A House committee has given preliminary approval to a measure aimed at preventing identity theft by allowing consumers to place a security freeze on their credit reports, preventing access to the information.
Under H2327, which was amended in the House Commerce Committee, the nation’s three credit bureaus — Equifax, Experian and TransUnion — would be required to place a freeze on a consumer’s credit report if the consumer asks them to do so in writing. With a freeze in place, no one can access the information without a password or identification number provided to the consumer by the credit bureau.
However, if a consumer asks via electronic means, such as by phone or e-mail, the credit bureau must temporarily unfreeze the information within 15 minutes.
Rep. Marian McClure, R-30, the bill’s sponsor, says placing a freeze on the account will curb identity theft in two ways. First, the credit bureaus will be unable to sell a consumer’s credit information to lenders if the credit report is frozen. Second, the freeze will prevent a thief from opening a line of credit under a person’s name.
Unsolicited credit card applications fill people’s mailboxes, said McClure, a Tucson lawmaker, and are the simplest way for a thief to steal someone’s identity.
“There is nothing to stop someone from coming and taking mail out of your box,” she told the committee at its Feb. 7 meeting. The thieves then open credit accounts and change the address.
After she was a potential victim of identity theft — her name was among thousands on a computer hard drive that was stolen from her health insurance provider’s office — McClure said she froze her credit reports to ensure lines of credit in her name were not opened.
Though not many will take advantage of the ability to freeze their information, she said it is still helpful for those who wish to.
2 groups oppose bill
Though the Commerce Committee passed the bill unanimously, the bill may never reach the floor. Two organizations oppose the bill and McClure asked the committee to approve the legislation so she can forge an agreement among the opponents and supporters of the measure.
“If we can’t work out something that everybody will live with, the bill will quickly die,” she guaranteed the committee.
Janna Day, a lobbyist for the Consumer Data Industry Association, said the main complaint from the credit bureaus is that there is no delayed enactment on the law. A similar plan was passed last year in Utah, she said, but it contained a clause that does not require the credit bureaus to comply with the 15-minute unfreezing until September 2008.
“In order for the credit bureaus to get everything in place to comply with a 15-minute mandate, they need time,” she said.
Day said she would like to see the Arizona bill mirror what was approved in Utah.
Bobbi Sparrow, president of the Arizona Auto Dealers Association, said her group supports the bill in its current form and has no objections to delaying its effect to match the Utah statute. Currently, she said, six other states are working on similar legislation, and more will likely follow in Utah’s footsteps.
“Once the credit bureaus can do [the 15-minute unfreeze], probably every state will look to do it,” she said.
The bill must be approved by the entire House before it can move to the Senate for hearings.