BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1580|
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THIRD READING
Bill No: AB 1580
Author: Gatto (D) and Irwin (D), et al.
Amended: 6/21/16 in Senate
Vote: 21
SENATE JUDICIARY COMMITTEE: 7-0, 6/14/16
AYES: Jackson, Moorlach, Anderson, Hertzberg, Leno, Monning,
Wieckowski
ASSEMBLY FLOOR: 78-0, 5/12/16 (Consent) - See last page for
vote
SUBJECT: Consumer credit reports: security freezes:
protected consumer
SOURCE: Author
DIGEST: This bill requires a consumer credit reporting agency
to place a security freeze on the credit file of a protected
consumer upon the request of, and submission of specified
information by, the protected consumer's representative, as
specified. This bill defines a protected consumer as any of the
following: an individual who is under 16 years of age at the
time a request for the placement of a security freeze is made;
an incapacitated person or a protected individual for whom a
guardian or conservator has been appointed; or a person under
the jurisdiction of a county welfare department or county
probation department who has been placed in a foster care
setting and is under 16 years of age at the time a request for a
security freeze is made.
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ANALYSIS:
Existing law:
1) Requires consumer credit reporting agencies to adopt
reasonable procedures for meeting the needs of commerce for
consumer credit, personnel, insurance, hiring of a dwelling
unit, and other information in a manner which is fair and
equitable to the consumer, with regard to the
confidentiality, accuracy, relevancy, and proper utilization
of such information. (California Consumer Credit Reporting
Agencies Act, Civ. Code Sec. 1785.1(d); Federal Fair Credit
Reporting Act 15 U.S.C. Sec. 1681(b).)
2) Permits a consumer to place a "security freeze" on his or
her credit report, prohibiting consumer credit reporting
agencies from releasing the consumer's credit report or any
information contained in it unless the consumer expressly
authorizes the release. (Civ. Code Sec. 1785.11.2(a).)
3) Requires a credit reporting agency to place a security
freeze on a consumer's credit report within three business
days after receiving the consumer's request. (Civ. Code Sec.
1785.11.2(b).)
4) Requires a credit reporting agency to send a written
confirmation of the security freeze to the consumer within 10
business days. The credit reporting agency must also provide
the consumer with a unique personal identification number or
password to be used by the consumer when he or she authorizes
the release of his or her information for a specific party or
period of time. (Civ. Code Sec. 1785.11.2(c).)
5) Permits a consumer to allow his or her credit report to be
accessed for a specific party or period of time while a
freeze is in place and requires the consumer to provide
specified information to the credit reporting agency so that
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the freeze may be temporarily lifted. (Civ. Code Sec.
1785.11.2(d).)
6) Requires a credit reporting agency that receives a
consumer's request to temporarily lift a freeze to comply
with that request within three business days. (Civ. Code
Sec. 1785.11.2(e).)
7) Provides that a credit reporting agency may remove or
temporarily lift a freeze only upon the consumer's request or
if the consumer's credit report was frozen due to a material
misrepresentation of fact by the consumer, in which case the
credit reporting agency must notify the consumer before
removing the freeze. (Civ. Code Sec. 1785.11.2(g).)
8) Requires that a security freeze must remain in place until
the consumer requests that it be removed. If a consumer
requests that the freeze be removed and provides specified
information, a credit reporting agency must comply with that
request within three business days of receiving the request
for removal. (Civ. Code Sec. 1785.11.2(j).) Existing law
provides that a credit reporting agency must require proper
identification, as defined, of a consumer making a request to
place or remove a security freeze. (Civ. Code Sec.
1785.11.2(k).)
This bill:
1) Requires a consumer credit reporting agency to place a
security freeze on the credit file or record of a protected
consumer if the agency receives both a request from the
protected consumer's representative for the placement of the
freeze, and specified information showing proof of identity
and authority to act on behalf of the protected consumer.
2) Requires a consumer credit reporting agency to create a
record for a protected consumer when it receives a request
for the placement of a security freeze if the agency does not
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have a credit file pertaining to the protected consumer.
3) Specifies that within 30 days after receiving a request, a
consumer credit reporting agency shall place a security
freeze for the protected consumer. The consumer credit
reporting agency must send written confirmation of the
security freeze to the protected consumer's address on file
within 10 days of the placement of the security freeze.
