Our View: Freeze on credit reports worth considering

The Olympian • Published May 28, 2007

Washington residents emerged from the 2007 legislative session with another tool to combat identity theft. Stealing another person’s identity is an escalating problem in this community and this state and Attorney General Rob McKenna promised a crackdown on the thieves — many of whom feed their drug habits with the proceeds from their crimes.

McKenna’s bill allows any resident — not just victims — to put a security freeze on their accounts to lower the risk of unauthorized credit or bank account transactions. Unlike a fraud alert, which places a statement on a consumer’s credit report, a security freeze means that that consumer’s credit file cannot be shared with potential creditors.

McKenna’s legislation, Substitute Senate Bill 5826, passed the House and Senate on unanimous votes and was signed into law by Gov. Chris Gregoire.

“Under our current law, a pickpocket could snatch your wallet, a scam artist could trick you into providing personal information over the phone or computer, your home could be broken into and personal documents could be taken — but you have to wait until further damage is done before you can block access to your credit report,” McKenna said, “It’s like having a law that says you can’t put a deadbolt on your door until your house has been burglarized.”

McKenna backed up his legislative proposal with a recent AARP survey that showed 85 percent of Washington consumers support security freezes and that 79 percent of the people would sign up for the service.

“Too many Washington consumers have experienced financial devastation and frustration that comes with being an identity theft victim, as well as the cumbersome task of cleaning up the damage,” McKenna said. “Legislators did the right thing this session when they united in their support of a preventative credit security freeze law and gave consumers a crucial defense tool.”

Under SSB 5826 a credit reporting agency is prohibited from furnishing a consumer’s credit report to a third party. Those lenders generally use the credit report for determining the consumer’s eligibility for credit. Identity thieves often use those reports to establish fraudulent accounts.

Consumers still have flexibility, however. If they are making a significant purchase that requires a credit check, the consumer can pay a $10 fee to authorize a temporary lift of the security freeze.

Also, security freezes on a credit report do not apply to mortgage brokers, loan originators, and any person acting under the authority of a court order.

With the passage of the law, the burden shifts to consumers when the law goes into effect Sept. 1.

Identity theft victims and seniors ages 65 and older will be able to place a freeze for free. Other consumers would pay to up to $10 to each bureau for placement of a freeze, a temporary lift or removal. Consumers who aren’t entitled to a free freeze would therefore pay a total of $30 to freeze their reports with the three major credit reporting agencies — Equifax, Experian and Trans Union.

In this age of identity theft, a security freeze is definitely worth consideration.