BILL ANALYSIS Ó
AB 2374
Page 1
ASSEMBLY THIRD READING
AB 2374 (Roger Hernández)
As Amended May 14, 2012
Majority vote
BANKING & FINANCE 7-3 JUDICIARY 7-3
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|Ayes:|Eng, Charles Calderon, |Ayes:|Feuer, Atkins, Dickinson, |
| |Gatto, | |Huber, Monning, |
| |Roger Hernández, Lara, | |Wieckowski, |
| |Perea, | |Bonnie Lowenthal |
| |Torres | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Achadjian, Harkey, |Nays:|Wagner, Gorell, Jones |
| |Morrell | | |
| | | | |
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SUMMARY : Prohibits a consumer credit reporting agency from
charging any fee upon a consumer 65 years of age or older for
placing security freezes.
EXISTING FEDERAL LAW requires every credit reporting agency to
disclose to a consumer, upon request, specific information
related to that consumer's credit report, as well as, directions
on how to contest information contained within the report.
(Fair Credit Reporting Act US Code, Title 15, 1681 et seq.)
EXISTING STATE LAW :
1)Establishes the California Office of Privacy Protection in
2001, which provides individuals and businesses with
information and assistance on ever evolving privacy topics
such as identity theft, online child safety, financial
privacy, cyber security and mobile device privacy. The role of
this office is to receive complaints from individuals
concerning a person obtaining, compiling, maintaining, using,
disclosing, or disposing of personal information in a manner
that may be potentially unlawful or violate a stated privacy
policy relating to that individual, and provide advice,
information, and referral, where available. The office also
needs to provide information to consumers on effective ways of
handling complaints that involve violations of privacy-related
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laws, including identity theft and identity fraud. If
appropriate local, state, or federal agencies are available to
assist consumers with those complaints, the office shall refer
those complaints to those agencies. (Government Code Section
11549.5-11549.10)
2)Allows a consumer reporting agency (CRA) to charge a consumer
who is 65 years of age or older and who has provided
identification confirming his or her age a fee not to exceed
$5 for placement of each freeze, the removal of the freeze,
the temporary list of the freeze for a period of time, or the
temporary lift of the freeze for a specific party. (Civil
Code Section 1785.11.2 (m))
3)Allows a consumer to place a security freeze on his or her
credit report by making a written request by mail to a
consumer CRA. (Civil Code Section 1785.11.2(a))
4)Defines "security freeze" as a notice placed in a consumer's
credit report at the consumer's request and, subject to
certain exceptions, prohibits the credit reporting agency from
releasing the credit report or any information from it without
the consumer's express authorization. (Civil Code Section
1785.11.2)
5)Requires the CRA to place a security freeze on the consumer's
credit report no later than three days after receiving a
request, and within 10 business days must send the consumer
written confirmation of the freeze along with a unique
personal identification or password to be used by the consumer
when authorizing the release of his or her credit for a
specific party or period of time. (Civil Code Section
1785.11.2(b) (c))
6)Allows a consumer to request a temporary lift of a security
freeze, if certain conditions are met. A CRA that receives a
request for a temporary lift of a security freeze is required
to do so within three business days of receiving the request.
(Civil Code Section 1785.11.2(d) (e) (g))
7)Provides that a CRA may develop procedures involving the use
of telephone, fax, the Internet, or other electronic media to
receive and process a consumer request to temporarily lift a
security freeze in an expedited manner. (Civil Code Section
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1785.11.2(f))
8)Requires that, if a consumer requests a security freeze, the
CRA must inform the consumer of the process for placing and
temporarily lifting a freeze, and the process for allowing
access to information from the consumer's credit report for a
specific party or period of time while a freeze is in place.
