New NC Bill Allows Consumers to Put Freeze on Credit

Among newly passed laws that range from restricting the operation of a video camera in movie theaters to prohibiting drivers and passengers from switching places at the scene of an accident, North Carolina passed one in particular that will hopefully give consumers greater power in limiting personal losses due to identity theft.

Under the Identity Theft Protection Act, passed December 1, a consumer may place a security freeze on his or her credit report by making a request to a consumer reporting agency, thus prohibiting the disclosure of any personal information without the consumer's express authorization.

In what state Attorney General Roy Cooper hopes will be an effective measure in preventing identity theft, the new law aims to smooth out the cumbersome process of freezing and unfreezing credit reports.

"We're fighting this fast-growing crime by giving people more ways to protect themselves from identity theft, and by making it harder for criminals to get their hands on your information in the first place," said Cooper. "By freezing your credit, you can block an identity thief from opening an account or getting credit in your name."

The three major credit reporting agencies — TransUnion, Equifax and Experian — currently provide this service for consumers who have become victims of identity theft. The new law, however, provides this option to North Carolina residents who are trying to prevent fraud.

Though freezing your credit will more than likely hinder approval of monetary tidbits such as instant credit and on-the-spot financing, this is but a minor inconvenience — as anyone whose personal credit card information has been misused will surely attest.

In addition to allowing consumers to freeze their credit, a handful of other measures were tacked on to the bill in effort to prevent identity theft. The bill minimizes the use of the Social Security Number as identification and restricts businesses from selling or displaying it. Businesses are also now required to dispose of customers' personal identifying information, and if in the event a breach occurs, they must notify their customers.

North Carolina is now among twelve states — including identity theft hotspots, California and Texas — to implement a security freeze law. Compounded by the explosion of fraud and identity theft cases, the preventative measures these states exemplify have caught the attention of other state lawmakers, namely New York Senator Charles J. Fuschillo Jr.

"Essentially, it puts [credit information] in a lock-box," Fuschillo said. "Nor information can be given out unless you, the consumer, say that it's OK." Furthermore, he added, the consumer would be provided with a specific password to access his or her file.

According to the Federal Trade Commission, the state of New York had the seventh highest identity theft frequency in 2004. And testimony recently submitted by the New York Public Interest Research Group evidently shows support for a similar credit-report freeze law, proclaiming that "New Yorkers should not remain second-class citizens when it comes to identity theft protections and personal privacy."

Having only been in existence since 2003, fledgling security freeze laws will supplement the recent deluge of anti identity theft legislation. The unwavering influx of identity theft cases, and the time and money spent on them each year, illustrate these laws may unfortunately be ineffective.

Still, North Carolina's Cooper is hopeful for the new Identity Theft Protection Act. "This can be an important way to prevent identity theft to begin with..." adding, "I'm going to do it myself."