One Technologies, a company that claims to offer free credit reports to consumers, just agreed to a settlement with the Federal Trade Commission for illicit practices, including charging for all of those “free” credit reports they offered.

One Technologies, based out of Dallas, Texas, also did business under affiliate names on over 50 websites, like MyCreditHealth ScoreSense, FreeScore360, FreeScoreOnline.com. The FTC agreement starts with compensating customers at least $22 million in Illinois and Ohio, with more states to follow.

The complaint against One Technologies reports that they were offering consumers access to their credit scores for free, with only a $1 refundable processing fee. However, once they had the consumer’s credit card information on file, mysterious fees started showing up on their statements for a $29.95 monitoring program. It was up to the customer to notice the charges, investigate where they were originating, and contact the company to request cancellation of service Of course it was hard to do so – a questionable business practice called “Negative Option Billing.”

Reportedly, the websites have been enrolling consumers in the $29.95 monthly credit monitoring service since 2008, resulting in over 210,000 complaints to banks, credit card companies, Attorney Generals, the FTC, and the Better Business Bureau.

Based on the ensuing FTC investigation, One Technologies and their affiliates agreed to pay out the $22 million as damages for deceptive marketing practices. The agreement didn’t include any admission or denial of guilt, though One Tech has stated they will reform some of their internal marketing practices.

“We always believed that we complied with the law,” said Fred Loeber, senior vice president at One Technologies, “but have worked with the FTC to set a new benchmark for industry transparency and disclosure.”

The FTC agreement for $22 million worth of damages still has to be approved by a federal judge in California. If and when that happens, consumers who were wronged will be contacted by the FTC and alerted that they’re due a refund. Once they fill out the appropriate claim form, the refund will be issued, according to the FTC.

Of course there were probably hundreds of thousands of consumers who didn’t notice the charges, or didn’t know how to cancel, or don’t know about the lawsuit because they never filed complaints. The bigger issue is the legality and prevalence with these negative billion options, which are used by firms all over the internet and a favorite of “free” credit reporting sites.

Experian got in hot water in 2005 and again in 2007 when its popular commercials for FreeCreditReport.com (remember those funny commercials with the band playing a catchy song about free credit reports?) advertised just that – free. But consumers had to surrender their credit card information and unwittingly were signed up for credit monitoring services for $80 a year. The FTC later settled with Experian for $1.25 million in damages. In many fields that kind of billing is now restricted, like the music business where negative option billing made Columbia House and BMG a fortune off their 9 CD’s for a penny ads in the 1980’s and 90’s. In Canada and other countries, that billing method is outright illegal.

If you want to obtain a copy of your credit report, you can request one for free every year from each of the three credit bureaus. There are several websites that offer a limited credit report or score for free, and legitimate credit management agencies like Blue Water Credit can provide your complete credit report or score for a nominal fee, or guide you through your other options.