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More states giving consumers power to freeze credit files

10 states adopt security freeze laws, Congress may extend the ID theft safeguard nationwide

Thursday, June 30, 2005

More States Giving Consumers Power to Freeze Credit Files

Security Freeze Gives Consumers Strong Protection Against Identity Theft

After months of news about data security breaches that have put millions of consumers at risk of identity theft, an increasing number of states are enacting laws that give Americans a powerful new tool to help limit the damage of such fraud. Ten states have given consumers the right to put a security freeze on credit files so crooks can’t open new accounts using stolen identities. More states are expected to follow suit and a bill extending the security freeze right to consumers nationwide has been introduced in Congress by Senator Mark Pryor.

“One of the biggest headaches that identity theft victims have to deal with is cleaning up the damage done to their credit records when crooks open new accounts in their names,” said Susanna Montezemolo, Policy Analyst with Consumers Union’s Financial Privacy Now campaign. “A security freeze gives consumers the ability to prevent thieves from ruining their credit records. If access to the consumer’s credit files is frozen, the identity thief is stopped cold.”

A security freeze enables the consumer to prevent anyone from looking at his or her own credit reporting file for purposes of granting credit unless the consumer chooses to let that particular business look at the information. This gives the consumer control over who has access to the information needed to process a credit application and prevents crooks from opening new accounts in the consumer’s name. When the consumer is applying for credit, the freeze can be lifted temporarily so the application can be processed.

California allows all consumers to put a security freeze on their credit reporting file at any time, even if they have not been victimized by identity theft. Legislators in Colorado, Connecticut, Louisiana, Maine, and Nevada have passed similar security freeze laws for all consumers, but they have not gone into effect. The Louisiana security freeze law will take effect on July 1, while Nevada’s law will start on October 1. The security freeze laws recently passed in Colorado, Connecticut, and Maine will go into effect next year. The New Jersey legislature recently passed a comprehensive identity theft bill that includes a security freeze provision available to all consumers. Governor Richard J. Codey is expected to sign the measure into law.

Texas allows consumers to put a security freeze on their credit files after they have filed a police report indicating that they have become victims of identity theft. Vermont identity theft victims will get the security freeze safeguard beginning July 1. Washington state’s new security freeze law covering identity theft victims and individuals who have been notified that their personal information has been lost or stolen will go into effect on July 24. Illinois Governor Rod Blagojevich recently signed a security freeze bill for identity theft victims, which will go into effect on January 1, 2006.

Senator Mark Pryor (D-AR) introduced a bill in Congress on Wednesday that would enable consumers throughout the country to put a security freeze on their credit files. Under the Pryor bill, all consumers, regardless of whether they have been victimized by identity theft, could place and lift a security freeze on their credit files at no charge.

“All consumers deserve the right to put a security freeze on their credit files so they can prevent thieves from hurting their credit in the first place,” said Montezemolo. “At a time when identity theft has become so common, this safeguard offers consumers a powerful tool to keep crooks from damaging their financial futures.”

For more information on the security freeze laws adopted by states, see: http://www.consumersunion.org/campaigns//learn_more/002355indiv.html

For more information:

Susanna Montezemolo: 202-462-6262
Norma Garcia or Michael McCauley: 415-431-6747

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