Print Print | Email Facebook Twitter Share ThisShareThis

As Identity Theft Risk to Millions of Vets Grows, Congress Prepares to Weaken Consumer Anti-Fraud Protections

House Bill Would Pre-empt Strong State Standards, Limit Consumer Protection Options

With almost daily reporting about new losses of personal information belonging to veterans, active duty troops and other federal employees, the House of Representatives is getting ready to consider H.R. 3997, a bill that would pre-empt strong state consumer protection standards, limit consumer protection options and protect the power of Credit Reporting Agencies (CRAs) over consumer information.

"Seventeen states have already passed legislation to allow approximately 130 million consumers greater control over their personal financial information, including the ability to 'freeze' and 'unfreeze' the ability of another party to issue credit in their name," said Scott Mitic, national expert on identity theft and CEO of TrustedID. "As it is currently written, H.R. 3997 would pre-empt those consumer rights with a weaker federal standard, putting millions of Americans potentially at greater risk of fraud resulting from identity theft."

H.R. 3997, the Financial Data Protection Act, includes several provisions that raise serious concerns about its impact on consumer credit protection:

  • Pre-Emption of Strong State Standards -- Seventeen states like California and New Jersey have already passed credit freeze laws to help some or all of their consumers protect themselves against identity theft. Five more states are considering such a move. But H.R. 3997 would create a federal standard that would actually weaken the protections consumers in these states have by limiting their credit protection options.
  • Protections Limited To Those Already Victimized -- H.R. 3997 would limit the use of credit freeze to those already victimized -- protecting their credit after it has already been compromised! Tens of millions of other consumers would be given no opportunity to protect themselves BEFORE they become victims of fraud.
  • Reactive Theft Countermeasures -- The Financial Data Protection Act includes "free file monitoring" to reduce identity theft. But free file monitoring only notifies a consumer AFTER financial damage has been inflicted. Unlike credit freeze, which empowers consumers to control access to their credit, free file monitoring does nothing to stop such crimes before they occur.
  • 20th Century Timing for a 21st Century Crime -- In an environment where credit information can be stolen electronically and used fraudulently in an instant, H.R. 3997 would require the use of certified mail for consumer credit freeze requests and give the Credit Reporting Agencies (CRAs) up to TWO WEEKS to act on those requests.

"With more Americans being threatened with identity theft, Congress should strengthen consumer protections rather than limit consumer options," said Omar Ahmad, Chief Technology Officer of TrustedID. "Unfortunately, as it is currently written, H.R. 3997 has the potential to undermine dozens of state laws and put more Americans at risk of identity theft."

Source: TrustedID news release

Posted: Wednesday, June 14, 2006 12:00:00 AM. Modified: Wednesday, June 28, 2006 3:25:53 PM.

317.875.5250 - Indianapolis  |  202.628.1558 - Washington, D.C.

NAMIC | Where the future of insurance has its voice TM