BILL ANALYSIS �
AB 1658
Page A
Date of Hearing: April 8, 2014
ASSEMBLY COMMITTEE ON HUMAN SERVICES
Mark Stone, Chair
AB 1658 (Jones-Sawyer) - As Amended: March 17, 2014
SUBJECT : Foster care: consumer credit reports
SUMMARY : Requires any child under the age of 17 placed into
foster care to have a freeze placed on his or her credit report.
Specifically, this bill :
1)States the intent of the Legislature that a security freeze be
placed on the credit reports for all minor dependents in
foster care under the age of 17 to protect them from identity
theft and financial crimes through the unauthorized usage of
their credit.
2)Requires a county welfare agency (CWA) to notify every
consumer credit reporting agency of the placement of a minor
dependent under age 17 into foster care at the time of
placement.
3)Requires a consumer credit reporting agency to place a freeze
on a minor dependent's credit report following notification by
a CWA that the minor has been placed into foster care.
4)Limits the application of a credit report freeze to minors who
are under the age of 17 and under the dependency jurisdiction
of the court.
5)Exempts check services companies, fraud prevention services
companies, or deposit account information service companies,
as specified, from the requirements of the bill.
EXISTING LAW
1)Requires a CWA to request a consumer credit report from each
of the three major credit reporting agencies on behalf of each
youth who is under the jurisdiction of the juvenile court on
his or her 16th birthday. (WIC 10618.6(a))
2)Requires a CWA or county probation department (CPD) to assist
any nonminor dependent (NMD) with requesting a consumer credit
report from each of the three major credit reporting agencies.
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(WIC 10618.6(b))
3)Requires county social workers and county probation officers
to ensure that minors in foster care and NMDs receive
assistance with interpreting their credit report and
addressing any inaccuracies with the report. (WIC 10618.6(c))
4)Exempts social workers and probation officers from providing
direct assistance with interpreting or resolving inaccuracies
of a minor in foster care or NMD's consumer credit report.
(WIC 10618.6(c))
5)Authorizes CWAs, CPDs and the Department of Social Services to
release necessary information to a credit reporting agency for
the purposes of requesting a consumer credit report on behalf
of minors in foster care. (WIC 10618.6(d))
FISCAL EFFECT : Unknown.
COMMENTS :
Maintaining the Family : Historically, it has been the stated
policy of California that when a child is removed from the home,
first preference should be given to placing the child with
another parent, or with his or her relatives whenever possible
and appropriate. This has helped to preserve and strengthen the
social bedrock of our society, by keeping families together and
reducing society's reliance on its social welfare system.
Child Welfare Services : The purpose of California's Child
Welfare Services (CWS) system is to provide for the protection
and the health and safety of children. Within this purpose, the
desired outcome is to reunite children with their biological
parents, when appropriate, to help preserve and strengthen
families. However, if reunification with the biological family
is not appropriate, children are placed in the best environment
possible, whether that is with a relative, through adoption, or
with a guardian, such as a nonrelated extended family member, as
specified.
In the case of children who are at risk of abuse, neglect or
abandonment, county juvenile courts hold legal jurisdiction and
children are served by the CWS system through the appointment of
a social worker. Through this system, there are multiple stages
where the custody of the child or his or her placement are
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evaluated, reviewed and determined by the judicial system, in
consultation with the child's social worker to help provide the
best possible services to the child.
At the time a child is identified as needing child welfare
services and is in the temporary custody of a social worker, the
social worker is required to identify whether there is a
relative or guardian to whom a child may be released, unless the
social worker believes that the child would be at risk of abuse,
neglect or abandonment if placed with that relative or guardian.
(Welfare and Institutions Code Sections 306 and 309)
The Welfare and Institutions Code also lays out the conditions
under which a court may deem a child a dependent or ward of the
court, including when the parent has been incarcerated or
institutionalized and is unable to arrange for care for the
child, such as placement with a known relative or nonrelative
extended family member (NREFM). If the child is deemed a
dependent or ward of the court, the court may maintain the child
in his or her home, remove the child from the home but with the
goal of reunifying the child with his or her family, or identify
another form of permanent placement. Unless the child is unable
to be placed with the parent, the court is required to give
preference to a relative of the child in order to preserve the
child's association with his or her family. Associated with the
placement, the assigned social worker shall develop a case plan
for the child, which outlines the placement for the child, sets
forth services necessary for the child, and outlines the
provision of reunification services, if necessary and
appropriate.
