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California Credit Freeze Law At Risk

Posted on Dec 6, 2006 by Tom Fragala

You didn't read this on the evening news but a bomb detonated recently and it has the potential to cause earthquakes nationwide. Parts of the California credit freeze law were struck down in appeals court. In other words, this means that CA residents are at risk of losing their their right to a credit freeze. And it could spread to every other state in the country.

This is from May It Please The Court:

You may think you can freeze your credit report from distribution, but according to the Second Appellate District in California, the legislature's attempt to protect you is mostly unconstitutional. Not even an appeal by California Attorney General Bill Lockyer could stop the court from overturning California Civil Code section 1785.11.2 that relates to public records and prevent identity theft. The plaintiff, U.D. Registry, Inc. collected consumer information and resold it to landlords and lenders.

Jim Malmberg at Guard My Credit File emailed me and this is his perspective:

The case, U. D. Registry vs. the State of California, did not invalidate the entire credit freeze law. Instead, it invalidated portions of the law that deal with public record information.

Under the California law any consumer can contact the credit reporting agencies and for a $10 fee have a freeze placed on their credit files. Without the PIN, the CRAs are forbidden from releasing a credit report.

Enter U. D. Registry (UDR). The company gathers public record information and distributes it to around 1,900 landlords in the Los Angeles area so that they can check up on prospective new tenants...Much of this data is commonly included in credit reports. The company makes its money by selling annual subscriptions at prices starting at $35.

UDR found that they were covered under the California law. They sued the state because the law forbids them from disclosing information that was already available to the general public. In other words, the company’s free speech rights were being restricted.

UDR lost the case in lower court, but in the appeals court they won.



Filed under: Identity Theft

Tags: california, credit freeze, identitytheft, idtheft, law

Comments

Lori Lamb on Dec 14, 2006

This is ridiculous. We should, as consumers, have the right to "freeze" OUR credit file BEFORE we have enormous damage to OUR credit report. Most consumers work very hard to achieve their good credit standing. Why should we allow someone else the power to detroy it. Then to struggle for months/years to clear it up! I hope our representative's in our goverment NEVER become victims.

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