New Law Helps Seniors Prevent Identity Theft

The National Center for Law & Elder Rights (NCLER) has released a fact sheet explaining a new law that allows consumers to place freezes on their credit information for free. The fact sheet, entitled "New Law Provides Free Security Freezes and Increased Fraud Alert Protection," explains that "[o]n May 24, 2018, the President signed Public Law 115-174 into law. Section 301 of Public Law 115-174 amends the Fair Credit Reporting Act, to establish a new federal right for consumers to implement a security freeze of their credit file." (citations omitted).  

The NCLER fact sheet explains:

A security freeze is the single most effective tool to minimize the risk of identity theft. Identity thieves often target unsuspecting older adults, luring them into giving out personal information. The scammers then use this information to steal the older adults’ identity and ruin a lifetime of positive credit.  As a general rule, security freezes allow a consumer to prohibit the release of their credit report. When a thief applies for credit in the victim’s name, often the intended creditor will attempt to obtain the victim’s credit report or score. The idea behind a security freeze is that, when the credit reporting agency returns no information or a notice that the consumer has frozen the file, the creditor will deny the thief’s application, thereby thwarting the thief and protecting the consumer’s credit reputation as well as the business interests of the creditor.

The new law permits the creation, temporary lifting (or “thaw)” and permanent removal of security freezes from the nationwide consumer reporting agencies. The security freezes are limited to parties seeking the consumer’s information for credit purposes, and do not apply to parties who seek the report for employment, insurance, or tenant-screening purposes. Freezes also do not apply to existing creditors or their agents conducting an account review, collecting on a financial obligation owed them, or seeking to extend a “firm offer of credit” (i.e.,pre-screening). 

The new law also extends the length of  fraud alerts from three (3) months to a full year.  A fraud alert notifies users that the consumer has been or may become a victim of fraud or identity theft. Extending the fraud alert better protects the consumer,

In addition, the new law federalizes or preempts state credit freeze laws.  "The legislation’s preemption extends to any state requirement or prohibition with respect to subject matter regulated by the statute’s provisions relating to security freezes. For example, some state statutes are stronger than the new federal standards by allowing consumers to freeze access to credit reports for employment or insurance purposes." There is also a provision covering when a fiduciary needs to secure a freeze for an individual who is incapacitated.

The new legislation should help seniors avoid identity theft.