Congress Will Make Credit Freezes Free for All in Belated Response to Equifax Breach

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Congress is set to finally do something that will benefit US consumers in response to the Equifax breach last year—beyond excoriating the company’s executives on live television. Yet, as with everything, it will come at a cost.


As many as 17 Democrats are lending their votes to a Republican banking bill that will scale back sweeping reforms passed in the wake of the 2008 financial crisis by rolling back or dismantling parts of Dodd-Frank. Known as the Crapo bill—after Banking Committee Chairman Mike Crapo, Republican of Idaho—the legislation includes a bipartisan agreement that will enable consumers to initiate credit freezes at no charge.

Credit report agencies, like Equifax, will lose a source of revenue in the deal. But not everyone is pleased. Some consumer advocates argue the bill may stymie the efforts of some states’ to pass more stringent credit-freeze requirements. Only eight states at present, however, guarantee consumers free access to credit freezes—a mechanism that prevents lenders from accessing credit reports, thus hindering identity thieves trying to get credit or open accounts in victims’ names.

Free credit freezes were among the bevy of solutions tossed around in Congress last year in response to the Equifax breach. Others included creating minimum data security standards for credit reporting agencies—Equifax, Experian, and TransUnion being the main three—and increasing Federal Trade Commission oversight of security practices. Some lawmakers also sought to bar credit firms from forcing consumers into arbitration, which hinder class-action lawsuits in response to negligent practices.

Notably, the credit-freeze agreement has zero implications for the industry’s security standards. Equifax’s own negligence was the biggest contributing factor to the breach, the largest of its kind ever reported, resulting in the theft of more than 145 million consumers’ personal data, including Social Security numbers.

Social Security numbers have long been used as proof-of-identity in exchanges with financial institutions, among other industries. The numbers have been treated more or less as a type of passphrase—one that most consumers are unable to change, compromise notwithstanding.

During a hearing before the Senate Commerce, Science and Transportation Committee in November, Entrust Datacard CEO Todd Wilkinson submitted that Social Security numbers should no longer be used as the primary means of identifying consumers, portraying them as an antiquated security measure that could only lead to further abuse.


Sen. Mark Warner, a Democrat of Virginia and chief sponsor of the banking bill, told the Wall Street Journal Thursday that he wished it did more to bridle the credit firms. “They have all of our personal information,” he said. “And there are not clear standards and clear penalties.”

The banking bill carrying the credit-freeze agreement—also known as the Economic Growth, Regulatory Relief and Consumer Protection Act—has been denounced as a “gift to Wall Street” by progressive Democrats pointing to two dozen of the nation’s top banks, where protections achieved through Dodd-Frank stand to be relaxed or dissolved entirely.


“The Senate—with the support of some Democrats—is set to start debate on a bill to roll back regulations on the same big banks we bailed out a few years ago,” Sen. Elizabeth Warren, Democrat of Massachusetts, told reporters on Tuesday, according to CNN. “If we lose the final vote next week, we’ll be paving the way for the next big crash.”

Proponents of the bill, however, argue that the legislation will provide much needed relief to smaller banks that have faced rising costs in the wake of Dodd-Frank, leading to a worrying increase in bank acquisition activity.


With the help of the Democrats, the bill is a shoo-in to pass next week after a formal debate.



Can you build credit during a credit freeze? I have a ton of questions about the utility of this.