Legislature(2017 - 2018)GRUENBERG 120
03/28/2018 01:00 PM House JUDICIARY
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SB 93-CREDIT REPORT SECURITY FREEZE 1:41:48 PM CHAIR CLAMAN announced that the next order of business would be SENATE BILL NO. 93, "An Act relating to security freezes on the credit reports or records of incapacitated persons and certain minors." 1:42:39 PM RYNNIEVA MOSS, Staff, Senator John Coghill, Alaska State Legislature, advised that SB 121 [passed in the Twenty-Ninth Alaska State Legislature] was enacted into law [9/17/16] and it provided a subsection in existing statutes for security freezes for minors. Although, she explained, the legislation did not set up a process for creating a security freeze, hence SB 93 creates that system. Ms. Moss paraphrased the sectional analysis as follows [original punctuation provided]: Section 1. Distinguishes difference between security freezes for adults and security freezes for a "protected customer" AND Defines a "protected customer" as a person who is incapacitated or under 16 years of age. 1:43:37 PM MS. MOSS explained that an incapacitated person is a person who is unable to receive and evaluate information and communicate decisions, and they need assistance from someone, usually with a court order, such as a legal guardian or legal representative. MS. MOSS offered that the age of 16 was chosen because Senate Bill 121 covered minors up to the age of 18 years. However, 26 other states have reduced the age to 16 with the rationale that consumers at the age of 16 years typically begin working, own a cell phone, have a bank account and; therefore, they have established some type of credit. MS. MOSS advised that Sec. 2 is the meat of the bill which creates a system for security freeze for protected consumers. She noted that a credit freeze for a minor and an adult, while similar in name, in practice operate in very different manners. A credit freeze for an adult is placed to temporarily turn off the availability of an already established credit for that individual. The request could be due to identity theft and because a credit report was previously created by a lending agency, the credit report simply needs to be frozen and the process is immediate, she explained. 1:45:12 PM MS. MOSS continued paraphrasing the sectional analysis as follows: Sec. 2. Creates Article 2A (Security Freeze for Protected Consumer) *45.48.300. Placement of security freeze. A consumer credit reporting agency is mandated to place a freeze on a protected consumer's report if: (1) A protected consumer's representative requests one. (2) The protected consumer's representative (a) Submits the request in a manner specified by the agency (b) Submits proof of identification of the protected consumer (c) Submits proof of identification of the representative and proof of authority (d) Pay the fee of not more than $5.00. *45.48.310. Record. If a protected consumer does not have a credit report with the agency, the agency will create a record for the protected consumer and place a freeze on it. *45.48.320. Proof of identification and authority. Proof of identification includes: Social security number or copy of SS card Certified or official birth certificate A driver's license or identification card issued by Division of Motor Vehicles Other identification issued by a government agency Proof of authority Includes: A court order A written, notarized statement expressly describing the authority that the representative has signed. *45.48.330. Time of Placement of security freeze. The agency shall place the freeze on the credit report or record no later than 30 days after receiving the request. *45.48.340. Operation of security freeze. Once a freeze is placed on the report or record, the agency cannot release information about the record without permission from the representative or consumer unless the freeze was placed based on misrepresentation of fact or the agency has received a request for removal of the security freeze. *45.48.350. Duration of security freeze. A security freeze remains in effect until the representative requests the freeze be removed or if the agency determines the freeze occurred because of misrepresentation of facts. *45.48.360. Removal of security freeze. (a) The protected consumer or his or her representative can have a freeze removed by: (1) Submitting a request in the manner prescribed by the agency (2) Providing sufficient proof of: (a) ID of protected consumer (b) ID of representative (c) authority for the representative (3) Pay the agency a fee of not more than $5.00 (b) The agency has not more than 30 days to remove the freeze *45.48.370. Effect of material misrepresentation of fact. The agency may remove a security freeze or delete the record is the security freeze was obtained using a material misrepresentation of fact. *45.48.380. Charges. (1) A consumer credit reporting agency may not charge a fee more than $5.00 (b) The agency has not more than 30 days to remove the freeze *45.48.370. Effect of material misrepresentation of fact. The agency may remove a security freeze or delete the record is the security freeze was obtained using a material misrepresentation of fact. *45.48.380. Charges. (1) A consumer credit reporting agency may not charge a fee more than $5.00 (2) The agency may not (shall not) charge a fee when: the protected consumer's representative submits a police report, investigative report of complaint involving criminal impersonation in the 1st degree the protected consumer is under the age of 16 and the agency has created a credit record for that consumer *45.48.390. Exemptions. Under the following conditions a frozen report of a protected consumer will be made available to the requestor: a person with a court order, warrant, or subpoena a government agency establishing and enforcing child support orders Dept. of Health & Social Services and its agents in investigating fraud Dept. of Revenue and its agents when investigating or collecting delinquent taxes, unpaid court orders, or other statutory responsibilities a credit file monitoring service the protected consumer is a subscriber to the protected consumer or representative has requested a report if the report of the agency consists entirely of information used solely for one or more of the following: Criminal records information Personal loss information Fraud prevention or detection Tenant screening Employment screening A person preparing a credit report for an inquiring bank or financial institution regarding account closures because of fraud, substantial overdrafts, automated teller machine abuse, or similar information regarding a protected consumer *45.48.395. Definitions. "consumer" an individual who is the