A second legislative push is underway to give Arizona residents a tool to combat identity theft by allowing them to freeze their credit report, a crime that is especially acute in the state.
A similar measure stalled in the House last session.
According to a statement released by the office of Sen. Amanda Aguirre, D-24, the three major credit bureaus – Equifax, Experian and TransUnion – allow residents of states without a security-freeze requirement in law, such as Arizona, to request a security freeze for a $10 fee. Victims of identity theft usually are allowed to freeze their consumer reports without paying a fee.
S1185 etches those standards in statute, lowers the fee to $5, and requires the bureaus to remove a freeze within 15 minutes of receipt of a request made over the Internet or phone during regular business hours.
Supporters said the bill is more “consumer friendly” than the bill that failed last session. And this time, it’s being supported by Rep. Bob Robson, a key House member who had concerns about last year’s bill.
S1185 is the product of negotiation among stakeholders, and it has the support of senior Republican and Democratic members in both chambers, including House Minority Leader Phil Lopes and Senate Majority Leader Thayer Verschoor, boosting its chances of landing on the governor’s desk.
“It can take years for people to rebuild credit once their identity is stolen. Credit freezes help prevent this kind of theft from happening,” said Aguirre of Yuma.
“I think everybody’s on board,” she said.
Robson, chairman of the House Rules Committee, was concerned last year that the Legislature might be “overreaching” in trying to combat identity theft, and in the process could be stifling people’s ability to gain access to their own reports.
“This session, we are bringing forth a better bill to help address this situation,” he said.
A big issue for Robson is fees.
A $5 fee to temporarily lift or remove the freeze makes it “very consumer friendly” as opposed to a provision simply saying the credit reporting agencies may charge a “reasonable fee,” Robson said. Aguirre said $5 was the middle ground between what credit-reporting agencies are charging and what some stakeholders want.
Last year’s measure did not specify an amount.
“I think we worked through the summer on a very good piece of legislation that we can all be proud of,” Robson said.
Robson said he regards identify theft as an insidious crime because it can ruin lives.
Indeed, the problem of identity theft is especially acute in Arizona, where three of its cities posted the highest per-capita rate of this type of crime in 2005, according to a report by the Federal Trade Commission.
The Arizona Attorney General’s Office has made it a priority to fight identity theft and helped craft the legislation.
The Federal Trade Commission describes a credit freeze as restricting access to a consumer’s credit file, so the file cannot be used to obtain credit. That is, when a credit report is frozen, no third party can access it, thereby protecting the report from being used to open up credit lines — by identity thieves.
Aguirre’s bill sets up a mechanism to freeze and unfreeze a consumer report.
Under it, a consumer may request in writing or in a form acceptable to a credit reporting agency that the agency place a security freeze on his or her credit report. The bill permits the credit-reporting agency to advise a specific party that a report is frozen but prohibits the agency from releasing the report without the consumer’s authorization.
The bill requires a credit-reporting agency to put the freeze in effect within 10 business days upon receipt of the request, and further requires the agency to send a written confirmation of the freeze within 10 business days.
The agency must send, together with the confirmation, a unique personal identification number or password other than the Social Security number. The number or password is needed to temporarily lift the freeze. Also, the credit-reporting agency must disclose the process of placing and lifting the freeze.
Also under S1185, a consumer may request to temporarily lift or remove the freeze by mail, telephone, or the Internet. When lifting a freeze, the consumer will be required to provide the unique identification number or password, and more specific information about the time period when the credit report will be made available to users, such as when a consumer applies for a credit line at a retail store.
The bill further allows the temporary lifting or removal of the freeze to be made within three business days after the receipt of the request by mail — or within 15 minutes after receiving the request by telephone or the Internet.
The timeframe was a sticking point in last year’s discussions.
In a nod to credit reporting agencies, the bill states that they are not required to remove or lift the freeze under certain conditions, such as “acts of God,” operational interruptions such as computer failures; governmental actions; during regularly scheduled maintenances; or upon receipt of the request outside of normal business hours.
Courts and government agencies are exempt from the freeze as they are investigating fraud or fulfilling their statutory responsibilities. That would include entities such as the state Department of Health Services, the Department of Revenue, and the Department of Transportation.
Arizona leads the nation in identity theft. A federal commission reported that the areas with the highest per-capita rate of this type of crime in 2005 were Phoenix, Mesa and Scottsdale; cities in Nevada and California came next.
Some 9,000 complaints from Arizona residents were logged that year, according to reports.
The Public Interest Research Group and the Consumers Union, which supported last year’s bill, believes the number is just the tip of the iceberg.
In fact, more than two-dozen other states and the District of Columbia have passed laws enabling consumers to prevent thieves from using stolen information to open new accounts, the groups said, calling the Aguirre bill a “common-sense consumer safeguard.”
Aguirre herself said she was a victim of credit-card fraud. Last year, she found out that someone had used her credit card information to try to buy shoes and apparel worth about $3,000 — more than the $2,000 she makes every month as a senator. Fortunately, the stores checked with her and the transactions were eventually canceled.