UPDATE on 11 July 07 to update state numbers: As of 9/1/2007, 28 states and DC will have freeze laws that have already taken effect for everyone. As of today, 33 states and DC have enacted freeze laws for everyone (or laws that upgrade to include everyone) but the remaining 5 state laws take effect in 2008. [Washington State is included in the 33; it has a current "victims-only law" that will upgrade to all consumers in 2008.] 4 additional states have already enacted freeze laws for victims only -- one of these (AR) takes effect in 2008, 3 (KS, MS, SD) are in effect.
Original post: Your best defense against identity theft is to freeze your credit report. That way, when a thief applies for credit using your purloined Social Security Number, he or she is denied when the cell phone company or department store contacts the bureau and is told that your report is frozen.
Since June 1, 6 new security freeze laws, in North Dakota (6/1), Hawaii (upgrade to all consumers on 6/15), DC, Montana and Wyoming (7/1) and West Virginia (7/2), have taken effect. When the Indiana law and the Texas upgrade to all consumers take effect on 9/1, all consumers living in 27 28 states and DC will have the right to a security freeze.
Several of the new laws are or will be among the best in the nation. Indiana's law will be the first to have no fees at all for either placing or temporarily removing a freeze. That's important, because you need freezes at 3 different credit bureaus. DC ($10) joins Delaware ($20) as states with one-time only fees. These states have no fees for temporarily lifting or removing the freeze, when you want to apply for credit yourself. The new Hawaii law caps both freeze and lift fees at $5 and West Virginia caps them at $3. These are all great pro-consumer provisions. New Jersey, Delaware, Utah and DC are among states that all will eventually require temporarily lifts to take place in 15 minutes or less. That's a 21st century convenience that's important both to consumers and businesses. It's being fought vehemently by the credit bureaus. They want the freeze to be slow and clunky, so people won't use it.
All states that have passed laws applying to all consumers allow identity theft victims free freeze and unfreeze or lift rights. Some state (Florida, Illinois, New Mexico, Oklahoma, Pennsylvania, and Rhode Island) laws are also free to seniors over 65 years old.
On the negative side, four states (Kansas, Mississippi, South Dakota and (in 2008) Arkansas) still limit their laws to previous identity theft victims and don't appear to have a plan to upgrade soon. That's like saying you cannot have a seatbelt until you've already been in a car accident. The worst of these laws -- in Mississippi and Arkansas -- impose $10 fees on victims if they want a freeze. Incredible.
Nevertheless, when all the laws that have already passed take effect, by 2008, fully 34 states will grant security freeze rights to all consumers. In Congress, S. 1178 has passed the Commerce Committee. While not as good as the best state laws, it allows stronger state laws. That's a departure from the usual Congressional mantra of "preempt, preempt, preempt."
The state security freeze laws are based on a model law written by U.S. PIRG and Consumers Union. Over at Consumers Union, this page is the most up-to-date listing of state laws.
