New Banking Law Provides for Free Credit Freezes, But States Differ on Practice

U.S. consumers can place and remove freezes on their credit files for free, as part of the rollback in key provisions of the Dodd-Frank Act passed by the U.S. House of Representatives this week. President Trump is expected to sign the bill, which removes many regulations on banks enacted after the financial crisis.

Credit freezes can currently cost up to $30 if requests are made of all three major credit-reporting agencies, Equifax, TransUnion and Experian.

Credit freezes restrict access to your credit report and can prevent identity thieves from using your stolen information to open new accounts. A 2017 data breach at Equifax affected nearly 148 million U.S. consumers and prompted many concerned consumers to freeze their credit.

A freeze goes a further than credit monitoring or fraud alert service. Those services mostly notify you of suspicious activity after it happens.

Most security credit freezes cost between $2 and $10. However, several states have already made them free. Your state will have more information on specific credit freeze policies — your attorney general’s website is a good place to start.

The legislation also extends fraud alerts from 90 days to a year for consumers who have had their identity stolen. Fraud alerts require lenders or other business to take additional precautions extending credit in your name.

Consumer advocates say the new law may not be as consumer-friendly as some believe.

The U.S. Public Interest Research Group (PIRG), a consumer advocacy organization, published a blog post in response to the new credit freeze federal rule. The writer is Mike Litt, director of PIRG’s Campaign to Defend the Consumer Bureau.

Here’s an excerpt:

“State freeze laws explicitly allow for temporary removals of freezes when consumers want to apply for credit, insurance or, in some cases, employment. The federal proposal refers to free removals but does not even mention temporary suspension of freezes or ‘lifts’ the way state laws do. This appears to be a loophole that could allow credit bureaus to still charge for temporary lifts, including in the four states (Indiana, Maine, North Carolina, South Carolina) where both freezes and lifts are free and in three more states (Delaware, Tennessee and Virginia) where lifts are explicitly free.”