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security freezes

For a copy of Connecticut's security freeze law instructions for using Connecticut's security freeze law, click here (opens as a PDF).

 

The following information may help you visualize the security (credit) freeze experience from a consumer's perspective.

 

How effective is a security (credit) freeze?

A credit freeze is indeed an effective tool to prevent identity fraud when a perpetrator is using the actual PII "personal identifying information" of an innocent consumer for the purpose of opening new credit or charge accounts to buy goods or services.  Recent statistics from Javelin Strategy & Research show that credit card fraud represents 28-30% of all identity theft related claims.  Another 19% of the reported fraud is related to telephone and utility accounts while 18% is bank fraud and 13% employment fraud which only accounts only for known employment fraud.

It is unclear whether or not a security freeze will be effective in preventing synthetic identity theft where a perpetrator may only use one significant component of a consumer's identity.  Since a credit repository cannot clearly match the "new" identity to an existing credit file, the perpetrator may still be successful opening a new unauthorized account.  In the end, an unsuspecting consumer, believing himself safe from credit related fraud due to his security freeze, may still be tracked down by a third party debt collector who utilized a skip trace data base to find the closest match to the "new" identity.

Another problem consumers have reported involves trying to request their PIN (personal identification number) to unlock their credit file after having lost the PIN letter sent by the bureau.  Other consumers have complained they never received their PINs or having to make repeated requests for a PIN.

Credit freezes prevent a credit report from being accessed only for the purpose of approving a new credit application.  A freeze will not stop a creditor with which the consumer already has an existing relationship from pulling follow up credit reports, nor will a security freeze prevent account takeover, a large piece of the credit identity fraud picture.  In addition, the records that appear in commonly used non-credit data sources such as Choicepoint exposes vulnerability if a perpetrator uses a victim's PII with an entity that merely verifies personal information using a non-credit data source.

The fact is that utilities (including cable and satellite television) rarely request credit reports before turning on service.  Cellular telephone services also do not use credit reports nearly often enough before establishing new service.  Many smaller employers, if not most, never run a credit check anymore.  Most pre-employment background checks are based upon criminal searches, motor vehicle reports and locater searches.  Here again, a credit freeze will not help prevent fraud.


FAQ's

 

How much does a credit freeze cost?

It will cost citizens of Connecticut $30 ($10 at each bureau) to freeze credit and another $30 to thaw it out.  This cost is incurred each time a new line of credit is applied for.  The cost for married couples will double. 

 

Does a freeze remove a credit file so no one can access it?

No.  Many companies still have access to a credit file, including:

  • Companies that wish to make pre-approved offers of credit or insurance to you
  • Companies which provide you with access to your credit report or credit score or monitor your credit file
  • Federal, state, and local government agencies
  • Companies reviewing your application for employment
  • Companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe
  • For fraud detection and prevention purposes; In connection with your application for insurance

Source: Equifax


Market Adoption

Thirteen million consumers use credit monitoring, which has been available since 2000.  In 2006 there were approximately 1 million fraud alerts set by consumers, in 2007 there are now 12 million fraud alerts set each year by consumers.  Credit freezes have been available in many states since 2004, and to date, 64,000 consumers use credit freezes.