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Juan Rodriguez

Legal, Regulatory, and Privacy Issues

Despite free credit freezes, consumer complaints continue

Parents are still required to mail in information to freeze a child’s credit, which is less convenient than doing it online.

Summary

Consumers have gotten some relief from legislation that enabled free credit freezes and fraud alerts, but there is still scope to improve the implementation of the law.

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One positive fallout from the 2017 Equifax security breach is a new law that enables consumers to freeze and unfreeze their credit reports for free.

Parents can also freeze the credit of children under age 16 for free. And consumers can extend a fraud alert on their credit reports to a year’s time. Although these provisions have eased things a bit for consumers, it seems the implementation process has not been altogether smooth.

Mike Litt, consumer campaign director at the U.S. Public Interest Research Group (PIRG), sees the best solution as having access to consumer credit reports automatically frozen.

“We shouldn’t have to opt-in to control access to our own data,” he said in an email.

See related:  How to freeze your credit: A step-by-step guide

Preemption of state laws not beneficial

Although PIRG sees the free credit freeze legislation as a positive overall, Litt noted during a congressional hearing on data security that the federal legislation preempted state legislation, some of which was more powerful.

For instance, some states allowed freezes to extend to checks relating to employment and insurance. Identity theft can occur in these instances. The federal law only applies to credit checks. Thus, Litt urged Congress to “remove the preemption of the national freeze law and allow states to improve on it.”

Freezing your child’s credit is still inconvenient

Another issue is that credit bureaus do not have to provide an online method for freezing the credit of children younger than 16, as they do for those over 16. This means parents and guardians have to mail in their freeze requests. Besides being more of a hassle, it poses a security concern, since they will have to provide sensitive information, including Social Security numbers. Thus, Litt would like online freezing to apply to children’s credit as well.

An Experian spokesperson said, in emailed comments, that parents have taken advantage of the provision to freeze their child’s credit. A TransUnion spokesperson also noted, “Several thousand parents per month are taking the opportunity to freeze their child’s credit.” An Equifax spokesperson said, in emailed comments, “We continue working with Congress as they consider additional potential consumer protections.”

See related:  How to check your child’s credit report

Some relief for consumers

A credit freeze allows consumers to block access to their credit files, by contacting all the three major credit bureaus (Equifax, Experian and TransUnion), so that identity thieves are impeded from opening new accounts in somebody else’s name.

And the law also extends the time frame for a fraud alert with the credit bureaus to one year, from the previous 90 days’ time. A consumer only needs to contact one of the credit bureaus to initiate a fraud alert. The law requires the one that receives the consumer notification to alert the other two bureaus.

A fraud alert requires businesses that check a consumer’s credit to get their approval before opening a new account.

“Both of these changes give consumers stronger tools to protect against identity theft,” a Federal Trade Commission spokesperson pointed out in emailed comments.

And Eva Velasquez, president and CEO of the Identity Theft Resource Center, noted that “Making credit freezes free gives consumers of all socioeconomic backgrounds the opportunity to be proactive in the protection of their identity.”

One way consumers have obviously benefited is from not having to pay for a credit freeze, whereas previously they had to pay up to $10 in most states to each credit bureau for this service (some states offered free credit freezes even before the federal legislation was passed). Previously, consumers also had to pay up to $12 to release, or unfreeze, their credit.

The TransUnion spokesperson also pointed out that freezing a consumer’s credit is not the same as freezing their credit score. He said, “This is a myth. The calculation of a consumer’s credit score is not impacted by a freeze. The score will continually change based on a consumer’s financial behavior.”

See related:  Credit freezes are now free, but do you need one?

Complaints galore

Although this credit freeze legislation is a positive development for consumers, it appears they are not entirely satisfied with how it’s working out. Consumers continue to complain to the Consumer Financial Protection Bureau about a “problem with fraud alerts or security freezes” related to credit reporting. The CFPB received more than 100 such complaints in the first three weeks of March alone. Consumers cited all three credit bureaus in these issues.

One consumer complained they were not able to use their PIN to lift a credit freeze they had put in earlier, since Experian told them their number was not correct.

According to this consumer, “I need my credit today, not in two weeks. I have all correct info. I do not want this company holding my credit hostage!”

This complaint, initiated at the end of February, had been resolved by March with no money involved in the resolution. The law requires a credit bureau to release a freeze within one hour when the consumer initiates the freeze request online or by phone. When the consumer mails in such a request, the bureau should take action within three business days.

Another consumer noted they were unable to use the Experian website to freeze their credit, with the website’s automated response being, “We were unable to honor your request to place a security freeze on your personal credit report based on the information you entered.”

This consumer also tried calling Experian’s credit freeze phone number, but was asked to submit “dozens of documents.”

This consumer concluded that Experian just does not want to freeze people’s credit. However, the CFPB reports that Experian had resolved this complaint, providing “non-monetary relief,” to the consumer. Other consumers reported difficulties with using the Experian website to freeze or unfreeze their credit, too.

In another incident involving TransUnion, a consumer complained they were looking to buy a car and could not unfreeze their credit. The credit bureau closed this complaint with an explanation.

And a complaint against Equifax stated the company did not remove an extended fraud alert even though the consumer did not ask for it to be placed on their credit file.

This consumer complained, “My rights are being violated with this extended fraud alert still on my credit file after asking numerous times for it to be removed.” This complaint, too, has been closed with Equifax’s providing an explanation to the consumer, the CFPB reports.

Experian and Equifax did not respond to a query asking for comment on issues that consumers have run into as they try to take advantage of the credit freeze law. The TransUnion spokesperson noted, “We proactively solicit feedback from consumers to improve the experience. Our research shows that some consumers believe freezing and unfreezing their credit will be a difficult and time-consuming process. But it’s quite the opposite: over 80% of consumers report that freezing and unfreezing credit with TransUnion is easy and fast.”

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Published: May 1, 2019

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