New Arizona law on credit freezes taking effect

PHOENIX - Arizona consumers are gaining a new shield from identify theft: the ability to impose low-cost freezes on their credit reports.

A new state law taking effect Sunday adds Arizona to more than 40 other states with similar laws restricting access to credit reports. Those reports detail a person's credit accounts, borrowing histories, addresses and other background information.

All are intended to keep wrongdoers from opening new credit accounts under victims' names. That form of identity theft can allow perpetrators to make fraudulent purchases for big-screen televisions and other big-ticket items before the thieves disappear.

A freeze can prevent identity theft because most banks and other businesses won't extend credit or open a new account without being able to review applicants' reports to determine their financial situations.

"Usually the thief will disappear at that point," said Gail Hillebrand, a Consumers Union senior attorney. "A security freeze is the strongest identity theft protection available to protect crooks from ruining your credit record."

Arizona in recent years has had the highest per-capita rate of identity thefts complaints nationwide, with Phoenix having that status among U.S. metropolitan areas, according to the Federal Trade Commission.

The big three credit reporting agencies - Equifax, Experian and TransUnion - already allow people to freeze their credit reports for a fee - free for identity theft victims - but the new Arizona and versions enacted by most other states are more favorable toward consumers in some key respects.

Under the law, the credit agencies can charge consumers $5 to place, remove or temporarily lift a freeze. An agency must temporarily lift a freeze within 15 minutes of the consumer making a phone or electronic request by using a personal identification number during normal business hours.

Hillebrand acknowledged there is "an inconvenience factor in using a freeze."

The tradeoff is the gaining of extra protection, she said. "It's like putting a deadbolt on your front door. You have to carry an extra key."

A total of 47 states and the District of Columbia now have credit-freeze laws, though some won't take effect until 2009, according to the National Conference of State Legislatures.

Sponsored by Democratic Sen. Amanda Aguirre of Yuma, the bill was passed unanimously by the state House and Senate before being signed into law by Gov. Janet Napolitano on April 16.

Aguirre sponsored similar legislation previously, but it died in the face of a committee chairman's stated concerns about stifling a person's ability to get access to their own reports and placing undue burdens on commercial transactions.

The chairman, Republican Rep. Bob Robson of Chandler, supported the 2008 bill that become the new law.

The Arizona Retailers Association had expressed concerns that freezes could hamper merchants' ability to provide customers with on-the-spot credit. An association official did not immediately return a call for comment Wednesday.