Clash over blocking a credit report

Rival lobbies pull at General Assembly as it seeks ways to fight identity theft

General Assembly

February 06, 2007|By Laura Smitherman | Laura Smitherman,SUN REPORTER

Maryland lawmakers are developing a bill that would allow state residents to block access to their credit reports, a tool that consumer advocates say is needed to protect against identity theft in an age of instant credit.

Passage of the bill is far from assured, however, as lobbyists in Annapolis are at loggerheads. Banking, credit bureau and insurance lobbyists want provisions that could weaken support among privacy activists and consumer groups, such as limits on who can put a "security freeze" in place and for how long.

The nation's credit system relies on easy access to credit reports, which are viewed by lenders and by retailers when extending quick credit at places such as department stores and car dealerships. It's a system that has made credit available to a broader swath of consumers and contributed to American debt levels.

It's also a system subject to identity fraud, including cases in which thieves have posed as other people to get credit cards and even mortgages. Identity thefts cost businesses and individuals nearly $50 billion last year, according to a survey released last week by Javelin Strategy & Research, a consulting firm that specializes in financial services.

About 8.4 million Americans were victims of identity theft last year. While that's down from 8.9 million in 2005, the survey shows, the incidence in the U.S. is still roughly one in 25 people.

"Identity theft remains a concern, and we're looking for ways to help people protect themselves," said Sen. John C. Astle, an Anne Arundel County Democrat and vice chairman of the Finance Committee that is hashing out the language of a proposed bill.

More than 25 states have passed similar laws. This is the third year such a bill has come before the Maryland General Assembly; some of the same disagreements among special interest groups helped to scuttle proposals in the past.

"In many ways, it's deja vu," said Johanna Neumann, a policy advocate for the Maryland Public Interest Research Group, which lobbies on behalf of consumers. "The big issues are kind of make-or-break deals."

Rick Abbruzzese, a spokesman for Gov. Martin O'Malley, said that his office is reviewing the legislation but that O'Malley generally supports measures that protect against identity theft. The office of Attorney General Douglas F. Gansler supports the idea.

"We're hopeful that meaningful legislation would make it through this year," said Steve Sakamoto-Wengel, an assistant attorney general in the consumer protection division, "and we're concerned that consumers in Maryland don't have the same tools as consumers in some other states."

A push last year by former Attorney General J. Joseph Curran Jr. didn't succeed in getting identity-theft legislation passed. Curran called on the legislature to enact security-freeze legislation as well as a bill that would require notification of consumers when their personal information has been lost or stolen.

Security breaches have put mass amounts of personal data at risk. Last year, a Veterans Affairs Department employee compromised the Social Security numbers of 26.5 million people by taking home a laptop and discs that were stolen by burglars.

Versions of security freeze and breach notification legislation have been refiled this year.

Sen. Jennie M. Forehand, a Montgomery County Democrat and sponsor of a security-freeze bill in that chamber, said, "I think this is the year to pass this thing."

Ginny Shelp, an Odenton resident, told the Senate Finance Committee last month about her identity being stolen. Ever since her debit card was denied at lunch after her bank account was drained in May 2005, Shelp says, someone has tried to open utility accounts and credit cards under her name and to buy computers, also using her name.

Even though she has requested a fraud alert so that credit bureaus must notify her when someone tries to access her credit report, she said a freeze would be a better defense. "I'm a sitting duck waiting for them to hit me again," she said. "By allowing us to have a freeze, I would at least be able to protect myself."

The Senate committee has begun the task of crafting language for the bill. That's where the controversy that has killed the bill before has arisen, as certain provisions pit vocal consumer rights groups against an array of well-heeled industry groups.

Lobbyists don't disclose how much they spend to influence lawmakers on any one issue.

But the Maryland Retailers Association has been among the top spenders on lobbying in Annapolis, with $304,000 in expenditures, according to a State Ethics Commission annual report for 2005, the latest year available. Not far behind was the Maryland Bankers Association with $242,000 in expenditures. Insurers lobby through several trade groups as well as company lobbyists.

Banks want to allow only victims of identity theft to block access to credit reports and for the security freezes to be automatically removed after seven years.

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