As one of the state's top consumer advocates, Robert Pregulman already was a believer in pending legislation that would give Washington residents the right to "freeze" their credit files to help fight identity theft.
Then a letter arrived at the WashPIRG executive director's house recently that made him look at the issue with new urgency.
His wife was one of nearly 3,200 Washington residents who learned from ChoicePoint, the Georgia-based data-collection company, that her personal information may have fallen into the hands of identity thieves.
Nationwide, thieves who have set up phony businesses to gain access to ChoicePoint's massive consumer databases may have stolen sensitive information from an estimated 145,000 people.
That widely publicized data breach has become powerful ammunition for consumer advocates, who say a security freeze is the best way to stop identity thieves cold.
A security freeze locks up an individual's credit report, preventing the three major credit bureaus from releasing the credit history without consent.
Most businesses won't issue new credit or loans without first reviewing the consumer's credit file. If a credit report is frozen and an impostor attempts to use the personal information to open a fraudulent account, the thief would be turned down. Washington is one of a dozen states considering such legislation this year.
For example, Pregulman and his wife could have frozen their credit files once they learned she was a victim of the ChoicePoint security breach, giving them peace of mind while they tried to determine whether there had been any fraudulent activity in his wife's name.
"You're wondering, 'Who's got my information and what are they doing with it?' It really can keep you up at night," said Pregulman, who heads the Washington State Public Interest Research Group (WashPIRG). "You should have the ability to make one quick call ... and make sure nothing else happens" while trying to clean up the record.
Senate Bill 5418 would let consumers place a security freeze on their credit files by sending a letter to each of the three national credit bureaus — Equifax, Experian and TransUnion. Consumers would pay no more than $10 for a freeze per bureau; the service would be free for identity-theft victims.
Existing creditors, lenders and government officials would continue to have access to the information. The consumer would have to take separate steps to opt out of receiving unsolicited offers for preapproved credit.
Consumers could use a special password from the credit bureaus to "thaw" or lift the freeze for a period of time, or for a particular person or company. Each request to lift the freeze would cost $10 to $12 per bureau, and the bureau would have three business days to comply with the request.
That would allow a consumer to shop for a car loan during a two-week period, for example, or let a prospective employer or landlord look at the credit file.
The freeze "gives people a way to 'own' their own credit report," said Sen. Darlene Fairley, D-Lake Forest Park, the bill's co-sponsor. "People want to feel in control."
The bill passed the state Senate and awaits a hearing in a House committee this week.
Placing a freeze on a credit file "provides almost a vault to put your credit information in. It prevents people from getting access unless they have the secret code," said Jordana Beebe of the Privacy Rights Clearinghouse in San Diego.
But the consumer-credit-reporting industry opposes the legislation. "There's no evidence that it prevents identity fraud," said Eric Ellman of the Washington, D.C.-based Consumer Data Industry Association.
California consumers have had the right to freeze their credit files for several years, but fewer than 2,000 people in that state have opted for the freeze, he said.
A security freeze is inconvenient, Ellman argues. It means a consumer can't get 10 percent off a department-store purchase at checkout by applying for a credit card, or prequalify for a mortgage in a 15-minute phone call.
And in an emergency — an accident or a flooded basement, for example — "your needs are not going to be met in a timely way," Ellman said.
Existing protections are enough, he said. Consumers already have the right to put a fraud alert on their credit file if they think their personal information has been stolen, alerting creditors to potential fraud.
Yet consumer advocates say it's not uncommon for lenders to ignore fraud alerts.
California officials say the credit-reporting agencies have made it unnecessarily difficult for Californians to learn about the security freeze, and that's why so few people there use it — although interest has picked up significantly in the weeks since the ChoicePoint incident.
A freeze thwarts identity thieves because the personal information becomes worthless even if it's stolen, said Gail Hillebrand, senior attorney for Consumers Union, the publisher of Consumer Reports magazine.
"We can't prevent companies like ChoicePoint from holding our data, and the choices they make increase our risk," she said. "This is just one more tool for consumers."
Linda Foley, an identity-theft victim in California, placed a security freeze on her credit files and has gained some peace of mind in exchange for what she considers the minor inconvenience of having her credit file frozen.
Foley, co-executive director of the Identity Theft Resource Center in San Diego, doesn't buy the consumer-data industry's argument that a freeze could prevent people from getting credit in an emergency.
"A hospital isn't going to deny you life-saving care," she said. "I can't think of too many situations where your life would come to a screeching halt because you couldn't get credit for three days."
Foley admits it did pain her a bit when she passed a stand at an airport recently where a salesperson was offering free i-Pods to people signing up for an airline credit card.
"Sure, it's a little inconvenient not to be able to do it. But I also know no one else can," she said. "And it does help keep us on a budget, as an added bonus."
Jolayne Houtz: 206-464-3122 or jhoutz@seattletimes.com
