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Study: Seniors Not Familiar With Credit Freezes

Barriers include cost, accessibility, AARP study finds

By Martin H. Bosworth
ConsumerAffairs.com

December 5, 2007

According to a new study from the American Association of Retired Persons (AARP) Public Policy Institute, 55 percent of the respondents were "very concerned" about becoming a victim of identity theft or fraud, but only 31 percent had read about or heard of services that enable them to freeze their credit accounts.

Of those respondents, 88 percent could not identify such a service, and only 2 percent could identify the term "security freeze."

Fifty-seven percent did not know where they could get information about security freezes, with most responding that their bank or credit union would be the first choice.

Respondents also cited the difficulty of sending copious amounts of personal information via certified mail to the major credit bureaus in order to enact a freeze as a problem, as well as the time it takes for a freeze to be unlocked.

"Legislators and regulators can take a number of actions to make security freezes easier for consumers to use," said AARP public policy analyst Neal Walters.

The survey was conducted between April and May 2007 and had 8,412 respondents, chosen from seven states that enabled all consumers to place freezes on their credit reports, and had that law on the books for a year or longer.

Security freezes work through consumers placing a password or four-digit code on their credit accounts, locking them to prevent new accounts from being opened in their names without their permission.

As the most pervasive forms of identity theft and credit fraud involve usurping personal information from existing accounts, freezes provide a powerful tool to hinder thieves and fraudsters.

Thirty-nine states and the District of Columbia have laws enabling consumers to freeze their credit, each with varying costs and regulations. Some states only permit freezes for victims of identity theft, and costs range from $5 to $10.

The three major credit bureaus -- Equifax, Experian, and Trans Union -- all lobbied heavily to prevent state adoption of credit freezes, claiming it would restrict access to credit and would harm businesses that depend on credit purchases. But in a surprise reversal, Trans Union and Equifax agreed to support credit freezes in all fifty states in September 2007. Experian followed suit several weeks later.

All three credit bureaus' freezes cost $10 to initiate and $10 to unlock, and require certified mailings to initiate. Experian enables consumers to unlock their credit in 15 minutes via a phone call, whereas Trans Union and Equifax take several days to unlock the freeze.

“Experian should be applauded for making the freeze easier to use,” said Consumers' Union policy analyst Jeannine Kenney. “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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