(Civil Code Section 1785.11.2(i))
9)Allows, except as specified, a CRA to charge a fee of no more
than $10 to a consumer for each freeze, removal of the freeze,
or temporary lift of the freeze for a period of time. (Civil
Code Section 1785.11.2(m))
10)Prohibits a fee from being charged to place a security freeze
for a victim of identity theft who presents a valid police
report or valid Department of Motor Vehicles (DMV)
investigative report. (Civil Code Section 1785.11.2(m))
11)Requires that whenever a CRA provide a written disclosure to
a consumer that it must also include a notice to a consumer of
their rights to receive and correct errors on their credit
report, as well as, information on placing a security freeze
and credit alert on their credit file. (Civil Code Section
1785.15)
FISCAL EFFECT : None
COMMENTS : The following states do not charge fees for security
freezes to those 65 or older: Illinois, Georgia, Florida,
Indiana, Louisiana, North Carolina, New Mexico, Oklahoma,
Pennsylvania, Washington, South Carolina, and Rhode Island.
Other states have fees ranging from $3 to $20 to place security
freezes. Currently, California charges those 65 or older a fee
of $5 to place, lift or remove a security freeze. All others
are charged a fee of $10.
In California, consumers have the right to put a "security
freeze" on their credit file which can help prevent identity
theft. A security freeze means that the consumer's file cannot
be shared with potential creditors. Most businesses will not
open credit accounts without first checking a consumer's credit
history. If credit files are frozen, even someone who has the
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consumer's name and Social Security number would most likely not
be able to get credit in the consumer's name.
Current law provides that a security freeze is free to identity
theft victims who have a police report of identity theft. For
those not an identity theft victim and under 65 years of age, it
will cost $10 to place a freeze with each of the three credit
bureaus. That is a total of $30 to freeze files. For those not
an identity theft victim and 65 years of age or older, it will
cost $5 to place a freeze with each of the three credit bureaus.
That is a total of $15 to freeze files.
Security freezes are designed to prevent a CRA from releasing a
credit report without the consumer's consent. Using a security
freeze to take control over who is allowed access to the
personal and financial information in a file may delay,
interfere with or prohibit the timely approval of any subsequent
request or application the consumer makes regarding a new loan,
credit, mortgage, insurance, government services or payments,
rental housing, employment, investment, license, cellular
telephone, utilities, digital signature, Internet credit card
transaction or other services, including an extension of credit
at point of sale.
When a consumer places a security freeze on their file, they
will be provided a personal identification number or password to
use if the consumer chooses to remove the security freeze from
their file or authorize the temporary release of their credit
report for a specific person or period after the security freeze
is in place. To provide that authorization, the consumer must
contact the CRA and provide all the following: sufficient
identification to verify identity, personal identification
number or password provided by the CRA, and a statement that the
consumer chooses to remove the security freeze from their file
or that the consumer authorizes the CRA to temporarily release
the consumer report.
Identity theft : Identity theft is taking someone else's
personal information and using it for an unlawful purpose.
According to a report called the "2011 Identity Fraud Survey
Report" by Javelin Strategy and Research, "there were 8.1
million U.S. adults who were victims of identity theft in 2010.
That represents 3.5% of adults, including about a million
Californians. The total cost of identity theft in 2010 was $37
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billion. The average victim spent $631 and 33 hours to resolve
the problem and clear up records. Victims come in all ages. In
2010, the 25-34 year old group experienced the highest rate of
identity theft and spent the most to clear it up, averaging
$1,471. Those over 65 years old had the lowest rate and spent
the least, $137."
Identity thieves do many things in a victim's name, from using a
credit card account to opening new accounts, taking out an auto
loan, getting medical services, or even committing a crime and
creating a criminal record.
According to the Consumer Sentinel Network, the largest number
of identity theft complaints in 2011, in the United States, came
from the ages 20-29 with 23%. The two ages with the least
amount of fraud complaints came from those 19 and younger with
8% and 70 and over with 6%.
In 2011, California ranked third behind Florida and Georgia, for
the amount of identity theft complaints received from consumers.
California received 38,607 identity theft complaints in 2011.
Need for the bill : According to the author, identity thieves
target seniors as they are much less likely to monitor their
credit files and are also less likely to detect if a fraudulent
account has been opened in their name. This is because seniors
do not typically open new credit accounts and therefore have
little need to check their credit reports.
Analysis Prepared by : Kathleen O'Malley / B. & F. / (916)
319-3081
FN: 0003618