4) Specifies that unless a security freeze for a protected
consumer is removed, a consumer credit reporting agency shall
not release the protected consumer's credit report, any
information derived from the protected consumer's credit
report, or any record created for the protected consumer.
5) States that in order to remove a security freeze, a
protected consumer or a protected consumer's representative
must submit a request for removal of the security freeze to
the consumer credit reporting agency and provide specified
information showing proof of identity and authority to act on
behalf of the protected consumer.
6) States that a consumer credit reporting agency shall remove
a security freeze for a protected consumer within 30 days
after receiving both the request to remove the freeze and all
required information.
7) Specifies that except as provided, a consumer credit
reporting agency is authorized to charge a reasonable fee,
not exceeding $10, for each placement or removal of a
security freeze for a protected consumer.
8) Excludes certain entities from the above restrictions,
including, among others, a person administering a credit file
monitoring subscription service to which the representative
of the protected consumer has subscribed on behalf of the
protected consumer.
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9) Defines a "protected consumer" as an individual who is any
of the following:
a) Under 16 years of age at the time a request for the
placement of a security freeze is made;
b) An incapacitated person or a protected person for whom
a guardian or conservator has been appointed; or
c) Under the jurisdiction of a county welfare department
or county probation department, has been placed in a
foster care setting, and is under 16 years of age at the
time a request for placement of a security freeze is made.
10)Defines a "representative" as a person who provides to a
consumer credit reporting agency sufficient proof of
authority to act on behalf of a protected consumer. This
bill specifies that for a protected consumer who has been
placed in a foster care setting, "representative" means
either a county welfare department or its agent or designee,
or a county probation department or its agent or designee,
but that it does not mean the foster parent of a protected
consumer who has been placed in a foster care setting.
Background
According to the Federal Trade Commission's (FTC) "Consumer
Sentinel Network Data Book for January - December 2015,"
California had more identity theft complaints-55,305-than any
other state. For every 100,000 people in California, there were
141.3 identity theft complaints. Nationwide, identity theft has
increased more than five-fold during the past 15 years, with the
FTC receiving almost a half-million complaints from consumers in
2015 alone. (FTC, Consumer Sentinel Network Data Book for
January - December 2015 (Feb. 2016)
Page 6
ember-2015/160229csn-2015databook.pdf [as of June 1, 2016].)
Identity theft victims' information can be misused in numerous
ways. One of the most common is the creation of new accounts,
including credit card, utility, or wireless telephone accounts.
But, victims' information can also be used in other, equally
nefarious ways. As the FTC notes:
Once identity thieves have your personal information, they can
drain your bank account, run up charges on your credit cards,
open new utility accounts, or get medical treatment on your
health insurance. An identity thief might even file a tax
return in your name and get your refund. In some extreme
cases, a thief might even give your name to the police during
an arrest. (Federal Trade Commission, Taking Charge: What To
Do If Your Identity Is Stolen (Apr. 2013)
Page 7
Chapter 720, Statutes of 2001].) Freezes placed on credit
reports can be a useful tool in frustrating the ability of
identity thieves to open new lines of credit using another
person's stolen identity. Since that time, at least 46 other
states have followed California's lead and enacted security
freeze legislation, limiting disclosure of consumers' credit
reports. Under current law, security freezes are available to
any consumer with a credit report, but individuals who have
never had credit in their names, such as children, may not have
a credit report on file for which a freeze could be placed.
This bill requires a consumer credit reporting agency to place a
security freeze on the credit file of a protected consumer,
including children under the age of 16, upon the request of, and
submission of specified information by, the protected consumer's
representative.
Comments
According to the author:
Credit freezing is one of the best tools available to prevent
identity theft. Under current law, credit bureaus are not
mandated to, and therefore do not, offer a clear path to
freeze a child's credit record unless the child has already
had his or her credit stolen. Otherwise, the parent must go
through an onerous process to add the child as an authorized
user on an existing credit card, which includes a 60 to 90 day
wait period, provision of notarized identification documents
to credit bureaus, and a confirmation notice. Similar
barriers prevented adults from freezing their own credit
reports until new regulations made the process secure and
easy.
According to a Carnegie Mellon study, children are 50 times
more likely than adults to have their identities stolen.