subject of a credit report or credit score. consumer credit reporting agency" - a person who, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages, in whole or part, in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing credit reports to third parties, but does not include a person who issues reports. incapacitated person" - means a person whose ability to receive and evaluate information or to communicate decisions is impaired to the extent that the person lacks the ability to provide or arrange for the essential requirements for the person's physical health or safety without court-ordered assistance. "proof of authority and identification" - proof of authority and identification required for a protected consumer's representative by the credit reporting agency to place a security freeze on the credit record or report. "protected consumer" - a person who is an incapacitated person or under 16 years of age. "record" - the record credit in AS 45.48.310, a record created by the agency and frozen. "representative" - a person who has authority to act on behalf of a protected consumer. "security freeze" - the restriction on access to a protected consumer's credit report or record. Sec. 3. Transition. This provision provides that security freezes put in place prior to the effective date of this Act, will remain enforced under the same statutes as they did when the freeze was placed on the record. 1:50:16 PM MS. MOSS explained that every year in the United States, 1.3 million children's identities are stolen, and 50 percent of those children are under the age of six years. Thieves can obtain social security numbers in numerous ways wherein 26 other states recognized that something must be done, and this legislation is Alaska's attempt to protect children and their parents from identity theft and fraud, she offered. 1:51:02 PM REPRESENTATIVE LEDOUX noted that if there was no credit report in the first place, how is a freeze established on something that does not exist. MS. MOSS answered that this legislation creates a process whereby a parent can ask a credit reporting agency to create a credit report (indisc.). The reason being, she explained, if there is no credit report and no freeze, there is no way to know that someone had taken another person's social security number to have credit cards, loans, or other indebtedness in that person's name. REPRESENTATIVE LEDOUX surmised, "If there is no credit report." MS. MOSS answered in the affirmative. 1:52:08 PM REPRESENTATIVE LEDOUX asked what happens logistically when a credit report is frozen and someone tries to obtain a credit card in the name of the person with a frozen credit report, and whether all sorts of lights and whistles go off. MS. MOSS answered that that action sends a signal to the credit card company that a freeze is on this credit report. The credit companies probably read between the lines that someone is applying for a credit card in other person's name and social security number. 1:52:54 PM REPRESENTATIVE EASTMAN offered a scenario where a father with a two-year old son filed for this credit report and froze his son's credit report. Except, the father forgot about it and when his son is 17 years of age, he [applies for credit] and all of the bells and whistles apply because the father forgot to inform his son of the credit freeze. He asked, in that scenario, whether it would make it harder for the son to "go about the normal things that 17 years olds do?" MS. MOSS answered that the son was above the age of 16 years, so he has authority to lift the credit report freeze. 1:53:34 PM REPRESENTATIVE EASTMAN offered the same scenario, except he changed it from a 17-year-old to a 15-year-old son. MS. MOSS responded that with the approval of his parents, he could lift the credit report freeze. In the event of a family squabble, the son could apply to be emancipated, she opined. 1:54:05 PM REPRESENTATIVE LEDOUX asked whether there is language in the bill that allows emancipated minors to either freeze or lift the credit report freeze. MS. MOSS explained that an emancipated person is considered an adult. 1:54:52 PM The committee took an at-ease from 1:54 p.m. to 1:55 p.m. 1:55:13 PM MS. MOSS continued her response to Representative LeDoux that once a person is considered an emancipated adult, he/she goes by the provisions of state law that address credit freezes for adults. She then referred the committee to AS [45.]48.100 through 45.48.210. 1:55:38 PM REPRESENTATIVE LEDOUX referred to [Section 1. Sec. 45.48.380(b)(2)(A)], page 5, line 9, which read as follows: (A) the protected consumer is under 16 years of age; and REPRESENTATIVE LEDOUX offered that rather than an adult with the definition of adult, the above cite does not appear to address the emancipated minor. 1:56:11 PM CHAIR CLAMAN noted that the credit agencies are busy collecting people's data from all kinds of different sources, and in the event a person decides they do not like that data collection, adults can send out this notice advising credit agencies to put a freeze on their credit history, and the credit card companies can no longer research that person's credit. In theory, he said, those companies are collecting data on minors even though "we wished they weren't," and this bill essentially gives individuals and families the option of advising that they want to protect their child and put a freeze on their credit. This information basically advises credit agencies that their child is a minor and to not collect information. The purpose of this legislation is to primarily give families and parents the ability to protect their youth or someone who is disabled, he said. MS. MOSS replied that Chair Claman was correct, and explained that once a person is emancipated, they are no longer defined as a protected consumer, they are an adult. 1:57:38 PM REPRESENTATIVE EASTMAN asked how the bill handles the potentially delicate situation where the mother or father do not agree to the freeze at the time of the two-year old son's scenario, or one parent wants to unfreeze their child's credit report MS. MOSS answered that there probably is not a clear answer, it may end up with a judge making that decision in a child support order. CHAIR CLAMAN noted that in cases where the one parent freezes their child's credit on one day and pays the $5.00 fee, and the next day the other parent unfreezes the child's credit and pays the $5.00 fee. He suggested that if these actions occurred often enough, there may be a point in which the $5.00 fee would cause them to try to find a compromise. 1:58:46 PM CHAIR CLAMAN opened public testimony on SB 93. After ascertaining no one wished to testify, closed public testimony on SB 93. [SB 93 was held over.]