Sprint recently was slapped with a $2.95 million penalty from the Federal Trade Commission for failing to notify its customers with lower credit scores that they were being charged $7.99 more per month for cell service than customers with better credit.
According to the FTC, some companies, including cable and satellite TV and mobile phone and Internet companies, use information from your credit report to determine what terms they’ll offer you. It’s called risk-based pricing and it’s legal, as long as the company informs you of what it’s doing in a Risk-Based Pricing Notice.
“Sprint failed to give many consumers required information about why they were placed in a more costly program, and when they did, the notice often came too late for consumers to choose another mobile carrier,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “Companies must follow the law when it comes to the way they use consumer credit reports and scores.”
The FTC says a Risk-Based Pricing Notice should:
- Explain that the less favorable credit terms you receive are based on negative information from your credit report.
- Tell you that you can get a free copy of your credit report.
- Also explain that you have the right to dispute errors in your credit report.
If you get a Risk-Based Pricing Notice, the FTC recommends that you order a free copy of your credit report and review it. If you find errors, you can dispute those by sending a letter like this to the credit reporting company and sending another letter to the company that provided the erroneous information to the credit reporting company.
Check out “7 Fast Ways to Raise Your Credit Score.”
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