Legislature(2015 - 2016)BELTZ 105 (TSBldg)

01/26/2016 01:30 PM LABOR & COMMERCE

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Audio Topic
01:31:41 PM Start
01:32:25 PM SB121
01:51:51 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB 121 SECURITY FREEZE ON MINOR'S CREDIT REPORT TELECONFERENCED
Heard & Held
Department Hearings - Department of Labor &
Workforce Development
+ Bills Previously Heard/Scheduled TELECONFERENCED
-- Public Testimony --
        SB 121-SECURITY FREEZE ON MINOR'S CREDIT REPORT                                                                     
                                                                                                                              
1:32:25 PM                                                                                                                    
CHAIR COSTELLO announced the consideration of SB 121.                                                                           
                                                                                                                                
1:33:04 PM                                                                                                                    
EDRA MORLEDGE,  Staff, Senator Kevin  Meyer, introduced SB  121 on                                                              
behalf of  the sponsor. Describing  the legislation as  a consumer                                                              
protection  bill,  she said  state  legislatures  and the  federal                                                              
government  work continually  on  measures to  prevent and  combat                                                              
the  crimes of  identity theft  and  financial fraud.  An area  of                                                              
growing concern  is child  identity theft  because many  years can                                                              
go  by before  it is  recognized. She  continued the  introduction                                                              
speaking to the following sponsor statement:                                                                                    
                                                                                                                                
     SB  121 allows  a parent or  legal guardian  to place  a                                                                   
     security freeze  on a minor's credit report,  and allows                                                                   
     for the  creation of  a credit file  by a credit  bureau                                                                   
     in order  to place  a freeze  if none currently  exists.                                                                   
     Alaska  statute  does  not  specifically  state  that  a                                                                   
     parent  or legal  guardian  can request  a  freeze on  a                                                                   
     minor's  credit report,  and  while  the credit  bureaus                                                                   
     have generally  allowed parents  to do  so in the  past,                                                                   
     SB 121 will expressly permit this action.                                                                                  
                                                                                                                                
     According  to  the  2012 Child  Identity  Theft  Report,                                                                   
     children  are 35  times  more likely  to  be subject  to                                                                   
     identity theft  than adults, increasing  the possibility                                                                   
     that  a parent  or  the minor  would  not  catch such  a                                                                   
     crime until  reported to a  collection agency,  or until                                                                   
     the  individual applies  for  credit  or financial  aid.                                                                   
     Unfortunately,  clearing  up   fraudulent  claims  on  a                                                                   
     credit  file can  take from  several  months to  several                                                                   
     years, and  could severely  limit the options  for young                                                                   
     people just entering adulthood.                                                                                            
                                                                                                                                
     SB 121  will give  parents and  guardians a much  needed                                                                   
     tool  to  safeguard  their  dependent  children  against                                                                   
     identity theft  and financial  fraud prior to  the crime                                                                   
     occurring. At  least 11 other states have  passed or are                                                                   
     in the process of passing legislation to do the same.                                                                      
                                                                                                                                
MS.  MORLEDGE  reported that  Alaska  is  one  of 27  states  that                                                              
allows a  consumer to  place a security  freeze on their  account,                                                              
but   has  no   specific  provision   for   minors  or   protected                                                              
individuals. Five  states specify that  a parent or guardian  of a                                                              
minor under  age 18 can  place a freeze  and a majority  of states                                                              
provide  some combination  of  under  16 years  of  age, under  18                                                              
years of age and/or  a parent or guardian of  a protected consumer                                                              
or incapacitated individual.                                                                                                    
                                                                                                                                
1:36:03 PM                                                                                                                    
SENATOR  GIESSEL   asked  which   five  states  have   a  specific                                                              
provision allowing  a parent or guardian  of a minor under  age 18                                                              
to place a freeze.                                                                                                              
                                                                                                                                
MS.  MORLEDGE  clarified  that  there  are  just  four  and  named                                                              
Connecticut, Illinois, Montana, and Nebraska.                                                                                   
                                                                                                                                
