Legislature(2017 - 2018)BARNES 124
04/17/2017 03:15 PM House LABOR & COMMERCE
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SB 93-CREDIT REPORT SECURITY FREEZE 4:04:32 PM CHAIR KITO announced that the third 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." 4:04:47 PM RYNNIEVA MOSS, Staff, Senator John Coghill, Alaska State Legislature, on behalf of Senator Coghill, prime sponsor, introduced SB 93. She said the bill looks familiar because last year [Twenty-Ninth Alaska State Legislature] the House addressed Senate Bill 121, which created a security freeze on minors and incapacitated consumers, or protected consumers, which are consumers who may be over age 16 or 18 but unable to take care of themselves. She stated that SB 93 takes up where Senate Bill 121 left off. In the last hours of last year's session, Representative Claman tried to add this language to Senate Bill 121, but it was just too late in the process to happen. MS. MOSS stated that SB 93 would set up a system to freeze a minor's or incapacitated person's credit report. This is important, she pointed out, because it is never considered that children could be victims of identity theft and that is what this bill is about. About 1.3 million kids in the U.S. are victims of identity theft annually and approximately 50 percent of them are children six years old or younger. This addresses a system to set this up because it is much different than freezing an adult's credit report. An adult already has a credit report and a credit history. A minor or incapacitated person usually doesn't, so there is nothing to freeze. MS. MOSS explained that to freeze a minor's or incapacitated person's credit report - which doesn't exist - a parent, guardian, or legal representative must go to a credit reporting agency and request that freeze. If there isn't a record or a report, the credit-reporting agency will create what is called a credit record and to do that the credit-reporting agency will have to make verification on many pieces of information. When an adult goes into a credit-reporting agency this happens almost instantaneously, she noted, because an adult has a credit report. However, she continued, when dealing with a minor or someone who doesn't have a credit report, the credit report must be established. This is done by the parent or [personal] representative asking that the credit report be secured, reporting certain information, and proving that they have the authority to make that request, which could be a court order for a personal representative or a birth certificate and identification (ID) for both the minor and the parent. The consumer agency then creates a credit record for a fee of $5.00. This fee is under statute and is the same fee that is paid by an adult to get a credit report frozen. The placement of the freeze could take up to a month for a child or incapacitated person because of that verification and checking of the records. MS. MOSS pointed out that the length of the security report would last for as long as the parent or personal representative requests. It could be lifted it at any time and to lift it the parent or representative would have to verify who they say they are and that they have the legal authority to do so. She said the exception to that would be when a minor turns 16 years of age and has a job, a car, or a cell phone, and has basically created a credit report, at which point the minor can lift the freeze, if desired. Another exception, she stated, is if an incapacitated person becomes self-sufficient and can prove with a court record that they are no longer incapacitated and then the freeze could be lifted. Another exception to lifting that freeze, she noted, would be if the information that was given to the credit reporting agency was misrepresented, which would allow the credit reporting agency to lift the freeze itself. Lifting the freeze would cost $5.00, she continued, except there would be no fee in the case of identity theft for which a police report or court document can be produced. MS. MOSS added that there are a few exceptions in the bill. There are people who collect data secondhand; they don't create that data. That would be, say, a government agency that is collecting back taxes or child support or a department of revenue, and they would not be required to freeze credit reports because they do not create credit reports, they collect credit reports. 4:10:41 PM REPRESENTATIVE SULLIVAN-LEONARD asked what prompted the bill; for example, whether something happened when someone turned 18 and tried getting credit cards but couldn't because their Social Security number had been compromised. MS. MOSS replied that the credit reporting agencies have requested this. She said 27 states other than Alaska have adopted these statutes because identity theft in children is a growing concern. Children are easy targets and it is a very easy way for people who create false credit, collect credit cards under false credit, or file false tax returns with the Internal Revenue Service using minors' Social Security numbers. 4:11:53 PM REPRESENTATIVE BIRCH stated he likes this idea. He inquired whether Social Security numbers are nowadays assigned at birth. MS. MOSS responded that there are exceptions; for example, her children didn't get their Social Security numbers until they were 13 years old. However, she continued, she thinks most people do get a Social Security number at birth. CHAIR KITO opened invited testimony. 4:13:12 PM CARLIE CHRISTENSEN, Director of Government Relations, Equifax Inc., testified that Equifax supports SB 93. She said SB 93 would specify the manner in which a protected consumer's representative must submit a request to a credit reporting agency, including sufficient proof of identification and authority to act on behalf of the protected consumer. By incorporating these specific requirements into the existing Alaska credit report security screen statute, affected consumers will be more protected from the risk of their freeze being either unduly placed on their credit file or unduly removed by someone who isn't authorized to act on behalf of that individual. This would bring Alaska law more in line with the other states that have minor freeze statutes specifying how to handle these requests and to do it consistently, she added. 4:14:34 PM REPRESENTATIVE BIRCH offered his recognition that Equifax is a private entity and asked whether Equifax or others in the same business of credit scoring keep digital copies of things such as proof of identification authority, Social Security, and birth certificates. He further asked whether Equifax has a copy of his birth certificate. MS. CHRISTENSEN answered that if it is something for placing a security freeze on behalf of a minor, Equifax may have to retain that. But, she added, she doesn't know the exact specifics of Equifax retaining that information or if it something that is just presented to Equifax. She said she would have to get back to the committee with the specifics. 4:16:20 PM SARAH LASHFORD, Manager of Government Relations, Consumer Data Industry Association (CDIA), testified in support of SB 93. She said CDIA is an international trade association founded in 1906 with more than 130 corporate members. Its mission is to enable consumers, media, legislators, and regulators to understand the benefits of responsible use of consumer data, which creates opportunities for consumers and the economy. She explained that the members of CDIA provide businesses with the data and the analytical tools necessary to manage risk and that CDIA members help ensure fair and safe transactions for consumers to facilitate competition and expand consumer's access to the market, which is innovative and focused on their needs. She stated that the products of CDIA members are used in more than 9 billion transactions each year. MS. LASHFORD said SB 93 would provide additional protection for identity theft. She recounted that in 2016 the Alaska State Legislature passed Senate Bill 121 to offer a credit freeze for the consumer records of minors. Providing protection for those exposed to the dangers of identity theft was a step in the right direction. However, she advised, by placing the authorization in the same section of statute as that for adults, the statute lacks additional protection that 27 other states have now adopted. These additional measures help to safeguard against fraud and identity theft as well as ensure consistency. She said SB 93 provides clear guidance and standards for handling minors' credit. She offered CDIA's belief that SB 93 maintains the original intent of the 2016 legislation while adding uniformity and consistency with other states' laws. She urged committee members to support SB 93 to provide the same level of protection as the other 27 states that have adopted a freeze for minors and incapacitated adults. 4:18:35 PM REPRESENTATIVE BIRCH stated that SB 93 appears to be a good measure and offered his appreciation for learning more about how to protect children with this opportunity. 4:19:07 PM CHAIR KITO kept public testimony open after ascertaining that no one else wished to testify on the bill at this time. CHAIR KITO held over SB 93. REPRESENTATIVE BIRCH asked why the chair is holding the bill. CHAIR KITO replied that he typically likes to have two meetings for each bill that is before the committee so there is an opportunity to address any questions that are not fully answered and to give an opportunity for amendments to come forward.