Equifax Hack Spawns Free Credit Data Services
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This is Your Money Matters from The Wall Street Journal. Welcome to Your Money Matters. I'm J.R. Whalen in New York. For the nearly 148 million Americans affected by the recent Equifax data breach, there's a bit of good news. They're in line for freezes and their credit data free of charge. Wall Street Journal reporter Lalita Klozel joins us from our Washington bureau to explain the significance of this. So Lalita, there's a bill making its way through Congress and it would affect all credit reporting agencies.
What change would a new federal bill require credit-reporting agencies to make regarding credit freezes?
What would it specifically require those agencies to do?
So the bill would impose a national standard that would require all credit reporting agencies to offer free credit freezes to consumers and unfreezes, meaning once your credit freeze has been implemented, when you want to turn it off, if you know you're applying for a loan, for instance, then that would be free as well.
And what exactly is the value to consumers of this freezing of access to their credit data? What kind of benefit is there for them to freeze it and then unfreeze it?
In order to make sure that someone doesn't steal your identity, you want to make sure that they can't go in and apply for a loan in your name. When you freeze your credit report, that means that a potential lender can't go in and ask for the credit reporting firm to verify your credit. So Ultimately, they probably wouldn't move forward offering a loan to someone in your name when you freeze your credit report. And that's the value. That's why a lot of people who suspect they've been a victim of identity theft would want to freeze their credit report.
Oh, okay. So it's almost as if you're leaving your credit data really out there exposed and being able to put a lid on it can kind of turn the spotlight off of it for the bad guys.
That's exactly it. And then they can't use it to apply for loans in your name.
And the credit reporting agencies aren't particularly thrilled about this idea of this new law about freezing and unfreezing because putting a freeze on credit data currently is a strong source of revenue for these companies.
Right. So it's a source of revenue, not probably the largest source of revenue. But they do charge for the services. In most states in the U.S., they're allowed to charge for those services. Typically, it'll be up to a $10 fee. And if they don't get that source of revenue, then in some cases, they they might not even be able to cover the costs of providing the services.
And in your story in the Wall Street Journal, you spoke to somebody who said that if it were not for the Equifax data breach, this whole idea of being able to freeze and unfreeze data would not have come around, that this sort of added a whole new level of oversight to protecting the consumers.
There are three major credit reporting firms in the U.S., Equifax, TransUnion, and Experian. So the breach affected Equifax, but... Obviously, those reforms are going to affect the entire industry and TransUnion and Experian as well. So as you can imagine, they're not too happy about having to deal with this additional oversight as a result of the Equifax hack. And the bill would be a pretty big change because it would preempt state law. So the change would be pretty broad because it would override any state laws on compliance credit freezes. And there's dozens of state laws that describe how credit reporting firms, how much they can charge for these services. And now it would be just a blanket across the country, no charge.
All right. We're speaking with reporter Lalita Klozel, and you're listening to your Money Matters from The Wall Street Journal. Welcome back, everybody. So, Lolita, if a consumer requests a freeze on access to their credit data under this proposed law, the reporting agencies have just a couple of days to comply. They can't stop and think about this.
They have a specific time period within which they have to comply and freeze your credit report. It depends on if you request electronically or if you do it by snail mail, for instance.
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