SENATOR STEVENS  raised a  question about  the language,  "has not                                                              
had the disabilities  of a minor  removed ..." and asked  if there                                                              
might be a better way to say that.                                                                                              
                                                                                                                                
MS. MORLEDGE  explained that  it refers to  minors that  have been                                                              
emancipated  at age  16. They  are  no longer  dependent on  their                                                              
parents to  make decisions. She offered  to provide a copy  of the                                                              
statute.                                                                                                                        
                                                                                                                                
SENATOR STEVENS  questioned the reason  for writing the  clause in                                                              
the negative, because it leads to confusion.                                                                                    
                                                                                                                                
                                                                                                                                
MS. MORLEDGE  offered her understanding  that it was  drafted that                                                              
way because Sec.  09.55.590 is titled "Removal  of disabilities of                                                              
minority." She  added, "We would  certainly be able to  reword the                                                              
statute to make that more clear."                                                                                               
                                                                                                                                
1:38:44 PM                                                                                                                    
SENATOR  ELLIS  asked where  the  idea  for the  legislation  came                                                              
from.                                                                                                                           
                                                                                                                                
MS. MORLEDGE replied  a constituent brought the  issue forward and                                                              
when she researched  the matter she found that many  states have a                                                              
similar statute.                                                                                                                
                                                                                                                                
SENATOR ELLIS  asked if Alaska would  be the fifth state  to adopt                                                              
this legislation.                                                                                                               
                                                                                                                                
MS.  MORLEDGE answered  yes.  She reiterated  that  a majority  of                                                              
states statutorily  provide some combination of under  16 years of                                                              
age,  under 18  years of  age and/or  a  parent or  guardian of  a                                                              
protected  consumer  or  incapacitated individual.  She  said  she                                                              
found that  one reason for  the terminology  "16 years of  age and                                                              
younger"  is because  individuals older  than that  can apply  for                                                              
federal  and state  student aid.  "So there  is a  question as  to                                                              
whether or  not you want to make  that age explicitly  16 years of                                                              
age and younger or keep it at 18."                                                                                              
                                                                                                                                
She  highlighted that  the Department  of  Law questioned  whether                                                              
the statute  could be construed  to assume  that only a  person 18                                                              
years  of age  and  older could  unfreeze  their  own credit,  but                                                              
Legislative Legal  opined that a child  16 years of age  and older                                                              
isn't prohibited  from lifting their own freeze.  She advised that                                                              
the sponsor is amenable to the policy call of the committee.                                                                    
                                                                                                                                
1:41:54 PM                                                                                                                    
SENATOR MEYER  added that  the constituent  who brought  the issue                                                              
forward said  that Delaware,  Georgia, Florida, Hawaii,  Illinois,                                                              
Maine,  Maryland, Massachusetts,  Michigan,  Minnesota, and  Texas                                                              
have   passed  or   are  in   the  process   of  passing   similar                                                              
legislation. He that  the constituent could provide  the source of                                                              
that information.                                                                                                               
                                                                                                                                
1:42:37 PM                                                                                                                    
CHAIR  COSTELLO asked  Ms. Williams  if the  administration has  a                                                              
position  on  the  legislation.  She also  asked  her  to  address                                                              
Senator Steven's  question about  the use of  the negative  in the                                                              
last sentence.                                                                                                                  
                                                                                                                                
1:43:33 PM                                                                                                                    
DAVYN  WILLIAMS,  Assistant  Attorney   General,  Civil  Division,                                                              
Commercial and  Fair Business  Section, Consumer Protection  Unit,                                                              
Department  of Law  (DOL),  Anchorage,  Alaska, stated  that  many                                                              
states have  passed legislation similar  to SB 121 due  to concern                                                              
about data breaches  and the potential for unauthorized  access to                                                              
credit information  of minor  children. Legislation  of this  type                                                              
is  designed to  give consumers  additional  protection. She  said                                                              
the department  is neutral  on the idea  of parents being  able to                                                              
create  credit reports  for  minors and  then  freezing them,  but                                                              
recognizes that many consumers like that additional protection.                                                                 
                                                                                                                                
