Monday, April 11, 2005
Groups say the initiatives would shield consumers from havoc and damages.
WASHINGTON POST
WASHINGTON -- Legislatures in more than two dozen states are considering ways to give consumers more control over personal information that is collected and sold by private firms, but many of the proposals are drawing fire from financial services companies.
Bills are on the table in 28 states responding to a series of high-profile security breaches at information brokers, banks and universities that so far this year have resulted in more than 1 million Social Security numbers, driver's license numbers, names and addresses falling into the hands of potential identity thieves.
In the most recent case, a medical group in San Jose announced Friday that records on roughly 185,000 current and former patients may have been exposed after two of its computers were stolen.
The state activity is being closely tracked on Capitol Hill, where several House and Senate members have introduced or are preparing identity theft legislation.
Generally, the various state bills do not target how thieves are obtaining data, through hacking, fraud or other means. But consumer groups and privacy advocates, who are championing many of the initiatives, say they would help shield consumers from the havoc and damage that identity theft can cause.
Credit freeze
One group of bills would allow consumers to "freeze" their credit reports so that sensitive data could not be given out to anyone without permission from the individual each time the data were requested.
Identity thieves often strike by obtaining a piece of private information, such as a Social Security number, and then using it to establish credit and make purchases.
Credit-freeze bills are moving through legislatures in about 20 states. In some cases, any consumer could order a freeze at any time. In other states, only people whose data have been breached would have that option.
"For years consumers have been told to take steps to protect their data by buying personal shredders and changing their passwords," said Kerry Smith, senior consumer attorney with state Public Interest Research Groups. "But, as the ChoicePoint and other scandals demonstrate, consumers have little control over their personal information. With the security freeze in place, consumers would be able to lock identity thieves out of their credit files."
Trade groups representing banks, mortgage brokers and credit bureaus are lobbying hard to defeat the freeze idea, arguing that it would cause consumers unforeseen headaches.
Since a consumer could not remove a freeze instantly -- because the request would have to be verified and processed -- some opportunities for the consumer to make purchases or do other business might be temporarily affected.
"Consumers may say they want the choice, and may exercise the choice, but they don't often realize the consequences," said Nessa Feddis, senior policy counsel with the American Bankers Association. "They may not realize that a freeze will slow a credit application. It may also delay job applications, apartment rental applications, insurance applications."