Utah Governor Signs New Credit Freeze Law

March 23, 2006 – On Monday, Utah Governor Jon Huntsman, Jr. signed 16 bills into law. Among them is a credit freeze law with a unique twist. The law was supported by major consumer groups, but they are not the only ones who are happy with the law. The bill was supported by virtually every major business group in the state; making it an anomaly among the states that have already passed or are considering credit freeze legislation.

Utah’s credit freeze law allows any citizen of the state to freeze their credit file for any reason. Individuals who have become victims of identity theft have the right to freeze their files for free. Those who are not victims of identity theft will have to pay a fee of $10 to each of the three major credit repositories. These features are fairly standard among the states that allow their citizens to place a freeze on their credit file.

What makes the Utah law unique is that citizens of the state will be able to lift a credit freeze on 15 minutes notice using a PIN number. No other state has mandated that the credit reporting agencies allow this. The systems used in other states can take up to a week for a freeze to be lifted.

The PIN requirement will mean that citizens of Utah will still have access to instant credit. No other credit freeze bill in the country provides this kind of access, which is the reason that major business groups have opposed virtually every other credit freeze proposal.

The large credit reporting agencies voiced strong objections to the PIN requirement, saying that they did not possess the technology to comply with the law. The law gives them two years to develop and deploy PIN technology that will bring them into compliance.

The new law also contains a data breach notification provision. This provision requires companies that store consumer data to notify consumers when their data has been exposed without authorization. This type of exposure can lead to identity theft.

The only two groups which engaged in active opposition to the Utah law right up until it was signed were the credit reporting agencies and data brokers. Even so, the law saw some unfortunate revisions just prior to the time it was passed by the state assembly, earlier this month. One clause that was added to the law prevents individuals from suing if their data is exposed, or if the credit freeze is violated. The responsibility for enforcement lies with the State Attorney General.

Another provision limited the scope of the credit freezes. Insurance companies and other companies that use credit reports to set rates will still be able to access them under the law. The unfortunate truth is that this single provision significantly weakens the law, and does not do enough to protect the privacy of consumers. This weakening was lobbied for heavily by the insurance industry, which uses credit reports to set insurance rates.

It should be noted that the new Utah law, along with other credit freeze laws in 13 other states and data breach laws in 23 other states, is in jeopardy. Congress is considering federal legislation that would usurp any state laws that allow credit freezes or require notification of consumers when a data breach occurs.

HB 3997, intentionally misnamed the Financial Data Protection Act, would set a weak federal standard for data breach notification. It would also allow consumers to freeze their credit file ONLY if they had already become victims of identity theft. Although there is stiff opposition to this legislation from privacy rights activists, including ACCESS, there is strong support in Congress for the bill. This is largely due to the amount of money that data brokers and the financial services industry donate to in the form of campaign contributions.

Even so, if Congress hears loud and clear from voters that they want to see the Financial Data Protection act defeated, they will listen. The best way to inform your elected representatives that you want this bad legislation defeated is to call them. When you call, a staff member will ask for your name and where you live so don’t be surprised when you are asked for this information.

You can get the phone number of your elected representatives by filling in the form below. When you press the button, the phone numbers of your Senators and your Representative in the House will be displayed immediately.

ACCESS is urging all concerned citizens to take just a couple of minutes of time and place these calls.

Technorati Tags : identity+theft, Congress, privacy, credit+freeze, data+breach

action="javascript:getReps();"> Instant Congress Phone Number Lookup Street number and name only: Zip Code (5 digits):