MS  WILLIAMS  confirmed  that the  Department  of  Law  questioned                                                              
whether  the statute  could be  construed  to assume  that only  a                                                              
person  18  years  of  age and  older  could  unfreeze  their  own                                                              
credit.  If the  statute isn't  specific, it  could be  burdensome                                                              
for the  person who  is trying to  lift the  freeze. On  the other                                                              
hand,  a person  under age  18 could  enter  a contract  to buy  a                                                              
vehicle,  for  example,  and  then  get out  of  the  contract  by                                                              
raising  the defense  of infancy  or disability.  She noted  that,                                                              
"09.55.990  allows   a  minor  to  go  to  court   and  emancipate                                                              
themselves  and then  they're  able to  do  things for  themselves                                                              
that generally  a minor would have  to have a parent do  for them,                                                              
and it requires a court order in that case under that statute."                                                                 
                                                                                                                                
1:46:20 PM                                                                                                                    
CHAIR COSTELLO  asked if a an  employee of a credit  rating agency                                                              
who  receives a  request to  place a  freeze on  a minor's  credit                                                              
account would  need to look through  that state's statutes  to see                                                              
if it was authorized.                                                                                                           
                                                                                                                                
MS.  WILLIAMS answered  yes, but  the three  major credit  bureaus                                                              
are  probably  accustomed  to checking  different  state  statures                                                              
because a number of states have this type of law.                                                                               
                                                                                                                                
CHAIR  COSTELLO asked  what the  burden is for  someone to  verify                                                              
that they are the parent.                                                                                                       
                                                                                                                                
MS. WILLIAMS replied  some states specify what is  needed, and the                                                              
credit bureaus generally  list the standards of  identification on                                                              
their  website. Often  it's a birth  certificate  or some  type of                                                              
court order stating  that the person is the legal  guardian of the                                                              
minor, she said.                                                                                                                
                                                                                                                                
CHAIR COSTELLO  asked what  the national  average is for  identity                                                              
theft of minors.                                                                                                                
                                                                                                                                
1:48:02 PM                                                                                                                    
MS. MORLEDGE  said the  information might be  in 2012  report from                                                              
the  AllClearID  Alert  Network   titled  "Child  Identity  Theft"                                                              
that's in  the packets, but  she would  do follow up  research and                                                              
provide the information.                                                                                                        
                                                                                                                                
CHAIR COSTELLO opened public testimony.                                                                                         
                                                                                                                                
1:48:51 PM                                                                                                                    
Laura  Hughes,  representing herself,  Anchorage,  Alaska,  stated                                                              
support for SB 121.  She explained that she and  her husband froze                                                              
their credit  after they purchased  their house. They tried  to do                                                              
the same  for their  daughter after she  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 the state  didn't have  a process                                                              
to do  this they contacted  Senator Meyer's office.  Responding to                                                              
an earlier  question, she  said she recently  read that  one child                                                              
in ten is a victim of identity theft.                                                                                           
                                                                                                                                
1:50:52 PM                                                                                                                    
CHAIR COSTELLO closed public testimony.                                                                                         
                                                                                                                                
SENATOR  STEVENS  asked what  the  process  is  to lift  a  credit                                                              
freeze once a child reaches age 18 or is emancipated.                                                                           
                                                                                                                                
MS.  MORLEDGE   explained  that   current  statutes   that  govern                                                              
security freezes  provide that the individual him  or herself must                                                              
contact the  credit bureau.  "It can  be as easy  as a  phone call                                                              
and then following up with documentation," she said.                                                                            
                                                                                                                                
[CHAIR COSTELLO held SB 121 in committee.]                                                                                      

Document Name Date/Time Subjects
SB 121.pdf SL&C 1/26/2016 1:30:00 PM
SB 121
SB 121 - Sponsor Statement.pdf SL&C 1/26/2016 1:30:00 PM
SB 121
SB 121 - Leg. Legal Memo.pdf SL&C 1/26/2016 1:30:00 PM
SB 121
SB 121 - Fiscal Note - Dept. of Law.pdf SL&C 1/26/2016 1:30:00 PM
SB 121
Child ID Theft Report 2012.pdf SL&C 1/26/2016 1:30:00 PM