Politics & Government

Pay to protect your credit information from ID thieves? Some lawmakers want to make it free

Lee Cutbirth received two unpleasant surprises last fall.

The first was a notice that he owed more than $1,000 in overdue charges for a credit card he hadn’t opened. The second was a bill for $42 to freeze his credit information, a step he took to prevent the identity thief from wreaking more financial havoc.

“It's our information,” the Battleground resident said recently. “Why should we have to pay to protect it?”

Some Washington lawmakers also question why residents must pay fees to freeze their credit — a strategy to mitigate damage from identity theft — when often they are not to blame for their compromised data. Two bills in the Legislature would eliminate credit-freeze fees many state residents have been forced to pay in today’s era of data insecurity.

More than 70 data breaches affecting Washingtonians occurred in 2017, according to data from the Washington State Office of the Attorney General.

The largest of those breaches happened last summer when the personal and financial information of more than 145 million Americans — and possibly millions of Washingtonians — was compromised in a hack of the credit reporting agency Equifax.

Sen. Mark Mullet, a Democrat from Issaquah sponsoring one of the bills, pointed to the magnitude of the breach as the tipping point in addressing credit-freeze fees.

“When it’s somebody else’s fault, it just seems ridiculous they’re having to pay this many fees,” Mullet said. “It’s one thing if they posted their address and Social Security number on Facebook, but they didn’t do that.”

His proposed legislation — Senate bill 6018 — passed the Senate with near unanimous support. An identical but separate bill passed out of the House last month. Both ask to eliminate credit-freeze fees and study the effect on industry. It is unclear which bill will be sent to the governor’s desk should they pass their respective floors, or if they will be combined, according to state Sen. Joe Fain, a Republican from Auburn.

“We want to make sure people have all the tools to take immediate control of that part of their life,” said Fain, who co-sponsors the Senate version of the bill. “If there are barriers to that then that just means the people most at risk of being impacted by a credit problem are going to be in the worst position to be able to respond to it.”

Equifax declined to comment on the nature of the bill.

A company spokesperson said in an email to The News Tribune and The Olympian that Equifax is “cooperating and engaging constructively with state and federal lawmakers.”

The trade association representing Equifax and other national credit-reporting agencies said it believes the credit-freeze fees are justified and that a company should not be held responsible for the actions of hackers.

“We certainly understand why legislatures might want to zero out the fee for credit freezes, but credit bureaus provide freezes to consumers as a service, and we invest a lot of time and money to create and maintain that system,” said Eric J. Ellman, the senior vice president for public policy and legal affairs with the Consumer Data Industry Association.

Lawmakers question whether credit-reporting companies profit from charging for the freezes — normally $10 at Equifax.

Equifax will waive the fee until June should customers present a police report or other documentation of their identity theft. TransUnion and Experian, the two other national credit-reporting agencies, have not lifted their freeze fees and did not respond to a request for comment.

Because each bureau stores similar information, victims of identity theft often have to freeze their information at all three in the event one has been breached. That’s why Cutbirth paid $42. It’s also why proponents of the bill said they believe the costs can become onerous should someone freeze their information, decide to unfreeze it to make a major purchase and then refreeze it afterward.

“From a consumer standpoint, it feels a little bit like [airline] baggage fees,” state Sen. Patty Kuderer, a Democrat from Bellevue, said in a public hearing on the bill last month.

State Sen. Phil Fortunato, a Republican from Auburn who voted against the Senate bill, said he believes removing credit-freeze fees would be an unnecessary regulation of the credit-reporting industry.

Rather than eliminating the fees, Fortunato suggested in an email people set up fraud alerts which are free and “sen[d] a message to do a more in-depth verification that the person applying for credit is the actual person.”

Mullet, the bill’s sponsor, likened fraud alerts to putting a Band-Aid on the issue of data breaches. He’d rather see the freeze fee removed — and fast.

“If you want to provide some relief for consumers... just get this thing signed,” Mullet said. “The sooner [the governor] signs it, the sooner the fee goes away.”