Foster youth and identity theft : Identity theft is a growing
crime that is typically not discovered until after the person
whose identity is stolen discovers that fraudulent or criminal
activity has been conducted in using their name and personal and
financial information. Identity theft is more common among
children and even more common among children in foster care. A
2011 study conducted by Carnegie Mellon University found that
children are far more likely to be targeted for identity theft
for their unused social security numbers. Specifically, the
report found that of 42,232 children polled, over 10%, or 4,311
of them, were found to have had their identity stolen. When
compared to the rate of identity theft among adults, children in
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this study were 51% more likely to experience identity theft.<1>
Further exacerbating this finding is the fact that parents and
children often do not find out the youth is a victim of identity
theft until he or she applies for a job, opens a financial
account, or is notified by law enforcement that his or her
personal information has been stolen.
However, children in foster care who rely upon the state's child
welfare system (CWS) to provide for their health and safety 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. The pilot
project conducted credit checks on 2,110 foster youth between
the ages of 16 and 17 years of age. It was discovered that 104
children were found to have 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 were found to have 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.
Providing foster youth access to their consumer credit reports :
In California, the state has adopted several legislative
measures to help address the risks of identity theft among
children in foster care. In 2006, the state adopted AB 2985
(Maze), Chapter 387, Statutes of 2006, which required CWAs to
obtain the consumer credit report for a youth in foster care
when he or she turns 16 years of age. It also required a CWA to
provide assistance to a foster youth if his or her credit report
was found to have any inaccuracies or negative findings. It was
later amended by AB 106 (Committee on Budget) Chapter 32,
Statutes of 2011, the human services budget trailer bill, which
clarified that, beginning July 1, 2013 CWAs were required to
request rather than obtain a foster youth's credit report when
he or she turns 16 years of age. However, soon after AB 106 was
signed into law, it was preempted by the federal Child and
Family Services Improvement and Innovation (CFSII) Act of 2011.
---------------------------
<1> Child Identity Theft: New Evidence Indicates Identity
Thieves are Targeting Children for Unused Social Security
Numbers. Richard Power, Distinguished Fellow; Carnegie Mellon
CyLab. April 2011.
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This Act requires CWAs to annually request a consumer credit
report for a youth 16 years of age and older who is in foster
care. Most recently, SB 521 (Liu), Chapter 847, Statutes of
2012, was adopted by the state to bring California statute into
compliance with the CFSII Act.
In implementation of this requirement, DSS issued All County
Letter (ACL) Number 14-23, which describes the process by which
CWAs may request a foster youth's credit report and how they can
provide assistance in resolving any negative findings in the
report. Specifically, DSS has reached an agreement with the
three major credit reporting agencies (CRA), Equifax, Experian,
and TransUnion, to create an electronic batch process for CWAs
to access the credit records of foster youth. However, as of
the issuance of the ACL dated February 28, 2014, five counties
have not opted into accessing foster youth credit records
through this process. In the case of counties that do not
receive a batch file, they are required to comply with separate
request procedures imposed by each of the three major CRAs. In
the case of Equifax and TransUnion, CWAs are required to open an
electronic account and pay a $500 fee. For Experian, CWAs must
submit a formal letter requesting the report, which must include
a copy of the court's dependency order with sensitive
information redacted.
Potential implementation challenges with state and federal law :
This bill seeks to require CWAs to notify all credit reporting
agencies of a child's status in foster care for the purpose of
placing a freeze on the consumer credit of all youth who are
under the jurisdiction of the juvenile court, regardless of
their length of time in foster care. Placing a freeze on the
consumer credit of children in foster care would increase the
protections afforded to foster youth and prohibit any person
other than the youth from accessing their credit.
However, it is unclear whether requiring a freeze would achieve
the author's intent. In order for a freeze to be placed on a
consumer's credit, a person must first have applied for a credit
account; one is not established automatically. Regarding
children, if a child, especially a foster youth, is found to
have a credit report, it should automatically raise concerns as
to whether a person is using his or her identity fraudulently.
