Legislature(2017 - 2018)BELTZ 105 (TSBldg)
03/28/2017 01:30 PM Senate LABOR & COMMERCE
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SB 93-CREDIT REPORT SECURITY FREEZE 2:11:30 PM CHAIR COSTELLO reconvened the meeting and announced the consideration of SB 93. She stated that intent is to hear the introduction, take questions and public testimony, and hold the bill for further consideration. 2:11:48 PM RYNNIEVA MOSS, Staff, Senator John Coghill, Alaska State Legislature, explained that SB 93 supplements Senate Bill 121 that passed last year. It establishes a process for setting up security freezes for minors who are  years of age and younger that mirrors the process that 26 other states have adopted. She presented SB 93 speaking to the following PowerPoint: Sec. 1 Who is a protected consumer? A person who is an incapacitated person or under 16 years of age. Definition of incapacitated person An incapacitated person is 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. Why Sixteen? Consumers at 16 years of age typically begin working, own a cell phone, have a bank account, and have established active credit. 26 other states have reduced the age from 18 to 16. A credit freeze for a minor and a credit freeze for an adult, while similar in name, in practice they operate in very different ways. A credit freeze for an adult is placed to temporarily turn off the availability of already established credit for that individual. The request for a freeze could be due to a recent identity theft or for other purposes. Because a credit report was previously created by a lending agency and therefore currently exists for an adult, one can turn on and off their credit by placing a freeze. In the case of a minor, a credit report should not exist for a person under the age of 16. Therefore, in order to place a freeze, a credit reporting agency must (1) verify and authenticate the identities of both the minor and the requester, (2) verify the relationship of the person requesting the freeze for the minor, and (3) create a new record (prohibiting a credit report from being created in the future for the minor) Sec. 2 Creates Article 2A. Security Freeze for Protected Consumers Article 2A sets up a system in state statute for placement of and removal of a security freeze for minors and incapacitated consumers. The bill puts in place requirements for identification of parties involved, verification of authority of personal representatives, accessing the record by the representative or other entities with legal purpose, and the lifting of a security freeze. 2:16:28 PM Placement of a Security Freeze AS 45.48.300 - A consumer credit reporting agency is mandated to place a freeze on a protected consumer's report if: A protected consumer's representative requests one. The protected consumer's representative Submits the request in a manner specified by the agency Submits proof of identification of the protected consumer Submits proof of identification of the representative and proof of authority Pays the fee of not more than $5.00 Creation of a Record for a Protected Consumer AS 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. Proof of Identification and Authority AS 45.48.320 - Proof of Identification 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 the 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 Time of Placement of Security Freeze AS 45.48.330 - Placement of Freeze The agency must place a freeze on the credit report of record no later than 30 days after receiving the request. Operation of Security Freeze AS 45.48.340 - Operation of 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 from the representative. Duration of Security Freeze AS 45.48.350 - Duration of 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 a misrepresentation of facts. Effect of Material Misrepresentation of Fact AS 45.48.370 - Material Misrepresentation of Fact The agency may remove a security freeze or delete the record if the security freeze was obtained using a material misrepresentation of fact. Removal of Security Freeze AS 45.48.360 - Removal of Security Freeze. (a) The protected consumer or his representative can have a freeze removed by: Submitting a request in the manner prescribed by the agency Providing sufficient proof of: Identification of protected consumer Identification of representative Authority for the representative Paying the agency a fee of not more than $5.00 (b) The agency has not more than 30 days to remove the freeze. Charges AS 45.48.380 - Charges. A consumer credit reporting agency may not charge more than $5.00 The agency may 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 2:18:36 PM Exemptions AS 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 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 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 Exemptions (continued) AS 45.48.390 - Exemptions. Under the following conditions a frozen report of a protected consumer will be made available to the requestor: If the report of the agency consists entirely of information used solely for one or more of the following: Criminal records information information Fraud prevention or detection Tenant screening Employment screening Definitions AS 45.48.395 - Definitions "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 to furnishing credit reports to third parties, but does not include a person who issues the report. 