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Colorado: Identity Theft Law Properly Balances Consumer's Protection Needs, Timely Access to Credit Information

Gov. Owens signed S.B. 137, Concerning Identity Theft, into law on Wednesday.

NAMIC and members of the insurance industry worked closely with the legislature to draft a bill that would protect consumers from any "unauthorized" disclosure of the consumer's credit information without unduly inhibiting "authorized" parties from accessing the credit report information.

Consumers can put a security freeze on their credit reports and temporarily lift the freeze to allow a particular entity access to the credit report for the purpose of issuing or extending credit to the consumer. The freeze must be maintained until the consumer specifically requests its removal and requires that a consumer be notified of the right to place a security freeze on his credit report each time he receives a summary of the rights relating to credit reports.

Consumers who had credit information released in violation of a security freeze may bring a private civil action against the consumer reporting agency that released the information in violation of the security freeze and sets forth statutory damages to be imposed against the consumer reporting agency.

The language of S.B. 137 was modified a number of times so that the consumer's need for protection from identity theft was balanced against the consumer's need for the timely access to his credit information. Specifically, the final version of the bill included a section that states that "the provisions of this section shall not apply to the use of a consumer report by or for any of the following: (l) any person or entity for use in setting or adjusting a rate, adjusting a claim, or underwriting for insurance purposes."

"Consumers need to be protected from 'unauthorized' access to their credit information and this security freeze legislation accomplishes this laudable objective without creating unnecessary impediments that would adversely impact an insurance carrier's ability to promptly secure credit information on the consumer that is necessary to underwrite insurance and adjust claims," stated State Affairs Manager, Christian J. Rataj.

"Since consumers want to be able to secure insurances quotes from insurance companies in a timely manner, typically at the time the consumer calls the insurance producer for an insurance rate, the insurance exemption to the security freeze provision for insurance underwriting is reasonable, appropriate and consistent with consumer's personal needs," stated Rataj.

Additionally, "when a consumer has suffered the misfortune of sustaining an insured loss, the consumer need his insurance claim adjusted in a timely manner so that he can promptly resolve the problem and move on with his life. The insurance exemption to the security freeze provision will assist insurance companies in their efforts to settle insurance claims in an expedited manner," stated Rataj.

"The insurance exemption in S.B. 137 should be a model for other states to emulate because it acknowledges that consumers may be protected from 'unauthorized' access to their credit reports, without creating a system that unnecessarily delays 'authorized' access to a consumer's credit report for legitimate purposes," stated Rataj.

"We live in a world where certain insurance coverages are required by state law to operate a motor vehicle, and where homeowner's insurance is required to secure a loan for the purchase of a home. Therefore, identity theft laws must be drafted in a way that protects consumers from identity theft without hindering the consumer's ability to address his personal needs and legal obligations in a timely way," stated State Affairs Manager, Christian J. Rataj.

Direct questions to NAMIC State Affairs Manager Christian Rataj.