The good news for Indiana consumers is that, with new legislation, no one can access their credit reports, said IU law professor Fred Cate. But that, he said, is also the bad news. \nIndiana residents can now protect their identity by placing a freeze on their credit report by submitting a request and establishing a PIN number. This protects against possible identity thefts and online phishing attacks. The legislation took effect Saturday.\nIndiana State Rep. Matt Pierce, D-Bloomington, said it sounds like a great idea, but when it comes to getting an extra 20 percent off a pair of jeans by signing up for a store credit card, people who chose to freeze their credit report will find that’s not going to happen. \nConsumers have the option of unfreezing their credit reports, but the process takes three days. \nThe situation, Pierce said, is a trade-off. Pierce is more involved in research on how to fight data breaches and phishing and did not author the bill. However, he still thinks it has its merits.\n“The key to this is that it puts control in the hands of the consumers,” he said.
How to freeze your credit report\nFreezing a credit report isn’t as simple as a quick phone call. \nIn order to place a freeze on a credit report, a consumer has to write by mail to each of the three credit bureaus: Equifax, Experian and Trans Union. The consumer must provide proof of identification, including a photocopy of a license and a utility bill.\nThe security freeze goes into effect five days later. Ten days after placing the freeze, a consumer \nreceives a confirmation letter and PIN number.\nStarting Jan. 1, 2009, all consumers will have the option of freezing their credit reports by e-mail. Consumer reporting agencies will have to lift the freeze within 15 minutes if the consumer requests it.
Reaction\nChris Soghoian, a doctoral informatics student with a focus in computer security, said he thinks the law is reasonable and can only strengthen as time passes. He doubts IU students will take an interest in the new law but once the credit freeze becomes available online, students might take more interest.\n“This is the MySpace generation,” he said. “I think lowering the bar to make it as easy as possible (is the best).”\nSoghoian said IU should be teaching students about financial safety the same way it teaches students to use condoms and not to drink and drive.\nThe new law is proactively dealing with identity theft, and it’s the only tool consumers have to stop identity theft before it happens, Soghoian said. He said the next best way to prevent identity theft is to shred any personal documents.\n“Buy a shredder and shred anything with your name and social security number, anything with credit card numbers,” he said. “In terms (of) bang for your buck, a shredder is the best investment you can make to protect your identity.”\nChris Jay Hoofnagle, an identity theft expert and senior fellow at University of California-Berkeley’s law school, said credit freezes can be a drastic but sometimes a necessary option for those with a persistent imposter.\n“For many consumers – those who don’t need access to instant credit, retirees and children and teenagers – credit freeze makes sense,” Hoofnagle said.\nHoofnagle added that he thinks credit reports should be frozen by “default” to protect identity from the start.\nBut Cate, also an identity theft expert, said there are “too many big problems with the new law.” Because of the three-day waiting period to remove the freeze on a credit report, consumers might not be able to buy items that they want, he said.\nCate said even though the idea of the law is simple, the way it is structured causes it to be a problem. \nEven though consumers have the option of freezing their credit report, it won’t make much of a difference, he said. He explained that the vast majority of identity theft does not involve the use of a credit report. In most cases, someone fraudulently uses someone else’s credit card or checks. He said the law is not necessarily a significant step toward eliminating identity theft.\n“This is a lot like taking a firehose to a fire but not aiming at the fire,” he said. “You’re going to spread a lot of water around and not put out the fire.”