Child identities are valuable to thieves because children do
not have existing credit files, and parents may not notice
fraudulent activity until the child applies for a student
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loan, a job, or a credit card. Recent security breaches at
Anthem and Premera Blue Cross highlight the fact that
technological advances make identity theft much easier. In
these breaches alone, hackers stole an estimated 19 million
records including names, birth dates, and social security
numbers, many belonging to children.
AB 1580 will allow a parent, legal guardian or conservator to
put a credit freeze in place for a child under the age of 16,
or for an incapacitated individual. To place the freeze, a
parent or representative would directly contact the credit
bureau and submit the request for a credit freeze in a secure
manner. Representatives would authenticate their identity and
prove they can legally act on behalf of the child or
individual. After the request is filed, a protected consumer
record will be created, and credit will be frozen within 30
days. A credit bureau will then be prohibited from releasing
credit information or customer records for that protected
child or individual.
Related/Prior Legislation
AB 1723 (Dodd, 2016), among other things, specifies that a debt
collector shall initiate review of an account within 10 business
days of receiving specified information that a consumer has
become the victim of identity theft and that the debt being
collected is not the responsibility of the consumer. The bill
additionally requires the debt collector to notify, within 10
business days, any consumer credit reporting agency to which the
debt collector furnished adverse information pertaining to a
creditor's account that the account is disputed, and requires
the debt collector to send notice of its determination to the
debtor no later than 10 business days after concluding the
review. The bill is pending in the Senate Judiciary Committee.
SB 641 (Wieckowski, Chapter 804, Statutes of 2015) added a
provision to the Fair Debt Buying Practices Act to provide
consumers, in limited circumstances involving actions brought by
debt buyers, extended time to file a motion to set aside a
default or default judgment and for leave to defend an action
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relating to debt, if the service of summons did not result in
actual notice to the consumer in time to defend the action.
AB 2374 (Hernandez, Chapter 645, Statutes of 2012) prohibited
credit reporting agencies from charging specified consumers any
fee for the initial placement of a security freeze, but
authorized such agencies to charge a fee of up to $5 for
lifting, removing, or replacing a security freeze.
AB 372 (Salas, Chapter 151, Statutes of 2008) permitted a credit
reporting agency to charge a fee of no more than $5 to a
consumer 65 years of age or older and no more than $10 to other
consumers for a request for a security freeze, removal of the
freeze, or temporary lifting of the freeze for a period of time
or for a specific party.
AB 2043 (Banking and Finance Committee, Chapter 521, Statutes of
2006) authorized specified business entities that become the
victims of identity theft to utilize debt relief protections
available to natural persons who are victimized by identity
theft.
AB 1294 (Wiggins, Chapter 287, Statutes of 2003) required a debt
collector to stop collecting a consumer's debt if an alleged
debtor provides the collector with specified information showing
that the debtor is a victim of identity theft, as specified.
SB 168 (Bowen, Chapter 720, Statutes of 2001) gave California
consumers the right to place a freeze on their credit reports,
which, while in place, prohibits a credit reporting agency from
releasing the consumer's credit report without the express
authorization of the consumer.
AB 156 (Murray, Chapter 768, Statutes of 1997) formally
recognized identity theft as a crime, providing that it is a
misdemeanor for a person to willfully obtain personal
identifying information of another and use that information to
obtain, or attempt to obtain, credit, goods, or services in the
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name of another person without the consent of that person.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified6/14/16)
California Attorney General Kamala Harris
AARP California
California District Attorneys Association
California Public Interest Research Group
Common Sense Kids Action
Consumer Attorneys of California
National Association of Social Workers, California Chapter
Privacy Rights Clearinghouse
Professional Fiduciary Association of California
Sacramento County District Attorney
Ventura County Sheriff's Office
OPPOSITION: (Verified6/14/16)
None received
ASSEMBLY FLOOR: 78-0, 5/12/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,
Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Calderon,
Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper,
Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines,
Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,
Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger
Hernández, Holden, Irwin, Jones, Kim, Lackey, Levine, Linder,
Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,
Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,
Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago,
AB 1580
Page 11
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Williams, Wood, Rendon
NO VOTE RECORDED: Burke, Jones-Sawyer
Prepared by:Tobias Halvarson / JUD. / (916) 651-4113
6/22/16 15:14:51
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