New York law lets consumers freeze credit data
Nov. 1 marked the enactment of a new state law allowing New Yorkers the option of "freezing" their credit information, effectively keeping identity theft thieves out and valuable credit information secure.
The New York State Security Freeze Law allows any state consumer to write to the three major agencies - TransUnion, Equifax and Experian - and request that their credit records be blocked from any inquiries.
The credit firms however, believe the law makes it very difficult for consumers to get credit when they need it, and suggested better, easy-to-use and free options, such as placing a fraud alert on their credit file, said Jennifer Costello, a spokesman from Atlanta-based Equifax.
While file freezing may be appropriate for some consumers, it can pose
inconveniences and unintended consequences for credit active Americans," Equifax said in a statement sent to this publication. "A security freeze requires a consumer to plan ahead as it limits credit grantors and other businesses access to their credit file to make offers of credit, employment, etc.
"Equifax urges consumers that there are other alternatives to file freeze such as fraud alerts or credit monitoring," the statement said. "It's important to remember that file freezing does not prevent future fraud as identity thieves can continue to damage a consumer's good name if they have personal information at their disposal. We encourage consumers to learn more about identity theft protection resources at www.equifax.com."
In general, a security freeze aids in the prevention of ID theft by thwarting someone from opening credit cards or lines of credit in another person's name.
A security freeze can only be obtained by sending a letter by certified mail or overnight courier to each of three credit-reporting agencies. The service is free if a consumer is making this request for the first time. However, a $5 fee can be charged for subsequent requests, as well as to remove or temporarily lift a security freeze.
No fees are charged to victims of identity theft provided they submit a signed police report or an ID Theft Victim's affidavit obtained from the Federal Trade Commission.
The freeze will take effect within five business days after the consumer's letter is received. Within 10 days, the credit bureaus must send a letter to the consumer informing them that the security freeze is in place and giving them instructions on how they can remove or temporarily "thaw" this credit freeze.
The letter will also include a personal identification number to be used when the consumer calls a credit bureau in the future.
ID theft is a serious crime that is both widespread and costly. According to a FTC survey released in January 2006, New York ranked 8th among all states in the number of complaints per 100,000 population made to the ID Theft Clearinghouse.
In 2003, the FTC found that New York ranked 6th in the country for complaints coming from persons over 50. The measure provides consumers more control over their credit report.
With New York, the total number of states that have passed credit freeze laws is 25.
Consumer officials have admitted that the law can cause disadvantages for some consumers, such as preventing them from using their own credit files to apply for credit as long as the freeze remains in effect.
"With a security freeze in place, you won't be able to borrow money or get a new credit card until you temporarily lift or permanently remove the security freeze," the state consumer board noted on its Web site. "The same is true of new insurance coverage and background checks that might be required by a new employer."
The security freeze can be temporarily lifted for a specific period of time or for a specific company or creditor. To do this, the consumer must write or call the credit bureaus using the PIN provided by them and request a temporarily lift of the security freeze from your records.
This "thaw" will cost $5 and the credit bureaus will have three days to carry out this request. Consumers should plan ahead if they want to borrow money, finance a purchase or open a new credit card.
This option, however, "requires that consumers plan ahead," Equifax's Ms. Costello said.
Maxine sweet, vice president for public education at Experian, Costa Mesa, CA, said before freeing their credit reports consumers should make sure they understand what they are doing. She recommends file freezing for people who have been fraud victims.
"Consumers might not realize how often they need to access their credit report, such as when they need to sign up for new cell phone service or apply for a business license," Ms. Sweet said. "Consumers should be sure they know what they are doing because they need to check their credit report for many daily activities."