Fair Credit Reporting Act News
Examining how the Fair Credit Reporting Act helps customers use credit freezes to guard against illegal access and identity theft
Monday, November 11, 2024 - Many customers are turning to credit freezes as a way to protect their credit data as increased worries about data breaches and identity theft surface. A credit freeze, sometimes referred to as a security freeze, limits access to a credit report, therefore making it more difficult for possible identity thieves to open accounts in a name. Regarding these "frozen accounts," the Fair Credit Reporting Act (FCRA) offers necessary protections and rules guaranteeing that consumers have both the right to freeze their credit reports and the capacity to monitor and remove freezes as needed. Under the FCRA, every consumer has the opportunity to freeze their credit reports with three major credit bureaus--Equifax, Experian, and TransUnion--at no cost under a credit freeze. This option lets customers proactively stop lenders, creditors, and other companies depending on credit checks for account approval from unlawful access to their credit reports. Only particular authorized entities--such as current creditors or government agencies with legal intent--may read the report when a freeze is in place. New creditors, however, cannot view the report, therefore lowering the likelihood of fraud. The FCRA also specifies particular guidelines for credit bureaus for handling credit freezes. When a customer requests a freeze, the credit bureau has to act fast--often within one business day if asked online or by phone, or three business days for requests made by mail. These short times are meant to let customers act right away if they think their data might be compromised. Under FCRA rules, credit bureaus also have to give consumers a unique PIN or password to lift or momentarily remove the freeze should they want to apply for new credit. A Fair Credit Reporting Act attorney may help in this regard.
Should customers choose to release their credit freeze, the FCRA requires that credit bureaus expedite the processing of this request. If a request is made online or over the phone, a credit bureau normally has to lift a freeze within one hour to minimize disturbance to individuals looking for new credit. This rapid turnaround time enables consumers to balance the safety a credit freeze offers with the freedom they need to obtain credit when called for. Credit freezes also help to prevent mixed credit files, a kind of reporting mistake when information from one credit file is inadvertently merged with another. Limiting access to their credit report helps consumers with similar names or identifying information lower their risk of credit information being mistakenly mixed with someone else's. By demanding appropriate processing and updating of frozen accounts, the FCRA's recommendations on credit freeze management complement these initiatives and help to ensure that customers keep control over their data. Under the FCRA consumers have choices for remedy should they have problems with their frozen accounts, including a delay in establishing or lifting a freeze. Should consumers feel a credit bureau has not lived up to expectations, they can submit complaints to the Federal Trade Commission (FTC) or the Consumer Financial Protection Bureau (CFPB). Consumers might also be able to seek damages should a credit bureau's noncompliance with FCRA guidelines cause financial loss.
