Legislature(2015 - 2016)BELTZ 105 (TSBldg)
02/08/2016 01:30 PM JUDICIARY
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SB 121-SECURITY FREEZE ON MINOR'S CREDIT REPORT 1:34:40 PM CHAIR MCGUIRE announced the consideration of SB 121. 1:35:08 PM SENATOR KEVIN MEYER, Alaska State Legislature, sponsor of SB 121, stated that this is a consumer protection bill, aimed at protecting children before they become victims of identity theft. His constituent, Laura Hughes, brought the issue to his attention. CHAIR MCGUIRE asked if the impetus was a constituent who had a personal story. SENATOR MEYER replied his constituent would explain how she and her family were impacted. SENATOR WIELECHOWSKI commented that he, too, has constituents who have expressed concern with this issue so he was pleased to see the bill. 1:36:57 PM EDRA MORLEDGE, Staff, Senator Kevin Meyer, introduced SB 121 on behalf of the sponsor, speaking to the following prepared comments: As you know, identity theft and financial fraud is a constant concern for consumers. State legislatures and the federal government are constantly working on measures to combat ID theft and protect individuals against these crimes. An area of growing concern is child identity theft, which is much more prevalent than adult identity theft, as their credit is basically a 'blank slate' for many years. Since children in general, do not begin to establish credit until they're 18 years old or at the time they apply for financial aid for higher education (which can be as early as age 16 in this state), many years can go by before identity theft is caught. SB 121 is designed to prevent this, and is a measure to protect children before they become consumers. This legislation is designed to do two things: 1, it allows a parent or guardian to place a security freeze on a minor child or dependent's credit report, in order to prevent fraudulent financial activity. 2, if no credit report exists (presumably because the child has not established credit yet), the parent can request that one be created in order to place the freeze. For example, the parents of a new born or adopted child could request a credit agency create a credit file and then place the freeze. Traditionally, a credit freeze has usually only been requested after some type of fraudulent activity has been detected - this legislation will change that and give parents and guardians proactive tools to prevent identity theft. Across the country there a large mix of state laws allowing credit freezes: 27 States, including Alaska, allow "any consumer" to place a security freeze with no provision for minors or protected individuals. 4 States specify that a parent or guardian of a minor under 18, can place freeze. And the majority of states provide for allowing a parent or guardian of a "protected consumer" to place a freeze on an incapacitated individual or a minor under 16. 3 states allow a security freeze to be placed only if the individual is a victim of id theft, and some provide for only residents of the state to place the freeze. 1:39:50 PM LAURA HUGHES, representing herself, testified in support of SB 121. She explained that she and her husband froze their credit after they purchased their house, and she tried to do the same after their daughter was born because they'd heard that minors are more susceptible than adults to identity theft. "They're essentially a clean slate and you don't know that their identity has been stolen until they are 16 or 18," she said. When they found that Alaska didn't have a process to do this, they contacted Senator Meyer's office. DAVYN WILLIAMS, Assistant Attorney General, Civil Division, Commercial and Fair Business Section, Department of Law (DOL), Anchorage, Alaska, introduced herself and offered to answer questions related to SB 121. SENATOR COGHILL asked if the Department of Law has had to take action to protect minors from financial fraud or identity theft. MS. WILLIAMS replied the Department of Law hasn't seen a lot of cases of child ID theft, but the potential is there and some consumers have expressed interest in extending credit freeze protection to minors. SENATOR COGHILL asked how families become aware of the issue. MS. WILLIAMS explained that the companies that have experienced a data breach generally do wide-spread notification, as required by law. If the stolen information is used to engage in identity theft, people might not know right away and a minor might not know until they are older and apply for credit. SENATOR COGHILL asked if there has been difficulty holding people accountable to the requirements in Alaska law relating to data breaches. MS. WILLIAMS offered her understanding that consumers have been notified accordingly, particularly in the instances of the larger data breaches. 1:46:23 PM CHAIR MCGUIRE asked if Alaska law protects people who are intellectually challenged or have a mental health issue and are moving into conservatorship status. MS. MORLEDGE reported that a legally appointed guardian or conservator of an incapacitated individual already has the ability to place a credit freeze for that individual. CHAIR MCGUIRE read the final paragraph of the 10/8/2015 memo from Megan A. Wallace that accompanied the work order for the bill. Please be advised, however, that the bill may be construed to give parents and/or minors greater protection than is provided to other adult consumers, to the extent that credit agencies are not required to generate a report for adult consumers who may not have any credit history. In this regard, please advise if you wish to include a provision that would require credit agencies to generate a credit report for all consumers who may not already have a credit report for the purpose of placing a security freeze. She asked if the sponsor saw and considered it. MS. MORLEDGE replied they did see it and decided to maintain the focus on minors and others who may have a guardian, because it wouldn't be difficult for an adult to do that for him/herself. However, the sponsor would be open to the discussion. CHAIR MCGUIRE said she'd give members an opportunity to consider the matter. SENATOR COGHILL noted that the credit reports include a process for placing a credit freeze. CHAIR MCGUIRE commented it might be an outlier circumstance, but it might be worth considering. 1:50:51 PM CHAIR MCGUIRE closed public testimony and held SB 121 in committee for further consideration.