The Best and the Worst of Credit Freeze Laws

January 31, 2006 – In the new year, a variety of state legislatures continue to debate credit freeze laws. Among these are two states on opposite sides of the country that are working on unique credit freeze solutions. One of them is probably the best credit freeze law proposed in any state. The other is dumbest credit freeze proposal that we have ever seen.

In Utah, there is low moan that can be heard. It is the plaintive wail of lobbyists for the credit reporting agencies (CRAs). They are upset because a State Senate committee approved SB71, which is probably the best credit freeze legislation to come out of any state.

If the bill eventually becomes law, Utah will give its consumers more flexibility than any other state with regard to credit freezes. The bill contains two provisions that the CRAs absolutely hate.

First, any consumer who places a freeze on his or her credit file will be able to remove the freeze within 15 minutes using a PIN number. This means that consumers with frozen credit files would still be able to have access to instant credit. Granted, they may have to go get a cup of coffee and come back, but they could still get credit on the fly. Because of this provision, a wide variety of major trade groups in Utah, including car dealers, realtors, and retailers selling big-ticket items have lined up in support of it. These same industry associations have opposed other credit freeze laws.

Second, consumers who find out a CRA has violated the law will have the right to sue that agency.

Complain as the CRAs might, there is a good chance that SB71 will become law. It has some key supporters within the State Senate. Sen. Sheldon Killpack said, "My wife had her purse stolen out of her vehicle. What a treat that was. It was like a month-long root canal."

With sentiments like that, how could the bill fail?

On the opposite side of the Country, Virginia may be set to take a somewhat different approach to dealing with credit freezes and identity theft. SB218 has the distinction of being some of the dumbest legislation that we have ever seen. It is also a shining example of why corporations should be barred from lobbying politicians.

Sponsored by Virginia State Sen. Frederick M. Quayle, the proposed law might actually do more harm than good for those between the ages of 18 and 65. But Quayle thinks he’s hit on something good here. He wants to allow parents to freeze the credit files of their minor children. He also wants to let anyone who is 65 or older, and living in an elder care facility to freeze their credit file. So far, so good.

But under Quayle’s proposal, everyone else is just out of luck. His excuse for this proposal is that too many lobbyists are opposed to stronger measures. To the Senator we say, "That’s why you make the big money!"

It shouldn’t be any great surprise that the senator’s bill hasn’t gotten the opposition that other credit freeze proposals have. Do you really have to wonder why? Nobody in business, including the CRAs, wants to allow identity thieves to steal the identities of minors. Why? Well for starters, they can’t be held accountable for the debts under any circumstances. And do you really have to ask why anyone wouldn’t support a bill that would help prevent fraud against frail elderly people living in nursing homes? Those pictures don’t play well on the nightly news.

The irony of this legislation is that it would protect two groups of people that get a lot of public sympathy, but it would do nothing for the vast majority of Virginian’s who become the targets of identity theft. If the bill passes, it will likely make more comprehensive credit freeze proposals less likely to pass. It would eliminate much of the bad press associated with identity theft.

While the bill may be well intentioned, it is definitely not well thought out. ACCESS urges the Virginia legislature to kill SB281 and to adopt some of the more comprehensive credit freeze legislation that is before it, even if the lobbyists don’t like it.

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