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Massachusetts Lags Behind The Country In ID Theft Protections
In January, TJX, the parent company of retail stores TJ Maxx, Marshalls and HomeGoods, announced a massive security breach of customer credit and debit account numbers. In total, millions of consumers’ financial data was stolen by an identity theft ring and used to commit fraud.
The incident came as states across the country have moved to enact tougher data security and identity theft protection laws. In Massachusetts, MASSPIRG has been advocating similar reforms since 2004.
In May, both the House and Senate passed identity theft protection legislation that would address security breaches like the one which occurred at TJX. At the time of this update MASSPIRG was working to reconcile the differences in the House and Senate legislation so Gov. Patrick can sign a strong and comprehensive consumer protection bill into law.
The bill was sponsored by state Sen. Jarrett Barrios (Cambridge) and state Reps. William Straus (Mattapoisett) and Michael Costello (Newburyport), and co-sponsored by over 60 state legislators. And the bill received a lot of input from the chairs of the Consumer Protection Committee, Sen. Michael Morrissey (Quincy) and Rep. Michael Rodrigues (Westport), who helped push the bill through the legislature.
“The two key aspects of our bill involve the breach notification and credit report security freeze,” said MASSPIRG Consumer Advocate Eric Bourassa. “Both provisions give consumers better awareness and tools to prevent identity theft before it happens.”
Breach Notification
The TJX incident, which ranks as one of the biggest retail security breaches ever, further highlights the need for a comprehensive breach notification requirement. MASSPIRG has called for security breaches to be immediately disclosed to affected customers.
“Notice is critical because awareness that a breach occurred will prompt consumers to more closely monitor billing statements and/or cancel affected accounts,” said Bourassa. “But it also provides the incentive that companies need to better safeguard consumer data in the first place. Otherwise they will suffer the cost and embarrassment of sending letters to affected customers if a breach occurs.”
According to the Privacy Rights Clearinghouse, a California-based privacy organization, since 2005 there have been over 200 security breaches nationwide at large corporations, government agencies, and even universities, that have exposed consumer information of more than 100 million people.
Credit Report Security Freeze
Some of the worse types of identity theft involve thieves that use a person’s Social Security number to open new credit accounts in that person’s name, wrack up huge debt, ruin their credit rating, and stick them with the bill.
MASSPIRG research has found that the average identity theft victim spends over $1,000 and 100 hours cleaning up the mess caused by the crime. Many people find out they have been victimized too late, after being denied a loan because their credit has been ruined, receiving harassing phone calls from collection agencies, or getting a constant stream of bills in the mail.
The solution to this type of identity theft is the security freeze. A security freeze law allows individual consumers to limit access to their credit report using a password. The password prevents credit from being issued in a person’s name without their knowledge or consent.
“The security freeze system allows consumers to lock their credit report so thieves cannot open new credit in their name,” said Bourassa. “We are advocating a freeze that is free and easy to set up, easy to change, and lasts as long as the consumer wants it—forever if need be.”
To date, 26 states have passed security freeze laws and 35 states have passed breach notification requirements, including all the New England states except Massachusetts.
“Massachusetts has to catch up with other states and provide stronger protections against identity theft,” said Bourassa. “The Legislature came close last session, but needs to get it done right this year.”
Momentum And Opposition
As a result of the TJX breach, Beacon Hill lawmakers expressed support for identity theft legislation. The chairs of the Joint House and Senate Consumer Protection Committee have pledged to work on passing a comprehensive bill. House Speaker Salvatore F. DiMasi said, “Identity theft will be a priority for this session.”
Unfortunately, numerous special interest groups are working to weaken legislation or oppose it outright. Entities that collect and store personal identifying information don’t want to suffer the cost and embarrassment of being required to notify their customers if a breach occurs. And credit bureaus don’t want individual consumers to be able to freeze their own credit reports because that would eat into the growing business of selling monthly credit monitoring products that do nothing to stop new credit accounts from being issued.
“For years the credit reporting agencies Experian, TransUnion and Equifax have fueled the problem of identity theft by allowing so much of our personal and financial information to be accessed by just about anyone for any reason,” said Bourassa. “Now they recognize that they can capitalize on the fear of identity theft by selling a weak ‘credit monitoring’ product for $12.99 a month. The credit bureaus are making huge profits off a problem they helped create, and now they are fighting the real solution: a strong security freeze law.”
At the bill hearing in April, Bourassa testified in support of the legislation along with Attorney General Martha Coakley and Office of Consumer Affairs Chief, Dan Crane.
Identity Theft Tips
While passing comprehensive legislation is the most important step to protect consumers, there are a number of things you can do to decrease their risk of identity theft:
1. Protect your Social Security number by using a different number on your driver’s license. Store your Social Security card in a safe location other than your purse or wallet.
2. Check your credit reports annually. Thanks to MASSPIRGbacked legislation, you can get one free credit report from the three major credit bureaus once a year at www.annualcreditreport. com. And as a Massachusetts resident you can get an additional free copy of your credit report each year by calling the credit bureaus directly.
3. Shred papers with confidential information before throwing them away.
4. Check your bank and credit card statements carefully each month for any unexplained activity.
5. Consider buying a mailbox that locks or installing a mailbox slot in your door to protect bills, pre-approved credit offers, and credit card statements before you get a chance to shred them.
6. Opt out of dangerous pre-approved credit offers by calling 1-888-5-OPTOUT, a number established by the three major credit bureaus.
7. Support MASSPIRG’s work to pass comprehensive identity theft protection in the State House by getting in touch with your legislator.
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