• Inquiries 

a Newly opened accounts 

rn Several indicators of possible credit fraud 

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You'll also receive: 

Dispute tips 

Creditcheck Newsletters 

Free Neighborhood & Homes Sales Reports 

Toll-fiee customer service support 

So click here to order your instant, free credit report right now!" 

The following is an example of a Consumerinfo Internet "pop-up" 

advertisement : 

"FREE Cred.lt Report! 

Free Credit Report with a Free Trial Membership! 

FREE! FREE! FREE! Get a FREE Copy of Your Credit Report 

mn mm Oniineii i Click Here to get a rur, copy of your online credit report! 

And that's not all.. .along with your FREE credit report, we'll give you 

30 FREE days of the CreditCheck Monitoring Service at no 

obligation. " 

9. Consumerinfo also uses the Internet website address 

www.i7eecreditreport.com to promote its free credit report offer. Consumerinfo's 

:adio and television advertisements direct consumers to visit 

m.fi-eecreditreport.com. Sample text from the www.freecreditreport.com home 

3age includes: 

"Get your FREE credit report in seconds! 

Click here to get a copy of your FREE online Experian Credit Report 

Instantly ! 

Plus, along with your FREE credit report, we'll give you a 

30-day FREE trial of the CreditCheck Monitoring Service membershp. 

Sign up now and have your FREE credit report delivered online in 

seconds! 

So what's the catch? There isn't one! But we're convinced that once 

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you've tried the Creditcheck Monitoring Service on a FREE trial basis, 

you won't want to be without it! But if you don't realize the value of 

the service, there's no obligation to keep the membershp." 

10. Through at least December 2003, none of Consumerinfo's advertisements 

for the Credit Check Monitoring Service disclosed the $79.95 annual membershp 

fee. Instead, Consumerinfo's advertisements stated that "there's no obligation and no 

commitment. And your FREE credit report is yours to keep." 

1 1. All of Consurnerinfo's Internet advertisements and webpages ultimately 

link to Consurnerinfo's online order form. The online order form is the only means 

through whch consumers can request the "fkee" credit reports from Consumerinfo. 

The form requires consumers to fill in detailed personal mformation, including their 

names, addresses, e-mail addresses, social security nwnbers, birtln dates, mothersi 

maiden names, and valid credit card account numbers. The online order form 

includes several distinct sections, includmg those labeled "Payment Information" 

and "Privacy Policy Notice." The substance of the order form remained constant 

from approximately November 2000 to mid-September 2003. 

12. Prior to mid-September 2003, the $79.95 annual membershp fee was 

mentioned on the website only in the "Privacy Policy Notice" section on the second 

Order page, in very small text. In contrast, the "Payment Information" section 

simply stated: "Your card will not be charged during the fi-ee trial period. However, 

valid credit card mformation is required to establish your account." 

1 3. Many of Consumerinfo's radio, television, and Internet advertisements 

have not mentioned or otherwise disclosed, or disclosed adequately, the existence of 

Consumerinfo's Credit Check Monitoring Service, or any free trial period in 

connection with the Service. Many conswners were thus unaware when signing up 

for their free credit report that they were also automatically signing up for 

Consumerinfo's Credit Check Monitoring Service, and would incur a $79.95 charge 

unless they cancelled within 30 days. 

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14. Through at least December 2003, Consumerinfo assessed the $79.95 

annually renewing fee against consumers who did not contact Consumerinfo and 

cancel their trial membershp with the 30-day period. The charge was made to the 

credit card account numbers that Consumerinfo had assured consumers were needed 

only to "establish [their] account." The charge appeared on consumers' credit card 

statements as "Credit Report Fee 877-513-4175 CA Credit Serv $79.95." At the end 

of the membershp terrn, Consumerinfo automatically renewed the membershp by 

imposing another charge on consumers' credit card accounts, without providing any 

contemporaneous notice that it was doing so. 

15. Consumerinfo's policy was not to charge consumers who cancelled 

their Credit Check Monitoring Service membershp within the 30-day free trial 

period, to provide pro-rats refunds to consumers who cmce"iled after the first 38 

days, but with 180 days. Consumers who cancelled after the first 180 days 

received no refund. Although many consumers have avoided being charged by 

cancelling with the first 30 days or have otherwise obtained a refund of this 

charge, many others received only a partial refund. Many consumers who did not 

see the charge on their cred.lt card statements when they were first billed received no 

refund whatsoever of the charges, and many of these consumers were charged for 

one or more additional annual membershp fees. 

VIOLATIONS OF SECTION 5 OF THE FTC ACT 

COUNT I 

16. In numerous instances since at least November 2000, in connection 

with the marketing of its fkee credit reportlcredit monitoring service promotion, 

Defendant has represented, expressly or by implication, that consumers can obtain a 

"free" credit report and a "free" trial membershp to Consmerinfo's Credit Check 

Monitoring Service at no obligation, but has failed to disclose or to disclose 

sdequately that consumers will incw an annual $79.95 fee unless they cancel their 
trial membership witlun 30 days after requesting their free credit report. 

