Equifax messed up. Now consumers have to pay?
In the face of mounting public outrage, Equifax stopped levying fees Monday on the consumers scrambling to lock down their credit files. It was the least the credit bureau — which disclosed last week that it had accidentally exposed Social Security numbers, birth dates, and other personal data of up to 143 million consumers to criminals — could do. Credit freezes are one of the few tools consumers have to protect themselves from identity theft that could result from Equifax’s bungling, and the company shouldn’t profit off its own failures.
Equifax said it would waive the fee on security freezes for 30 days. But consumers in Massachusetts and most other states still have to pay for freezes at the other two major credit reporting agencies, Experian and TransUnion, and will need freezes at all three for maximum protection.
That’s a counterproductive burden. Consumers should be allowed to freeze their files for free, at all the credit reporting agencies. If anything good comes of the outcry over Equifax’s data’s breach, it should be a renewed effort by state legislatures to eliminate credit freeze fees.
A credit freeze works by preventing credit reporting agencies from sharing the data in their credit files under most circumstances. So if a thief steals your identity, it may not do them much good: If the thief seeks to open new credit accounts in your name, the bureaus won’t cooperate, and the lender likely won’t approve the credit request.
Credit freezes also prevent the reporting agencies from responding to legitimate requests, but consumers can remove freezes if they need to apply for a new mortgage or open a new credit card. For consumers who don’t expect to take out a new loan anytime soon, credit freezes have virtually no downside.
As the consumers who rushed over the weekend to freeze their reports after the Equifax breach learned, the process takes only a few minutes and can be completed online. It’s not like freezes require heavy lifting on the companies’ part.
Yet Massachusetts, like most states, allows the bureaus to charge fees for credit freezes. Although the fee in Massachusetts is only $5, the credit agencies can also charge additional fees to lift or remove freezes. Multiple fees, across multiple credit rating agencies, add up to a disincentive to request freezes. Public policy should be pushing in just the opposite direction, by making it easier and cheaper to limit the damage that identity thieves can do.
In Indiana and South Carolina credit freezes are free; a few other states specify free freezes for senior citizens. They’re also generally free if a consumer has been a victim of identity theft — which is to say, when it’s already too late. No consumer asked companies like Equifax to amass vast amounts of private data about them. Why should they be charged for asking the companies not to share it?