F R E E That Spells Money

You have to hand it to the marketing team at Experian Interactive’s FreeCreditReport.com division. Perhaps it is simply the amount of traditional media that I consume that makes me this way, but when I see that name, I cannot help but hear in my head, "F R E E that spells free. FreeCreditReport.com baby." It’s either a close second or just ahead of Subway’s $5 Footlong campaign. Both companies have done something magical, and I find it even more so for Experian. They’ve taken a generic term and created a brand. Free credit report. It’s almost hard to say without adding the "dot com." Yet, all is not worry free in FreeCreditReport.com land. Like any for-profit business, simply giving away credit reports does not make them any money. So, the savvy consumer asks, what’s the catch? It can’t be truly free. And the savvy consumer realizes that the free has an asterisk. Getting the credit report requires enrolling in a trial membership of their revenue product, a monitoring service.

Unlike the lovely neutraceutical space, where anyone can start a business selling pills tomorrow, doing so in the credit space requires greater hurdles initially. It’s a highly regulated space, the companies might argue too much so as they have had their fair share of run-ins with enforcement bodies. Those in our space might stress about the FTC, many worrying about the December deadline for compliance with their updated guidelines for bloggers. At least the FTC hasn’t gone so far as spending money to directly parody your business. One line in the FTC video below goes, "All the others charge a fee. Read the fine print and you’ll see. That’s the harsh reality. I should know ’cause it happened to me." Ouch. Another subtle difference is the voice over at the end – AnnualCreditReport.com says No hidden fees. Absolutely Free, whereas the voice over and message appearing on FreeCreditReport.com consists of, "Offer applies with enrollment in Triple Advantage."

Here is one of the original FreeCreditReport.com Ads:

If you didn’t know better, you might also assume this to be them as well, but it is the FTC’s:

The FTC’s parodies (another is at the bottom of the article) were released earlier this year, but the FreeCreditReport.com vs. AnnualCreditReport.com debate has resurfaced thanks to a recent New York Times article. The article is part of a more recent trend by both the media, the FTC, and other governing bodies looking into subscription-based services, with them for now focused on something other than health and beauty. The credit space is a little unique, but the underlying mechanism for the upwards of three-quarters of a billion dollars spent by consumers on monitoring services comes from a re-bill program. In the case of FCR, as the site says, "When you order your free report here, you will begin your free trial membership in Triple Advantage(SM). If you don’t cancel your membership within the 7-day trial period**, you will be billed $14.95 for each month that you continue your membership." (The double asterisks fine print refers to the time it takes for monitoring to take place.) That desire by people to want to see their credit report is a good hook, and enough people either don’t understand the service being tried out or are aware of the government’s version that they continue to come under fire. In Experian’s case, it involves more the domain name than the legitimacy of the service, but the financial crisis has only escalated their tensions as people have become more aware of credit.

The monitoring services are not necessarily a dying breed, but the exclusivity and mystery of obtaining a credit report has started down the path towards obsolescence. Three sites in addition to the government’s exist that challenge the notion that a user must either pay or subscribe to a free trial in order to obtain one including CreditKarma.com and Credit.com (who has received lots of news coverage with the relaunch of their Credit Report Card). Their angle in addition to the price is their focus on simplifying what is a lengthy and not intuitively read product. The success or failure of a credit related product might come down to the name after all. Another company that has also seen its fair share of litigation is LifeLock. Unlike a credit monitoring service, where you couldn’t mimic its functionality on your own (as that would require constant access to the credit report), you can in theory do the core LifeLock service yourself. Yet, unlike FreeCreditReport, LifeLock has yet to pop-up on the FTC’s radar or the mainstream media, because of one incredible fact. They have a roughly 90% retention rate. They too have to market to make money, and market they do with at least one Nascar car and a team of 30 in the department.

LifeLock and Experian ultimately share much more in common than they do apart. It’s more a matter of positioning, where users of Lifelock look at their charge as an insurance policy, something they are afraid to live without; whereas, while a credit monitoring service can offer that same level of internal comfort, given that many users get it as a byproduct of another action, they don’t stay on as long as those using LifeLock. Like many things, though, the story is not that easy. For instance, Lifelock is less than 1/2 the size of FCR in revenue and it doesn’t convert nearly as well online. But, it is one of the few products that people sign-up for directly without some other incentive, and that’s what the fight over subscription services is about. We all know their opt-out nature plus human nature creates a higher CPA and great revenue options. That same advantage though also leads to many shortcuts – less focus on the product and a greater focus on finding ways to generate conversions. It’s why we are also seeing an even greater brouhaha over their use as upsells. In short, we are entering another phase in the subscription service regulation, and it’s another reminder to stay focused on adding value if you want to be around in the long run.