Posted on Mon, Oct. 23, 2006
Icy start for credit freeze
Reporting bureaus make it hard to use new law for fighting identity theft

Pioneer Press

When a Pioneer Press reader heard about Minnesota's new credit freeze law, he jumped at the chance to try it out. He found himself jumping through hoops instead.

So he asked the Watchdog to find out why credit reporting companies seemed to make a straightforward law designed to protect consumers so complicated.

The law went into effect Aug. 1 and is the most powerful tool you have to protect yourself from credit fraud. It lets you "freeze" your credit file with the three major credit reporting companies, Equifax, Experian and TransUnion, so no one can use stolen information to take out loans or open accounts in your name. When you place the freeze, creditors, like banks or stores, can't give credit to an imposter because your credit file will be locked.

But that also means you can't get credit easily. So it's important for consumers to know when it's worthwhile to take this step and how to do it.

As our reader found out, the credit reporting companies don't make it easy.

TO FREEZE OR NOT TO FREEZE

Freezing your credit file is an important step for victims of identity theft, said Darryl Dahlheimer, of LSS Financial Counseling, a credit-consulting organization. But if you haven't noticed anything fishy on your credit report or haven't had important personal information stolen, like your Social Security number, then you don't need to freeze your credit.

Checking your credit regularly to spot signs of fraud is a more appropriate step, he said. Consumers are entitled to one free credit report each year, so Dahlheimer advised ordering a free report from a different company every four months. That way, you get three free credit reports each year.

But if someone does have your identity and is using it to rack up bills, freezing your credit file is the only surefire way to stop the thief.

FOR VICTIMS

The Watchdog spent the better part of a day trying to figure out how to freeze her credit with the three companies. After that, it still wasn't clear.

Minnesota is one of the few states that allows you to place the freeze over the phone, but you wouldn't know it by calling the credit reporting companies or visiting them online. The numbers to call if you're a Minnesota resident are buried in the fine print of the companies' Web sites. Only Equifax directs people by phone to information about credit freezing.

The instructions the Watchdog eventually found on the Web make it sound like mailing each company a certified letter is the only way to freeze your credit. The companies are required by law to place the freeze within three days of receiving your letter and they must respond to you by mail with a personal identification number within 10 days. You use this number to give someone access to your credit file if you need to take out a loan or set up an account.

After translating business days into real days, you'll be waiting longer to get your file frozen and your PIN. Identity thieves aren't likely to take a break on weekends.

WHY IS IT SO HARD?

A.

lthough these companies want to appear friendly to consumers, Dahlheimer said, they are set up as a tool for creditors.

"Every step forward for consumers in the credit report world has been mandated by the government, not offered up by credit reporting companies," he said.

With the freeze available to more and more consumers (25 states now have similar laws), the companies fear they will get less business, said Beth Givens, director of the Privacy Rights Clearinghouse.

"They want free flow of credit information because that's how they make money," she said.

However, the companies warn people against a hasty decision about freezing their credit if they have not been victims of identity theft. It can be difficult to open cell phone or store credit accounts when you've frozen your file.

"This shouldn't be done as a knee-jerk reaction," said Rod Griffin, Experian's manager of consumer education. Freezing your file also can mask other types of fraud, he said. If criminals can't get your credit information, they'll find another way to rip you off, like check fraud, Griffin said.

Dahlheimer disagrees. Freezing your credit is "the same good idea as locking your car door," he said. Sure, a determined thief could still break in, but most thieves, when they realize it's locked, will move on to an unlocked car.

"That doesn't keep me from still locking my car," he said.

WILL PROCESS IMPROVE?

Will it get easier? Not if it's up to the companies, Givens said. So Minnesotans should contact their state lawmakers or the Attorney General's office if they are unhappy with the credit freeze law.

"Under the law, this process should be consumer friendly," said attorney general spokeswoman Amy Brendmoen, who urged people to call the office with complaints.

It takes time for companies to adjust to new laws.

"But it's been about two months now," she said. "The intention was not that people would have to jump through 2 million hoops to do this."

The bill's intent was to protect consumers, said Sen. Dan Sparks, R-Austin, Minn., the bill's chief author. Though he negotiated a six-month time frame for the companies to make the full transition, "You'd think they'd be getting to the point where it's not so difficult," he said. He told the Watchdog he'd be willing to "firm up" the language in the law if the companies don't begin to make the process more consumer-friendly.

Editor's note: Feel like an underdog because of a problem with a business, government agency or school? Maybe the Pioneer Press Watchdog can help. Go to www.twincities.com and follow the link to our Watchdog home page. Or call 651-228-5419 or e-mail watchdog@pioneer press.com.


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