In a rush to protect personal accounts from intrusion by thieves bent on taking their money and ruining their credit standings, consumers are now moving toward a new fix called “security freezes.”

With financial fraud wreaking anywhere from $5 billion to $60 billion in damages on the economy last year – depending on whom you ask – citizens are pushing legislators and business providers to defend them.

In response, said Julie Brill, assistant attorney general for the State of Vermont, “there is a lot of (legislative) action behind security freezes,” which is the ability of a consumer to freeze his/her credit report so that no one can look at it unless authorized by the consumer, she explains.

Brill, who has been Vermont’s assistant attorney general for 18 years, said this remedy “is thought to be a very effective mechanism for insuring that the consumer will not become a victim of identity theft, or if they are victimized, then it will not spread.”

Late last year, the Identity Theft Resource Center in San Diego reported 110 security breaches affecting 56.3 million individuals in the United States. The Center is a national nonprofit organization, founded in 1999 by Linda and Jay Foley after illicit access to their personal tax data led to use of credit cards and a cell phone.

According to Brill, 12 states already have enacted such laws – eight allow any consumer to obtain a security freeze and four states say only an identity theft victim can obtain one. The four are: Texas, Vermont, Illinois and Washington (where you have to be an identity theft victim, or have received notice of a security breach), according to Vermont’s Brill.

So, what’s not to like? Enter industry. Tony Hadley, vice president, government affairs for Experian in Costa Mesa, Calif. Though best known among financial professionals for its credit reporting services, Experian press materials describe it further as “a global leader in providing value-added information solutions to organizations and consumers.”

“We’re a little bit at odds with the credit industry (about) file freezing,” said Hadley, who maintains an office in Washington, D.C. “We’re worried about how (it) will impede instant credit,” he noted, filling out the indictment.

“To freeze your credit file means you’re frozen out of a lot of decisions including: employment, credit, insurance, utilities, housing, and government licenses” Hadley warned.

He – and Experian – prefers quite a different tack; what is called a “shared data” approach to fighting financial fraud.

This method would promote a greater exchange of information among data collection entities that would aim for more linkage of technology from different databases.

Using the term “linkage technology,” Hadley said it provides for “a greater ability to spot a single data element in multiple applications or transactions.” It facilitates identifying potential problems upfront, by comparing all current credit applications and data, “before eligibility decisions are made about a credit application.”

Rather than taking legislative action to shrink contact, Hadley said, “business needs access to more data than the perpetrator of the identity theft.”

***

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