New Tools To Fight Identity Theft

The House voted overwhelmingly Wednesday to give Americans new weapons for fighting identity theft, including a free credit report on request and a single telephone call "fraud alert" system to block thieves from opening accounts in their names.

Those steps were among the changes lawmakers approved to the Fair Credit Reporting Act, which contains provisions that must be renewed by year's end. The legislation was approved 392-30.

Identity theft cost consumers and businesses $53 billion last year, the Federal Trade Commission said last week, with almost 10 million Americans falling victim to thieves using their name and other personal information, such as a Social Security number or bank and credit card numbers, to establish credit or buy products.

"This bill will give consumers the weapons they need to fight identity thieves and the tools to repair their credit history after an attack," said House Financial Services Chairman Michael Oxley, R-Ohio.

Under the legislation, all consumers would have the right to a free copy of their credit report annually upon request. Only six states — Colorado, Georgia, Maryland, Massachusetts, New Jersey and Vermont — now require the nation's three major credit bureaus — Equifax Inc., Experian Information Solutions Inc. and Trans Union — to give consumers free credit reports every year.

At the request of Rep. Barney Frank, D-Mass., the House agreed to include regional and national specialized credit bureaus to the list of credit bureaus that would have to provide free credit reports.

The bill also gives consumers "one-call-for-all" protection by requiring credit bureaus to share consumer calls on identity theft, including requested fraud alert blocking.

"This legislation not only empowers consumers with protections, it also demands creditors and credit bureaus do their part to combat fraud," said Rep. Darlene Hooley, D-Ore.

The House voted down an amendment that would have put a nine-year cap on the legislation instead of making it permanent.

The Bush administration supports the legislation. "I congratulate the House on this prompt action," Treasury Secretary John Snow said. "Americans need these tools and the House has acted without delay."

The Senate has yet to consider similar legislation, but its Banking Committee is expected to act soon.

Congress must address the Fair Credit Reporting Act this year because the 1996 provisions that instituted uniform reporting requirements are due to expire at the end of 2003.

"The national uniform credit reporting system has lowered costs and increased choice and convenience for American consumers," said Rep. Spencer Bachus, R-Ala. "Much like the national interstate highway system allows for quick and easy travel across state lines, a national uniform credit reporting system allows for consumers to receive credit in a cost-effective and timely fashion."

Industry groups cheered the vote. The bill "strikes the right balance to ensure the availability of credit and fighting identity theft while not undermining the credit reporting system," said Edward L. Yingling, executive vice president of the American Banking Association.

But several consumer groups have criticized the bill, which would pre-empt tougher state legislation on the sharing of personal data. For example, California just passed a law allowing California consumers to block banks, insurance companies and other institutions from sharing their personal information.

"Sloppy financial industry practices have led to the identity theft epidemic, yet this House bill does little to force industry to clean up," said Ed Mierzwinski, consumer program director at the U.S. Public Interest Research Group. "We expect the Senate bill to be more balanced and will work to ensure that the final law is a floor, not a ceiling, allowing California and other states to protect privacy and help fight identity theft."

The House by voice vote rejected an amendment by Rep. Maxine Waters, D-Calif., to exempt California's new law from the legislation.