17. In light of the representation set forth in Paragraph 16, Defendant's 

failure to disclose adequately the need for consumers to cancel the Credit Check 

Monitoring Service memberslap with 30 days to avoid being charged was, and is, 

a deceptive act or practice in or affecting commerce in violation of Section 5(a) of 

the FTC Act, 15 U.S.C. 5 45(a). 

COUNT 11 

18. In numerous instances since at least November 2000, in connection with 

the marketing of Consumerinfo's Free Credit Report, Defendant has caused annual 

$79.95 charges to be assessed against consumers' accounts without the express, 

informed consent of the consumers. 

19. Defendant's praciice of causing the annual $79.95 charges to be assessed 

for payment without the consumers' express, informed consent causes, is likely to 

cause, or has caused, substantial injury to consumers that is not reasonably 

avoidable by conswners themselves and is not outweighed by countervailing 

benefits to consumers or competition. 

20. Therefore Defendant's practices as alleged in paragraphs 18 and 19, are 

unfair in violation of Section 5(a) of the FTC Act, 15 U.S.C. 5 45(a). 

COUNT HI 

21. On December 4,2003, the Fair and Accurate Credit Transactions Act of 

2003 ("'FACT Act"), Pub. L. 108-159, amending the Fair Credit Reporting Act 

('FCRA"), 15 U.S.C. 5 1681, et sea., becavne law. Section 21 1 of the FACT Act 

amends Section 612 of the FCRA, 15 U.S.C. 5 168 lj, to require all nationwide 

consumer reporting agencies to provide all consumers with a copy of their credit 

report once during any twelve-month period, upon request of the consumer and 

without charge. Section 21 1 requires the FTC to prescribe regulations establishing a 

"centralized source" through whch consumers can request their reports. 
22. The FTC issued its final rule as required by Section 21 1 of the FACT 

Act on June 4,2004,16 C.F.R. Part 610. The FTC's rule provided for a structured 

roll-out of the availability of the free credit reports, beginning Fn the western states 

on December 1,2004, and culminating in the Eastern states on September 1,2005. 

The rule sets forth the requirements for establishing a centralized source, including a 

dedicated website through which consumers could order their reports. That website 

has been in operation since December 1,2004, and its URL is 

www .annualcreditreport. corn. 

23. The availability of fiee annual reports pursuant to the FACT Act has 

been widely publicized in the mass media since December 2004. Millions of 

consumers have ordered their reports to date. 

24. Since December 1,2004, Consumerinfo has aavertisea and promoted 

its "fkee reports" available through www.fieecreditreport.com. Popular search 

engines such as Google providing search results for the term "free credit report" 

have listed freecreditreport.com as its fnst listing. 

25. From December 1,2004 to at least March 2005, Defendant failed to 

disclose or to disclose adequately in their advertisements or on their websites that 

the "fiee" credit reports they were offering were not associated with the annual free 

credit report program pursuant to the FACT Act, but rather a commercial promotion, 

and that consumers cannot obtain their statutorily-mandated free report through 

Defendant's websites. 

26. In light of the representations they made, Defendant's failure to disclose 

adequately the facts set forth in Paragraph 25 was, and is, a deceptive act or practice 

in or affecting commerce in violation of Section 5(a) of the FTC Act, 15 U.S.C. 

§ 456). 

Page 9 of 11 
CONSUMER INJURY 

27. Defendant's violations of Section 5 of the FTC Act as set forth above, 

have caused and continue to cause substantial injury to consumers. Absent 

injunctive relief by ths Court, Defendant is likely to continue to injure consumers. 

THIS COURT'S POWER TO GRANT RELIEF 

28. Section 13(b) of the FTC Act, 15 U.S.C. 5 53(b), empowers ths Court to 

grant injunctive and other ancillary relief, including consumer redress, disgorgement 

and restitution, to prevent and remedy any violations of any provisions of law 

enforced by the Federal Trade Commission. 

PRAYER FOR RELIEF 

WHEREFORE Plaintiff Federal Trade Commission, pursuant to Section 

1 q fi-\ -.CAI. mrnn 

I qo) ol me r I L Act, 15 U.S.C. 5 53(b) and the Cow's own equitable powers, 

requests that ths Court: 

1. Pemanently enjoin Defendant from violating Section 5 of the FTC Act 

as alleged in ths complaint; 

2. Award such relief as the Court fmds necessary to redress injury to 

consumers resulting fiom Defendant's violations of Section 5 of the FTC Act, 

including but not limited to, rescission of contracts, the refund of monies paid, and 

the disgorgement of ill-gotten monies; 

3. Award Plaintiff such other additional relief as the Court may determine 

to be just and proper; and 

4. Order any further relief that the Court deems appropriate. 

Page 10 of 11 
Dated Ays4 15,2005 Respectfully submitted, 

WILLIAM BLUMENTHAL 

General Counsel 

JENNIFER M. BRENNAN 

Federal Trade Commission 

10877 Wilshe Blvd. Suite 700 

Los An eles CA 90024 

(3 10) 894-4j43 Attorneys for Plaintiff 

Federal Trade Comrmssion 

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