Monday, August 14, 2006

In Fighting Identity Theft, A Credit Freeze Beats Credit Monitoring Every Time

According to some estimates, well over 88 million Americans’ identities are at risk of theft in the wake of a steady stream of data breaches since February 2005’s at ChoicePoint Inc. The circumstances call for immediate changes to the rules that have disallowed consumers in many states from requesting a credit freeze. The credit freeze, after all, is far superior to monitoring when it comes to fighting identity thieves. A credit freeze locks access to your credit, whereas a monitoring service simply alerts you that someone has gained access. Then you still have to deal with it—and it’s a real headache. Are we going to make the credit freeze—something with teeth—available? Or are we just going to go through the motions and offer them little more than the consolation prize, credit monitoring?

Only a fraction of the country’s 50 states allow consumers to choose the credit freeze, and prohibitive restrictions in a number of those states render the option impractical anyway. As a result, activists have called for lifts on credit freeze restrictions. And yet, according to a June 16 report in the Cherry Hill Courier Post, a bill before U.S. Congress actually sought to pre-empt laws that make the credit freeze available to consumers. For this and other reasons, the Financial Data Protection Act of 2006 has drawn ire from columnists everywhere and from advocacy groups such as Consumers Union and the U.S. Public Interest Research Group.

Following the May 3 theft of a Department of Veterans Affairs laptop from an employee who took the computer home against Department policy, about 17.5 million past and current U.S. veterans found themselves at risk of identity theft. On June 22, The New York Times reported that the Department offered all affected veterans one year of free credit monitoring.

Great. Why don't we simply intruct the thieves to wait a year before using the information? Identity thieves are smart. They know how to work the system. In response, we make laws that disallow consumers from working that same system. Where’s the logic?


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