Credit freeze protects you from identity theft

The problem of identity theft is a growing one; it is estimated that it costs Americans some $33 billion annually. In the electronic age, it is just too easy for a criminal to obtain personal information about people with good credit and use that information to open new accounts or take out loans, all at the victim’s expense. The average victim spends 100 hours dealing with creditors and police in trying to resolve the problem and getting his or her credit report cleared up completely can take several years. Identity theft is a problem that we can all do without.

One solution, now an option in twelve states, is to allow a consumer to put a freeze on his or her credit report. This freeze prohibits the credit bureaus from releasing credit information to anyone without the express permission of the consumer involved. The process can be activated by mail or phone, and unfreezing an account can take several days. As long as an account is frozen, no new credit can be issued, as no lender or creditor will do so without first checking a credit report.

The ability to freeze an account has long been sought by consumer advocates, who say that it is one of the few tools available to consumers to help them fight identity theft. On the other hand, freezing is opposed by credit bureaus and large lenders, including automobile dealers. The credit bureaus don’t like freezes because it represents additional work for them and additional cost. Experian estimates that each time an account is frozen or unfrozen, it costs them $8, but consumers are permitted to lock their accounts for free. Automobile dealers don’t like freezes because the locked account, and the several days that it may take to unlock it, may discourage customers from making a purchase.

These arguments, pro and con, go on in every state that is considering allowing their citizens to lock their reports. One interesting statistic speaks in favor of not allowing them, however. Apparently, in the dozen states that allow the practice, including California, only 25,000 people have elected to take advantage of the process. That is quite a small number, and advocates of the process are struggling to determine why the practice isn’t more popular with the public. It is difficult to speak out in favor of something that is good for the public if the people don’t seem to care if it becomes law or not.

Consumer advocates would be wise to continue to try to educate the public about the benefits of locking their credit reports. There really is no equivalent tool available that will so readily help eliminate identity theft. While few people may be interested in locking their credit, it’s a safe bet that 100% of identity theft victims will wish that they had done so.

Other states are looking into the possibility of legalizing the process. We hope that they will continue to do so.

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