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September 26, 2017
To: Chairman Chan, Chairwoman L’Italien and members of the Joint Committee on Consumer Protection and Professional Licensure
RE: In Support of An Act Removing Fees for Security Freezes and Disclosures of Consumer Credit Reports, SB 130 & HB 134
The behemoth credit bureau Equifax’s massive security breach – affecting 3 million Massachusetts residents and 143 million Americans nationwide – is just the most recent reminder of the need to allow consumers to lock down or “freeze” their credit reports preventing identity thieves from setting up new credit accounts in an unsuspecting consumer’s name.
MASSPIRG testified today in support of Act Removing Fees for Security Freezes and Disclosures of Consumer Credit Reports, SB 130 & HB 134, filed by Senator Barbara L’Italien (Andover) and Representative Jennifer Benson (Lunenburg). The bill makes it easier for consumers to protect themselves from identity theft by eliminating the fees charged by credit bureaus to “freeze” or “thaw” their credit reports. Freezing or locking credit reports prevents identity thieves from setting up new accounts because creditors will not open new accounts without first checking a consumer’s credit report.
The three major consumer reporting agencies - Equifax, TransUnion, and Experian - charge Massachusetts consumers $5 to freeze their credit reports and an additional $5 every time they want to thaw or lift the freeze. While some of the fees are waived if you are a victim of identity theft and have a police report, it is too onerous and more importantly too late for consumers to protect themselves. Maine, Indiana, and North and South Carolina already have passed laws allowing all consumers to freeze and thaw their credit reports for free. Since consumers never gave the agency permission to collect or sell their data in the first place, providing a free freeze and temporary lifts (thaws) is also a way to return some needed control to consumers of the use of their sensitive information.
In 2016 over $16 billion was stolen from 15 million Americans as a result of identity theft – a 16% jump from the year before. While consumers are not individually liable for the fraudulent charges, they spend endless time, effort and frustration in clearing up their credit reports and restoring their good names after they have been victimized. In the meantime, because of their poor credit rating as a result of the fraud, they are charged higher interest rates for credit and risk losing out on a new job or housing. According to the Federal Trade Commission (“FTC”) it took credit bureaus more than six months to correct the credit reports of more than half of the identity theft victims surveyed.
Credit reporting agencies should be encouraging consumers to freeze their credit reports, not discouraging us through fees. We hope you will pass the Free Credit Freeze bill without delay.
The key reforms and proposed amendments to this bill and supported by Attorney General Maura Healey, MASSPIRG and bill’s sponsors include:
1. Credit Freeze: The bill would allow consumers to place and lift a credit freeze on their files at any time, for free. Unlike credit monitoring (which alerts you after potential identity theft has already occurred), a credit freeze makes it harder for someone to open a new account in your name. The new legislation will require the credit reporting agencies to put in place a simple, one-stop shop for freezing and unfreezing your credit reports.
- Credit reports: The bill will require each credit reporting agency to provide extra access to free credit reports to consumers impacted by a breach. Under federal law, consumers only get access to one free credit report per year, but under the new legislation, affected consumers will be entitled to no less than three free copies from each agency after a data breach.
- Consent: Any company seeking to obtain or use a consumer’s credit report or credit score will need the written consent of the consumer and must disclose the reason for seeking access to the information.
- Credit monitoring: If the breach occurs at a consumer reporting agency – like Equifax – the bill requires it to provide five years of free credit monitoring to affected consumers.
- Encryption: The bill will require that all agencies encrypt personal information contained in consumer credit reports to enhance the security, confidentiality and integrity of personal information.
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