Unnecessary holes remain in identity theft protection

Eleven states and one of the big three credit card agencies still won't let customers freeze credit reports - a key weapon in the battle against identity theft.

Basically a security freeze lets consumers stop thieves from getting credit in their names by locking up access to the consumer credit reports and credit scores kept by TransUnion, Experian and Equifax. Without this information, a bank or business can not issue new credit cards. When the consumer wants to get new credit, he or she uses a PIN to unlock access to the credit file, says Consumers Union, the publishers of Consumer Reports.

For a freeze to be truly effective, Consumers Union says customers need to be able to place the freeze with all three credit reporting agencies. TransUnion and Experian have on the past few weeks said they will allow consumers in all states to freeze credit files - usually for a $10 fee - beginning in Oct. Equifax remains as the only bureau that doesn't allow freezing.

A story in USA Today this summer described how the Big Three credit bureaus have lobbied for two years to stop strong credit-freeze laws from being adopted at the federal and state levels. The bureaus disseminate credit histories used by lenders to issue credit cards, mortgages and other loans.

Consumers who live in Alabama, Alaska, Arizona, Georgia, Idaho, Iowa, Michigan, Missouri, Ohio, South Carolina, and Virginia, the eleven states without a freeze law can utilize the services of these companies.

If you want to see how your state legislates security freeze identity theft protection look here. The US Federal Trade Commission says that over a quarter of a million ID theft complaints were lodged with the agency in 2006, accounting for 36% of the 674,000 complaints the FTC received. That number is down slightly from 2005, when ID theft accounted for 37 percent of all complaints. 2006 was the seventh consecutive year that identity theft has been ranked number one.

A poll released by Consumers Union this month found that a large majority of Americans support government action that would restrict the use of Social Security numbers to help prevent identity theft. The poll, which was conducted through a telephone survey of more than 1,000 American adults, found that 89% of consumers thought that the government should pass laws that restrict the use of Social Security numbers by outside parties, and that 97% of consumers said they should have the right to freeze access to their credit files if their Social Security number is stolen.

"The widespread use of Social Security numbers has made it easier for crooks to commit fraud," said Jeannine Kenny, the senior policy analyst at the Consumers Union, a non-profit consumer advocacy group. "It's time to restrict the availability of Social Security numbers to prevent this sensitive information from falling into the hands of identity thieves."

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Copyright © 2007 IDG Communications, Inc.

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