The placement of a credit freeze is a secondary action to
discovering whether a foster youth has a credit report.
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If implemented as currently written, this bill would also make
it difficult for the state to comply with the federal CFSII Act.
Should a credit freeze be placed, it would render the ability
to acquire a youth's consumer credit report nearly impossible
because the freeze would render the youth's credit report
inaccessible. It is also unclear when the freeze could be
lifted and who would have the authority to lift the freeze;
whether it is at the request of the youth, at the time of the
youth's emancipation from foster care, if the foster youth
becomes a nonminor dependent under extended foster care, by the
youth's social worker, his or her parent or guardian, or by
order of the court. Additionally, if a court allows a parent to
retain care, custody, and control rights over his or her child
while the child is in foster care, it is unclear whether the
bill, as proposed, would allow the parent to lift the freeze.
RECOMMENDED AMENDMENTS :
This bill seeks to place a new section into Part Four of the
Social Services Division of the WIC requiring CWAs to notify the
three major CRAs of a child's entry into foster care, presumably
for purposes of requesting that a freeze be placed upon the
foster youth's consumer credit record. However, this amendment
should be made consistent with existing statute relating to
credit records of foster youth and appropriately reference the
section of the Civil Code this bill seeks to establish, which
would govern the responsibilities of CRAs on this matter.
This bill should also be amended to allow a thoughtful
discussion and development of the practices and procedures by
which a foster youth is identified to have a credit record, how
and by whom a credit freeze may be placed and lifted, as well as
how any credit irregularities or negative findings are resolved.
Given the many potential circumstances under which a foster
youth whose credit record has been frozen should have his or her
credit record unfrozen, it would be burdensome to list them in
statute. Rather, it should be done through a thoughtful and
deliberative process, such as a stakeholders process, which
includes current and former foster youth, to determine how, by
whom and under what circumstances a foster youth's credit freeze
is lifted.
Specifically, the amendments would do the following:
Amendment #1 - Amend Section 1 of the bill to read:
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Civil Code 1785.11.7
1785.11.7. (a) In furthering the policy of the State of
California that children in foster care have the right to a life
that is free from abuse pursuant to Section 10618.6 of the
Welfare and Institutions Code, it is the intent of the
Legislature that, a security freeze shall be put into effect on
the credit report for all minor dependents in foster care under
17 years of age to protect them from identity theft and
financial crimes through the unauthorized usage of their credit.
(b) Following following notification by a county welfare or
probation department agency of the placement of a minor
dependent or nonminor into foster care, a consumer credit
reporting agency, upon request of the county welfare or
probation department, shall do the following:
(1) Notify the county welfare or probation department of
whether the minor or nonminor dependent has an active
consumer credit record.
(2) place Place a security freeze on the minor dependent's
credit report pursuant to Section 1785.11.2.
(3) If a minor dependent is not found to have an active
consumer credit report, preclude the minor dependent's
information from being used to create a credit account in
his or her name.
(c) This section shall only apply to minor dependents who are
under 17 years of age.
(d) This section does not apply to a check services company, a
fraud prevention services company, or a deposit account
information service company in accordance with Section
1785.11.6.
Amendment #2 - Delete Section 2 of the bill.
Amendment #3 - Amend Section 10618.6 of the WIC to read:
10618.6. (a) (1) The Legislature finds and declares that
children in foster care are at greater risk of identity
theft and having negative findings placed on their consumer
credit report due to the unlawful actions of others. The
Legislature further recognizes that a child's consumer
credit report is more vulnerable while in foster care, and
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a child in foster care is more likely to not discover he or
she is a victim of identity theft until he or she applies
for a job, opens a financial account, or is notified by law
enforcement that his or her personal information has been
stolen.
(2) In order to help reduce the rates by which a child
in foster care experiences identity theft, a county
welfare department or county probation department
shall, for youth under the age of 16, who do not fall
under the federal Child and Family Services
Improvement and Innovation Act of 2011 requirement
that a consumer credit report be requested on their
behalf when they turn 16 and annually thereafter while
in foster care, upon a child's entrance into foster
care, do the following:
(A) Notify each of the three major credit
reporting agencies that the child is in foster
care.
