New legislation from the Federal Trade Commission took effect April 2 requiring companies marketing free credit reports to add additional warning labels on their advertisements for supposedly “free” offers.

Web sites must now prominently state a free credit report is available from annualcreditreport.com or by phone at 877-322-8228. The same requirement for TV and radio ads goes into effect Sept. 1.

According to Gerri Detweiler, personal finance advisor for credit.com, consumers were mislead into monthly fees for credit monitoring and other services for which many had no intention of signing up.

People would go to a search engine and type in ‘free credit report,’ thinking they were going to the annualcreditreport.com Web site, Detweiler said, when in fact they would be lead to another site and end up paying for something they thought they should have gotten for free.

“Consumers thought that they were getting a truly free credit report, when they were really just trying out a paid service,” she said.

The regulation is an effort to crack down on misleading advertisements.

According to Tiffany George, an attorney in the FTC Division of Privacy and Identity Protection, the FTC has taken action in the past to address confusion in this area.

The FTC previously sued Experian, the credit data company that operates freecreditreport.com, in 2005 and 2007 on charges of misleading consumers. The company paid a total of $1.25 million to settle the two sets of charges.

However, rather than including disclosures about annualcreditreport.com, Experian has begun charging $1 for the credit reports, saying “due to federally imposed restrictions, it is no longer feasible for us to provide you with free Experian Credit Reports”, according to their Web site.

“It does appear the credit bureau is one step ahead of the regulators,” Detweiler said. “Because this is such a profitable industry, I’m sure that the companies themselves are already at work to find new creative ways to get consumers to pay for their information.”

Detweiler said the most important thing is that consumers are able to find the correct source for their free credit report.

“[Consumers] have to understand that there is only one source for their truly free credit report each year, and that’s annualcreditreport.com,” she said. “If you have to put in a credit or debit card number to get the credit report, then you’re probably using a trial service.”

According to Frank Dorman, a spokesman for the FTC, the commission will be “carefully monitoring industry practices for compliance of the rule.”

George said the FTC has begun a campaign to bring awareness to consumers.

“We have initiated a consumer education campaign to educate consumers about annualcreditreport.com,” George said.

Detweiler said, however, credit-monitoring services can be valuable in certain cases.

“If you want to monitor your credit report, then it’s fine to sign to a service that will let you do that, as long as you know that’s what you’re paying for,” Detweiler said.

According to Detweiler, it can be useful for students to subscribe to a credit monitoring service to be alerted about any potential problems with their credit.

“Students are often moving a lot, and they are one of most heavily targeted groups for identity theft,” she said. “There are times when it makes sense.”

The new rule is one of the changes instituted by the Credit Card Act of 2009.

Under the Credit Card Accountability, Responsibility and Disclosure Act , no one under the age of 21 will be approved for a credit card offer unless a parent, guardian, or spouse is willing to co-sign, or the young adult shows proof of sufficient income to cover the credit obligation.

Detweiler said consumers can definitely breathe a little bit easier now, however there are still many people who are struggling with very high interest rates and payments on their credit cards.

With new legislation making it harder for students to get credit, at least on their own, Detweiler said she believes credit card companies will adapt their marketing strategy.

“They are probably going to start marketing to parents more often now,” she said.