Arizona is number one. Unfortunately, our state ranks highest when it comes to per capita identity theft complaints filed by consumers with the Federal Trade Commission (FTC).
In February, the FTC released its report on consumer fraud complaints and Arizona came out on top with 9,113 complaints or 147.8 complaints per 100,000 people. Of course, most people do not take the time to file a formal complaint with the FTC, so these numbers are just the tip of the iceberg.
The FTC has estimated that nearly 10 million people nationwide become identity theft victims each year. In about a third of those cases, crooks use stolen information to open new credit accounts in their victims' names. If this happened to you, you would probably end up with a damaged credit record and a big mess to clean up.
But more and more states are giving consumers the power to put the freeze on identity theft.
Twenty-seven states, and the District of Columbia have passed laws that enable consumers to prevent identity thieves from using stolen information to open new accounts. Arizona could be next.
The Arizona Senate recently passed SB 1345, a bill that would give you the right to put a security freeze on your credit files and stop identity thieves cold. Now it is up to the House to do the same and send this common sense consumer safeguard on to the Governor.
If you become a victim of identity theft and a crook opens new accounts in your name, you will spend, on average, $1,180 and 60 hours cleaning up your credit record. Until you are able to repair the damage to your credit record, you will probably have a tougher time getting a good interest rate on a car loan, home mortgage or credit card. These days, a damaged credit record can even prevent you from getting a job or determine how much you pay for auto insurance.
Creditors are not required to verify the identity of all individuals applying for credit, which makes it easier for thieves to use stolen information to apply for credit. Wouldn't you feel more secure if you had the power to prevent identity thieves from using stolen information about you to get a credit card or loan?
The security freeze established under SB 1345 would enable you to prevent anyone from applying for credit in your name because it blocks access to your credit files. If a security freeze is in place, creditors cannot process new applications for credit unless you give them permission to do so. So if an imposter applies for credit in your name while a security freeze is in place, the application will be denied. If you are applying for credit, you can lift the freeze so that a particular creditor can review your credit file for a specified period of time.
Under the proposed bill, you would be able to initiate a security freeze for a "reasonable fee" determined by the credit bureaus. But if Arizona lawmakers are serious about making sure the security freeze is affordable, they should not leave it up to the credit bureaus to set the price. An increasing number of states with security freeze laws have made this safeguard available for $5 for each credit bureau. Arizonans deserve the same affordable safeguard.
The security freeze is much stronger than existing safeguards. Right now, identity theft victims can put federal fraud alerts on their credit files or pay for expensive private credit monitoring services to detect further abuse. But this will not erase the damage that has been done by the time fraud is discovered.
A security freeze would empower you to prevent thieves from hurting your credit in the first place. State lawmakers should make sure that Arizona becomes the next state to offer a low-cost, easy to use safeguard to freeze crooks out of credit files.
Diane E. Brown is the Executive Director of the Arizona Public Interest Research Group (Arizona PIRG). Michelle Jun is a Staff Attorney with Consumers Union.