The New Regulations for Free Credit Monitoring- What should Servicemembers be Aware of?
Military personnel will be eligible for free credit monitoring services from the three major credit agencies beginning in September, with some restrictions.
Free credit monitoring services, which often cost $30 or more per month, can assist service members in keeping tabs on their money by notifying them of any changes to their credit reports. Armed forces can take preventative measures against fraud and other problems if they are uncovered early on.
Proposed New Rules for Cost-Free Credit Monitoring
However, the final regulations from the Federal Trade Commission will have one important exception, and they will be published in the Federal Register soon. It is clear from reading the law that individuals “assigned to service remote from the typical duty station of the customer” are the ones who will be eligible for the free credit monitoring. All Regular and Reserve Components serving under Title 10 orders are included.
The FTC has made it clear that National Guard members who are stationed away from their “usual duty station” are still eligible for the free credit monitoring service. This is so that members of the National Guard can take advantage of the free credit monitoring service; Congress purposely left out the stipulation that the Guardsman be deployed elsewhere. The FTC has taken note of the glaring injustice.
According to a press release announcing the new regulation, the [FTC] urges Congress to pass additional legislation to address the problem, to the extent that Congress intended to provide free credit monitoring more generally. The Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 made the additional benefits available to military personnel.
Defense officials reportedly recommended that the FTC expand the definition so that it would be consistent with the definition of active duty under the military compensation statute, which does not require a service member to be deployed outside of their regular duty station.
Validating installations is complicated by the inability of credit bureaus to determine which customers are eligible for the free service. The FTC recommends that credit reporting companies “err on the side of delivering the free service more broadly” in this situation. If a credit reporting agency provides free electronic credit monitoring services to clients who self-certify that they are either active duty personnel, reservists serving on Title 10 orders, or members of the National Guard, the FTC will consider the agency to be in compliance with the law. This will make it more likely that a member of the military who is otherwise qualified to use the service will be able to use it. Credit bureaus have the last say on whether or not to broaden this perk for more military personnel.
A credit reporting agency’s verification of a person’s active duty status is good for two years, under the FTC’s final regulation. The credit bureau may then request additional information from the consumer.
A spokesperson for the Federal Trade Commission (FTC) stated that there is no requirement under the rule that a military consumer notify the credit reporting bureau when they return to the duty station.
The FTC reports that the three major national credit reporting companies, Equifax, Experian, and TransUnion, are still working out the details of how service members can sign up for the free credit monitoring.
There are a number of material additions or changes to your credit files that these services notify consumers about, including inquiries or requests for a consumer report other than for pre-screening or account review, new accounts opened in your name, changes to your address, name, or phone number, and changes to your credit limits.
A person’s credit report includes details such as their current and previous addresses, payment history, the total amount of debt owed, and any negative information such as lawsuits, arrests, and bankruptcies. It’s used to determine if you get a loan, a rental, and—most importantly for those in the military—a security clearance. The financial records of all those who contribute to national security, including active-duty service personnel, are subject to regular government scrutiny in accordance with current legislation.
Customers who make use of these preventative monitoring services will be able to spot signs of fraud or other problems early on and respond appropriately.
Military members will not have to pay to access their credit reports if they are notified of a substantial change. If a consumer receives notice from a credit reporting agency on such a change to the customer’s credit file, the agency is required by the final rule to also provide the consumer with unrestricted access to the file.
In the event of a material change, consumers in the military will not be charged to check their credit reports. If a consumer is notified of such a change to their credit file, the final rule mandates that the credit reporting agency must also provide the customer with free access to their file.
No specific date was included in the legislation allowing for this expanded open access from credit reporting organizations. However, the FTC was given a full year from the bill’s passage on May 24, 2018, to craft the regulations necessary to put the measure into effect.
One Last Thing
As a result, the FTC set a deadline of three months after the new regulations were published in the Federal Register. Recognizing that credit reporting agencies may need additional time to develop systems to accept proof of active duty service and to make changes to their systems to generate alerts about the changes, the FTC has stated that they will permit credit reporting agencies to continue providing their current commercial credit monitoring service for free to service members for up to a year after the effective date of the rule. Learn more about the process of obtaining a military verification here.