Putting the freeze on ID theft prevention costs

Putting the freeze on id theft prevention costs
State lawmakers behind ESB 6018 want to allow Washington residents to freeze their credit for free as a way to combat identity theft that can occur following massive cybersecurity breaches, such as the recent case with Equifax. However, a minority of legislators argue the cost will simply shift to other fees consumers have to pay. Photo: Lotus Head

Last year, a cybersecurity breach of the consumer reporting agency Equifax exposed the personal information of 143 million American consumers. That included credit card data, Social Security numbers, birth dates, driver license numbers and addresses. One way for Washingtonians to respond to these types of cyber breaches is through a security or credit freeze that alerts most businesses to not open credit accounts – and such action can be effective at preventing identity theft. However, for those under 65 who are not yet a victim with a police report in hand, there is a $10 fee to freeze an account.

A bipartisan group of state lawmakers believe that protection should be available for free, though others say consumers will pay one way or another. ESB 6018 would prohibit credit reporting agencies from charging a fee for freezing and unfreezing a person’s credit. It was approved overwhelming in the Senate in a 46-2 vote January 18 following a “do pass” recommendation from the Senate Committee on Financial Institutions & Insurance. On January 31, it received its latest “do pass” recommendation from the House Committee on Business & Financial Services.

According to the Insurance Information Institute, in 2016 Washington state ranked 14th in the nation for identity theft complaints with a total of 8,310 – an estimated114 per 100,000 people. That same year,  $16 billion was stolen from 15.4 million U.S. consumers, according to the 2017 Identity Fraud Study published by Javelin Strategy & Research.

The proposal’s prime sponsor is Majority Assistant Whip Mark Mullet (D-5), who also chairs the Financial Institutions & Insurance Committee. Cosponsors include 11 fellow Democrats and Republican Floor Leader Joe Fain (R-47).

In a statement, Mullet wrote that “consumers whose sensitive financial data has been exposed through no fault of their own shouldn’t have to pay to protect their credit ratings. We’re taking real steps to help people protect themselves and their personal information by removing undue financial penalties.”

Also in favor of this policy, albeit at a federal level, is American security consultant and Frank Abagnale, whose youth working as a con artist was depicted in the 2002 Steven Spielberg film Catch Me If You Can.

At a November Talks At Google, Abagnale said “there should be no reason there should be a fee associated with it because then that becomes a deterrent to people actually freezing their credit.”

However, not all are on board with the idea. Voting against it in Business and Financial Services were Reps. Brandon Vick (R-18) and Bill Jenkin (R-16).

Vick told Lens that consumers will end up paying that fee indirectly in the form of higher interest rates or loan application fees. At the January 31 committee vote, he told colleagues that he didn’t want “to rain on the parade,” but “I thought there was some better ways to go about it.”

Vick’s reservations were perhaps conveyed in an amendment introduced on the Senate floor prior to the bill’s passage by Sen. Michael Baumgartner (R-6). It requires the state Office of Cybersecurity, the Office of Privacy and Data Protection and Attorney General Bob Ferguson’s Office to submit a report to the legislature by 2020 evaluating the bill’s impact to consumers and credit reporting agencies.

This week ESB 6018 was placed in Rules Committee for second reading.

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