The California Legislature has been ahead of Washington in protecting consumers against the worsening problem of identity theft--the unauthorized use of someone else's personal information for financial gain. For instance, Sacramento made identity theft a state crime last year, while Congress is still fiddling with a bill to make it a federal crime. But still, according to the state Department of Consumer Affairs, California is the nation's "identity theft capital." More protection is needed.
California should follow the lead of Vermont, Georgia, Massachusetts, Maryland, Colorado and New Jersey and give consumers free access, at least once a year, to their credit reports. The California Senate passed a bill last year to do just that. The Assembly Banking and Finance Committee, chaired by Louis J. Papan (D-Millbrae), is finally scheduled to take up the Senate-passed measure, SB 930, on Monday. The bill would also allow consumers to block unauthorized release of their credit reports.
Too often victims of identity fraud discover the crime only long after the fact, when they are refused credit or when collection agencies go after them for charges racked up by unauthorized use of their credit. If consumers had easy access to their credit reports, they would be able to spot unusual or unauthorized activity sooner and report it.
A study by the California Public Interest Research Group (Calpirg) showed that 29% of credit reports contained serious errors--incorrect delinquencies or accounts that did not belong to the consumer. (Many of these were mistakes, not the result of crime.)
Under last year's changes to the federal Fair Credit Reporting Act, consumers can request a free copy of a credit report under very limited circumstances: if they have been denied credit or are unemployed, indigent or victims of identity theft. Otherwise a credit reporting bureau can charge consumers up to $8 per report unless states stipulate otherwise.
The fee is not the sole obstacle to procuring credit reports. Each of the big three credit reporting companies have different procedures. In some cases, getting a report involves repeated requests or long delays. All of this should be simplified, an action that will probably have to be taken at the federal level.
Consumers should not have to pay to see information about themselves that is sold by credit bureaus. SB 930 is supported by Calpirg, the American Assn. of Retired Persons and various law enforcement and consumer groups. It's a small burden on the credit bureaus to make credit reports more freely available, but it would be a major consumer tool in detecting and stopping identity theft and other frauds.