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Two Credit Bureaus Offer Consumers Credit Freeze in 50 States

Trans Union, Equifax reverse policy; Experian undecided

by Martin H. Bosworth
ConsumerAffairs.com

September 22, 2007

The service will be available in the 11 states that do not already have credit-freeze laws, costing consumers $10 to set the freeze and $10 to unlock it, and will "meet or exceed the requirements" of states with existing freeze laws.

The freeze service will be free to victims of identity theft, and is scheduled to roll out Oct. 15. TransUnion is also offering a more expensive package that combines credit monitoring with the ability to lock and unlock credit freezes online, for $14.95 monthly.

"TransUnion understands that many consumers are concerned about identity theft and want access to tools that provide them with a personal level of comfort," said Trans Union's Mark Marinko.

"We're pleased to be in a position to empower all consumers with the extra measure of security and peace of mind that a file freeze can deliver under the right circumstances."

Consumer advocates hailed Trans Union's decision and urged the remaining bureaus to follow suit. “For a security freeze to be effective to stop new account identity theft, it must be placed at each of the three major credit reporting agencies,” said Consumers' Union's Gail Hillebrand. “That’s why it is so essential for Experian and Equifax to offer the freeze nationwide.”

Equifax followed suit, announcing yesterday that it too would offer credit freezes for customers in all 50 states, and would roll out its own plan sometime in October.

Experian undecided

The last of the "Big Three" credit bureaus, Experian, is still "studying the process," said spokesperson Don Girard. "We expect to make an announcement on our decision in the near term."

Credit freezes prevent new credit accounts or loans from being made in someone's name without their explicit authorization, such as a password or PIN code.

The freeze can reduce or prevent the most common form of identity theft, where someone's personal information is used to open new credit cards and take out loans in their name, without their knowledge.

Thirty-nine states and the District of Columbia already have laws in place enabling consumers to freeze their credit, with varying rules and costs for usage. The credit and financial industries have aggressively lobbied against credit freeze laws, claiming they would reduce the availability of credit and discourage shoppers from making big-ticket purchases due to the time spent unlocking a credit account.

Efforts by the credit industry to push weaker national credit protection laws that would preempt state law stalled out in Congress. States such as Utah have passed laws enabling citizens to freeze and unfreeze their credit accounts in as little as 15 minutes.

Consumer advocates and identity theft protection companies such as TrustedID have also heavily advocated the passage of credit freeze laws in all 50 states, claiming that the availability of personal information combined with easy access to credit makes consumers too vulnerable to identity theft and fraud.

Just as the major credit bureaus began offering comprehensive -- and expensive -- identity theft protection services to customers in the wake of the explosion in high-profile data breaches, credit freezes and associated protection plans represent a potentially lucrative new revenue stream for the bureaus to make use of.

But as Consumers Union's Hillebrand notes, if the bureaus have the technical means to enable instant locking and unlocking of credit, they should not be charging high fees to use a service that can be turned on and off in minutes.

“TransUnion and the rest of the credit bureaus should follow the lead of the states with the best security freeze laws and provide this protection to all consumers for no more than $5,” Hillebrand said. “All three credit bureaus should make it fast, affordable, and easy for consumers nationwide to take advantage of this important identity theft safeguard.”

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