BILL ANALYSIS Ó
AB 1658
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Date of Hearing: May 7, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1658 (Jones-Sawyer) - As Amended: April 22, 2014
Policy Committee: Human
ServicesVote:7 - 0
Banking and Finance 11 -
0
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill specifies the process for placement of a credit freeze
for a child in foster care. Specifically, this bill:
1)Requires that upon entry into foster care of a child under 16
years of age, or for a child in foster care placement on their
16th birthday, a county welfare agency (CWA) or county
probation department shall notify each of the three major
credit reporting agencies (CRAs) that the child is in foster
care to determine whether the child has an active consumer
credit report.
If the child has a report, the welfare agency or probation
department shall immediately request the CRAs place a freeze
on the child's report and work with the Department of
Justice's Enforcement and Protection Unit to resolve any
credit irregularities or negative actions on the credit
report.
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2)Provides that, following notification from a welfare agency or
probation department that a child is in foster care, the CRAs
shall notify the welfare agency or probation department
whether the child has an active consumer credit record. If the
child has a report, the CRAs must place a security freeze on
the child's credit report. If the child does not have a
report, the CRAs must preclude the child's information from
being used to create a credit account in his or her name.
3)Specifies that no later than July 1, 2015, the Department of
Social Services (DSS) shall, in consultation with the
Administrative Office of the Courts, the Department of
Justice's Privacy Enforcement and Protection Unit, the
California Welfare Directors Association, the County Probation
Officers of California, and others, issue instructions to
counties regarding lifting a credit freeze, and identifying
required processes and best practices for identifying and
resolving credit irregularities or negative actions on a
foster child's credit report.
FISCAL EFFECT
1)On-going administrative costs to DSS of approximately $2.9
million (GF) to handle cases. The affected foster care
caseload is approximately 41,000 in 2014-15. DSS indicates it
takes a social worker about one hour to handle/freeze an
account.
2)Unknown costs to cover fees charged by credit reporting
agencies to freeze credit reports. This fee is capped in
statute at $10 per agency. Assuming that 5% of the reports are
frozen, costs would be approximately $60,000 (GF), $30 per
child x 2,050 cases.
3)On-going costs in the range of $140,000 to DSS associated with
unfreezing credit accounts, plus $60,000 in fees to the credit
reporting agencies. It is unclear in the bill who would pay
the fee for unfreezing the reports.
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COMMENTS
1)Purpose . This bill is intended to prevent, and if necessary
mitigate, the impact of identity theft on children in the
foster care system. AB 1658 requires county welfare agencies
or county probation departments to determine if a minor has a
credit record and if so, ask the credit reporting agencies to
place a freeze on that record. If the child does not have a
record they would request the credit reporting agencies to
prevent any credit record from being opened for the child.
2)Child Identity Theft . Children's personal information, such as
a Social Security number, is valued by identify thieves
because there is typically no credit file associated with the
data. Thieves can easily pair the information with any name
and date of birth to create a false identity, using it to
purchase homes and automobiles, open credit card accounts and
obtain driver's licenses. The damage can go undiscovered for
years.
Children in foster care are at an even greater risk than
their peers to become victims of identity theft. In 2011, the
California Office of Privacy Protection, now known as the
Department of Justice's Privacy Enforcement and Protection
Unit, released a report of a year-long pilot project in Los
Angeles County that conducted credit checks on 2,110 foster
youth between the ages of 16 and 17 years of age. It was
discovered that 104 children had 247 financial accounts of
varying types, credit cards, bank accounts, utility accounts,
cellular phone and cable contracts, etc., opened in their
name. Several children had auto loans and one was identified
as having a $217,000 mortgage listed in the child's name.
Fortunately, the project also worked to resolve all 247
accounts and cleared the credit of all 104 children who
participated in the pilot.
3)Previous legislation . SB 1521 (Liu), Chapter 847, Statutes of
2012, brought California into compliance with the Child and
Family Services Improvement and Innovation (CFSII) Act of 2011
which requires CWAs to annually request a consumer credit
report for a youth 16 years of age and older who is in foster
care.
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Analysis Prepared by : Jennifer Swenson / APPR. / (916)
319-2081