By Jan Mechanic, for SBT
Identity theft affects thousands of consumers and impacts business operations. Recently, many states, including Wisconsin (effective 1/1/07) have enacted legislation enabling consumers to lock or “freeze” their credit files, the Credit Freeze Law.
To achieve this highest level of protection, a consumer must make a written request to each of the three credit bureaus: TransUnion, Equifax and Experian. Once the request is in place, the credit bureaus cannot release information on that consumer to a third party.
Blocking access to the report means that even if a person has your Social Security number and your name, new accounts will not be able to be opened. A loan, for example, cannot be approved in your name without your consent.
A personal ID or pin number is provided to lift the freeze temporarily. The consumer must specify the time period the agency has to release the report. The cost of the freeze or to lift it for each bureau is around $10. Seniors do get a discount. In Wisconsin, there is no fee if the person can prove he is a victim of identity theft.
While a credit freeze protects consumers by prohibiting access to their credit profile, there are some exceptions. The credit bureau must comply with requests for credit information if it is related to child support, law enforcement or existing business relationships.
The freeze also can be “thawed.” To do so, a consumer must send a request in writing to each of the three bureaus. It will take up to three days to remove the freeze, which may adversely impact a consumer’s ability to secure credit quickly and effectively.
While this new identity protection tool is useful, it is not a brand new type of protection. Currently, consumers can place free 90-day fraud alerts on their credit file. With this restriction, a lender must verify the identity of the consumer prior to accessing credit information. Compared to the new “freeze,” the current protection is more restrictive and consequently consumers may lose out on discounts or more importantly the opportunity to purchase a home or car.
Also, mortgage brokers will not be able to access needed information to approve a loan. In a fast-moving housing market, that can be disastrous. Unfortunately, the mortgage division of a bank the consumer already has a relationship with is not affected. This seems to be an unfair competitive advantage.
On the other hand, lenders may benefit from reduced fraud costs.
Wisconsin Gov. Jim Doyle has created a state office of Privacy Protection to enforce the new law.
Jan Mechanic is a co-owner and the mortgage coordinator at KLM Mortgage Group Inc. in Wauwatosa. He can be reached at jan@klmmortgagegroup.com.
