Mortgage

38 states call on Experian and TransUnion to drop credit freeze fees in wake of Equifax breach

Some states already prohibit credit reporting agencies from charging freeze fees

Equifax may be offering one year of credit file monitoring and identity theft protection in the wake of the credit reporting agency’s massive data breach, which exposed the personal information of 145.5 million consumers, but more than 75% of the states want the rest of the major credit reporting agencies to do more to protect consumers.

Earlier this week, the attorneys general for 38 states sent letters to Experian and TransUnion, calling on the credit reporting agencies to stop charging consumers to freeze their credit.

Each state has different rules around credit freezes, but in some states, it costs $10 to place a credit freeze on their account and another $10 if they want to lift the freeze.

Other states prohibit the credit reporting agencies from charging fees for credit freezes, but the 38 state attorneys general want each of the big three credit reporting agencies to drop those fees altogether.

“Illinois residents are struggling to protect themselves from potential identity theft and are rightly angry that they must pay $10 to each credit reporting agency to place a credit freeze and another $10 every time they want to temporarily lift the freeze,” Illinois Attorney General Lisa Madigan, who led the effort, said in a release.

“The credit reporting agencies profit by selling consumers’ information, and they have a responsibility to protect that same information,” Madigan continued. “They need to allow consumers to freeze their credit without a charge or hassle.”

Joining Illinois in sending the letter were the attorneys general of Arkansas, Colorado, Delaware, District of Columbia, Florida, Hawaii, Idaho, Iowa, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming.

“For the most part, consumers do not choose to do business with (credit reporting agencies), yet they are at CRA’s mercy for data security and accuracy of their credit report,” the state AGs say in the letter.

“We have heard from our consumers that they are outraged that they should have to pay a company with which they do not choose to do business in order to protect themselves from identity theft as a result of a breach that was not their fault,” the AGs continue. “The crisis in confidence extends to the entire credit reporting industry.”

According to Madigan’s office, some of the credit reporting agencies (including Transunion) already offer free freezes. Equifax has also said that it will launch a new product in January that will allow consumers to freeze and unfreeze their report whenever they want to, for free.

But, there are some differences in how each company views a “freeze” and how each handles such requests.

“Currently, some of the CRAs are offering what they call a credit lock, which is similar to a credit freeze, but in some cases they also charge a monthly fee for the lock and combine it with other services, such as credit monitoring,” Madigan’s office said.

“In other cases, the CRAs offer a credit freeze free of charge, but the terms and conditions indicate that consumers’ information will be shared with affiliates and third-party marketers,” Madigan’s office continued.

According to Madigan, those conditions are “unacceptable because the goal for consumers is to secure their data – not distribute it any further.”

Madigan continued: “Consumers should be able to receive the credit freezes provided for by law without fees and without being subjected to marketing from unknown third parties.”

Madigan’s office also said that Illinois’ House of Representatives will soon consider a bill that will outlaw credit freeze fees for the state’s residents.

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