(B) Discover whether the foster youth has an
active consumer credit report.
(C) In instances where a foster youth is found to
have an active report, the county welfare
department shall, no later than July 1, 2015, do
the following:
(i) For foster youth discovered to have an
active consumer credit report, immediately
request that the credit reporting agencies
place a freeze on the youth's report.
(ii) Work with the Department of Justice's
Privacy Enforcement and Protection Unit to
resolve any credit irregularities or
negative actions that have been discovered
on the foster youth's credit report.
(D) For foster youth who have not been found to
have an active consumer credit report, provide
the credit reporting agencies with information
necessary to preclude a foster youth from having
a credit account created in his or her name.
(b) No later than July 1, 2015, the department 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,
youth-based organizations made up of current and former
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foster youth, and consumer, privacy and foster youth
advocacy organizations, develop and issue via an all-county
letter that:
(1) Provides the circumstances under which a freeze of
a foster youth's credit report is lifted, including
when the youth exits, emancipates, or runs away from
foster care, and by whom the freeze can be lifted.
(2) Provides how a county welfare or probation office
shall notify the three major credit reporting agencies
of a foster youth's ability to reacquire the ability
to develop credit.
(3) Identifies required processes and best practices
in the identification and resolution of credit
irregularities or negative actions on a foster youth's
credit report, including but not limited to entering
the information into the foster youth's case plan and
notification of the juvenile court, minor's counsel,
and other adults responsible for the youth's care, as
necessary.
(c) Pursuant to the federal Child and Family Services
Improvement and Innovation Act of 2011, when When a child
in a foster care placement reaches his or her 16th
birthday, and each year thereafter, while the child is
under the jurisdiction of the juvenile court, the county
welfare department, county probation department, or if an
automated process is available, the State Department of
Social Services, shall request a consumer credit disclosure
from each of the three major credit reporting agencies,
pursuant to the free annual disclosure provision of the
federal Fair Credit Reporting Act, on the child's behalf,
notwithstanding any other law.
(1) If a minor dependent is found to have an active
consumer credit report, the county social worker or
probation officer shall immediately notify the three
major credit reporting agencies and request the
placement of a freeze on the report, unless the minor
dependent declines.
(2) If a minor dependent is not found to have an
active consumer credit report, the county social
worker or probation officer shall provide the credit
reporting agencies with information necessary to
preclude a foster youth from having a credit account
created in his or her name, unless the minor declines.
(3) If a nonminor dependent is found to have an active
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consumer credit report, the county social worker or
probation officer, pursuant to the requirements of
this subdivision, shall ensure that the nonminor
dependent receives assistance with the placement of a
freeze on his or her credit report.
(b) (d) For a nonminor dependent, the county welfare
department or county probation department shall assist the
young adult, on a yearly basis while the nonminor dependent
is under the jurisdiction of the juvenile court, with
requesting the consumer credit disclosure from each of the
three major credit reporting agencies, pursuant to the free
annual disclosure provision of the federal Fair Credit
Reporting Act.
(c) (e) Pursuant to subdivision (c), the The county social
worker or county probation officer shall ensure that the
child or nonminor dependent receives assistance with
interpreting the consumer credit disclosure and resolving
any inaccuracies. The assistance may include, but is not
limited to, referring the youth to a governmental or
nonprofit agency that provides consumer credit services.
Nothing in this section requires the social worker or
probation officer to be the individual providing the direct
assistance with interpreting the consumer credit disclosure
or resolving the inaccuracies.
(d) (f) Notwithstanding any other law, in order to request
a consumer credit disclosure for youth described in
subdivision (a) pursuant to this section, the county
welfare department, county probation department, or if an
automated process is available, the State Department of
Social Services is authorized to release necessary
information to a credit reporting agency.
DOUBLE REFERRAL . This bill has been double-referred. Should
this bill pass out of this committee, it will be referred to the
Assembly Banking and Finance Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
American Federation of State County and Municipal Employees
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(AFSCME)
City of Los Angeles
Common Sense Media
National Association of Social Workers, CA Chapter (NASW-CA)
Western Center on Law and Poverty
Opposition
None on file.
Analysis Prepared by : Chris Reefe / HUM. S. / (916) 319-2089