2:19:19 PM Sec. 3 - Transition This transition language 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. SENATOR MEYER commented that age 16 as opposed to age 18 can be discussed as a policy call. He asked if all the provisions that passed last year remain the same, but that this bill is directed at minors and incapacitated people. MS. MOSS said that's correct. SENATOR GARDNER asked if adolescents would need to go through the process of removing a freeze placed by their parents once they reach age 16. MS. MOSS said she believes they would be allowed to remove the freeze once they turn 16. She deferred further comment to invited expert testimony. 2:21:47 PM CHAIR COSTELLO opened public testimony on SB 93. 2:21:59 PM ERIC ELLMAN, Consumer Data Industry Association (CDIA), Washington, D.C., stated that CDIA represents over 100 consumer reporting agencies including the three major credit bureaus. They have worked with legislators in 26 other states to establish minor credit freezes and SB 93 will make Alaska law consistent with those states. Addressing the question regarding age 16 versus age 18, he explained that all the minor credit freeze statutes that have passed apply to individuals below 16 years-of-age. The reasoning is that 16-year-olds get jobs and are essentially credit active consumers. That is why CDIA is asking that SB 93 follow what other states have done and adopt age 16. Responding to Senator Gardner's question, he explained that once the minor turns 16 he/she can affirmatively request the credit bureau remove the freeze. 2:25:10 PM SENATOR MEYER continued to question the age 16 provision and pointed out that a parent or guardian is legally responsible for their child or ward. MR. ELLMAN argued that those in the credit reporting community, the banking and financial services community, and schools encourage the pursuit of credit education for youngsters. He agreed that a parent or guardian might need to step in if a minor fails financially, but maintained it is not appropriate to address that through a minor freeze. The goal in establishing age 16 as the threshold is to protect individuals who should not be credit active. Once they reach the age of 16 many consumers will become credit active and we want to meet their needs and their parents' needs, he said. SENATOR MEYER questioned the notion of encouraging his 17-year- old to be credit active. He observed that she could get a job, but she could not get a credit card or a bank loan on her own. MR. ELLMAN reminded members that the goal of the minor freeze is to prevent commerce from occurring, whereas the goal of the adult freeze is to allow adult consumers to turn their credit on and off as needed. CHAIR COSTELLO asked if there is a way to communicate with a minor's parent if someone steals a minor's identity and there is a freeze on their credit. MR. ELLMAN said yes. He explained that 99 percent or more of minors under age 16 do not and should not have a credit report. If they do, it is most certainly due to fraud and the bill will allow a parent or guardian to lock down the minor's credit history. Procedures are also in place to allow the parent or guardian to monitor activity on the credit report. 2:31:41 PM CARLIE CHRISTENSEN, Director of Government Relations, Equifax, Atlanta, Georgia, testified in support of SB 93. She agreed with previous testimony that SB 93 would amend Alaska law to bring it in line with minor freeze laws in other states. It specifies the way a protected consumer's representative must place a request to place or remove a security freeze. It also clarifies what constitutes sufficient proof of identification for the representative to act on behalf of the protected consumer. She also stated support for the bill covering minors 16 years of age and younger. SENATOR GARDNER asked if she's aware of any dueling parents who have placed a credit freeze on a minor's record. MS. CHRISTENSEN said she isn't aware of any specific instance, but the company likely has an established procedure to deal with that circumstance. CHAIR COSTELLO asked Mr. Ellman to respond to the question. MR. ELLMAN said he suspects that there would be times when it might be necessary to arbitrate between dueling parents. He offered to do some research and provide a more definitive answer. SENATOR GARDNER commented that this could be both a bug and a feature. 2:36:20 PM CHAIR COSTELLO closed public testimony on SB 93 and held the bill in committee.