Wednesday, October 10, 2007

Credit Freeze Option Gaining Ground

As an increasing number of state legislatures adopt credit freeze laws, two of the three major credit reporting agencies have announced that they will also make credit or security freezes available to all consumers nationwide at a nominal fee. For victims of identity theft, there will be no fee.

To date, only 11 states have not enacted some form of credit freeze law. states listing.

A credit freeze is one of the best tools available to a consumer to thwart an identity thief from continuing fraudulent activities involving a consumer's personal information. A credit freeze is an order to a credit bureau to stop sharing information from a credit report without your express authorization.

Beginning October 15, 2007, TransUnion will permit a consumer in those states where no credit freeze laws have been passed to freeze their information for a $10 fee, or for no fee if the consumer is an identity theft victim. Experian has announced they will make the same service available to all consumers for the same fee, effective November 1, 2007. Equifax has announced that it will also offer credit freezes, but has not provided any details.

The state laws vary considerably with respect to fee caps, duration of freeze, and the ability to lift the freeze temporarily, or with respect to a specific creditor. While the credit bureaus' decisions to permit credit freezes are to be applauded, their initial opposition to some of the state legislative efforts prevented this prevention tool from being available to consumers earlier. Many state legislators were subjected to lobbying against these bills by the credit bureaus as well as their customers -- banks, insurance companies, department stores, and big box retailers. Credit bureaus have long counted on the revenue from selling consumers' credit files to third party creditors, and the users didn't want the flow of this valuable source of potential customers to be stemmed. Clearly, the tide has turned in favor of credit freeze laws, with Congress stepping up with credit freeze provisions in the several pending data breach notification bills, which would preempt the state laws.

No comments: