Notes On Consumer Affairs
Identity theft can take many forms, as fraudsters can use stolen identity information in numerous ways. They can use credit card information to rack up thousands in fraudulent charges; they can use another's identity to hide from their creditors; and they can even use stolen identities to receive medical treatment. Identity thieves can inflict the most damage, however, when they open new credit accounts in the names of their victim and use these accounts to purchase goods and services.
Oftentimes, thieves will apply for several new lines of credit using their victim's information.
In most cases, it is only a matter of time before the thief is able to fool a credit-granter into opening a fraudulent account. This leaves victims with the task of clearing up fraudulent purchases and, more significantly, with the task of reestablishing their credit history.
In order to fight this widespread and damaging form of identity theft, the Legislature passed, and the Governor signed, Assembly bill 7349-D, which I sponsored, allowing consumers to "freeze" their credit files. Security freezes prohibit access to a consumer's credit file unless they expressly consent to it. This is important since most creditors will not extend new credit, or increase existing lines of credit, without first viewing an applicant's credit file in order to help determine the applicant's creditworthiness. By preventing access to a victim's credit files, security freezes effectively cut off identity thieves access to access to credit, loans and leases.
Those who choose to place a security freeze are required to contact each of the three major consumer reporting agencies (Experian, Equifax and TransUnion) and make a request in writing by certified mail or overnight mail. A consumer who places a freeze is provided a personal identification number (PIN) that must be given to the consumer reporting agency each time the consumer wants to allow access to their credit information.
Consumers are permitted to remove a freeze entirely, lift a freeze for a specific period of time, or grant a specific party access to their frozen file. Consumer reporting agencies are allowed, but not required, to charge consumers who are not identity theft victims a fee of up to five dollars for the removal or lifting of a freeze, the second or subsequent placement of a freeze, or the replacement of a lost PIN.
No charges are allowed for identity theft victims who present a police report or a signed copy of a Federal Trade Commission ID theft victim's affidavit to the consumer reporting agency. This also applies to any consumer placing their first freeze on their file.
Specific exemptions to security freeze restrictions are allowed for existing creditors, persons to whom a financial obligation is owed, government entities, prescreening conducted in accordance with federal law, child support agencies, law enforcement, person or entities with court orders, check service or fraud prevention companies processing checks or other financial transactions, credit monitoring services and individuals accessing their own credit.
It should be noted that while security freezes are a very powerful tool, they limit a consumer's ability to take advantage of "on-the-spot" financing deals and other instant savings deals. Consumers who are actively seeking credit should be aware that a security freeze may slow applications for credit. If you are an identity theft victim, or have reason to believe that you may become a victim, you should consider freezing your credit files. It is important to remember that if you are not satisfied with a freeze, you can remove it at any time.
For more information about New York's security freeze law, please visit the New York State Consumer Protection Board's Security Freeze webpage at http://www.consumer.state.ny. us/security_freeze.htm. This page contains answers to several common questions related to security freezes, as well as sample freeze request letters pre-addressed to the three major credit reporting agencies.
For more information about obtaining a Federal Trade Commission ID theft victim's affidavit, please visit http://www.ftc.gov/bcp/conline/pubs/ credit/affidavit.pdf.