July 22, 2005

Important Credit Freeze Update: Freeze Provision Is in Pending Federal Legislation

Filed under: Economy,Privacy/ID Theft,Taxes & Government — Tom @ 1:43 pm

Lisa Vass at eWeek reports that the ability for consumers to freeze their credit, which BizzyBlog has called for, is in pending federal legislation (bold is mine):

The Identity Theft Protection Act, sponsored by Sen. Gordon Smith, R-Ore., and a slate of bipartisan supporters, is a bill that touches on data protection and safeguards, as well as data breach notification.

… At the heart of the battle between industry and consumer groups lies three key legislative components: First, the bill doesn’t specifically exempt data that’s encrypted.

It also has stringent notification requirements wherein the breach of a single consumer’s data triggers notification requirements, as opposed to other bills’ stipulations that larger totals, such as 10,000 records, will trip the notification requirement. Finally, and most importantly, it provides for a consumer’s right to freeze their credit report.

Hoofnagle suspects that the committees will water down consumer protection in the bill by targeting the credit report freeze. “[Credit freezes] can at least theoretically slow down impulse buying decisions,” he said. “With the freeze, you have to call an agency to say, ‘Please thaw my record so I can buy a big-screen TV.’ In that delay, you might speak with your spouse or think to yourself, ‘Can I really swing this?’”

The credit industry’s view is that people vote with their pocketbooks, and they want the convenience of instant credit. As McNabb pointed out, however, California’s law has a provision whereby consumers can receive a PIN to thaw credit temporarily.

A credit bureau has three business days to act on the thaw request, and the thaw can last as long as it takes to refinance a house—for example, 10 days or 30 days. Three days isn’t that far away from instant credit, McNabb said. Besides, pre-ChoicePoint, a mere 4,000 Californians had frozen their credit reports in the three years of the law’s existence.

“Even when they know about it, not everybody will do it,” McNabb said. But the idea of a freeze is particularly appealing for people who aren’t in the market for credit, such as the elderly or disabled; in other words, people who are traditional targets of fraud.

Very few have consumers have used the freeze in California because the new law has received almost no visibility, and because it costs $10 to put on a freeze for EACH bureau, and another $10 each to take it off (freezes are free if you have been a victim of identity theft).

The cost structure is ludicrous. Freezes and thaws should be free, and whatever real costs are involved should be considered a cost of doing business for the bureaus and ultimately their business clients (unless I’m missing something, it’s a lot less than $10 per freeze or thaw, at least once it becomes available to the entire population). I also believe that there are no insurmountable barriers that make freezes and “(nearly) instant credit” incompatible.

Never forget: It’s your information, not theirs.

The credit freeze option needs to be in the final legislation when passed, or it won’t be worth the paper it’s printed on, or for that matter the hard drive space it takes up.

UPDATE: Outside the Beltway Traffic Jammer.

UPDATE 2: Trey Jackson chronicles the data breach litany of just the past few months. These things will keep happening, folks. Of course it’s important to do everything possible to prevent them, but too many people have too much access to too much data for anyone to seriously believe that all data breaches can be prevented. The question is whether you are protected when it does happen. That’s why the credit freeze must be available to everyone who wants it, and why it should be the “default” option.

UPDATE 3: A Consumers Union press release confirms eWeek’s worries:

Consumer groups are concerned that an intense lobbying campaign in Congress by industry groups may leave Americans without the safeguards they need. Industry lobbyists are fighting to block a new right for consumers to freeze access to credit files, stricter rules regarding data security, mandatory notices of all security breaches, and the ability of states to provide stronger identity theft protections.

LA Times Shakeup Shows that The New York Times Is Not Alone in MSM Financial Suffering

The New York Times, whose professional and financial problems I blogged on earlier, is not the only Mainstream Media outlet suffering lost readership and the financial effects of being out of touch.

Editor and Publisher reports the “resignation” of John Carroll as Editor of the Los Angeles Times, and the breathtaking declines in circulation that have occurred at the paper during the past year:

But in recent years, the paper has taken a financial drubbing. Even when it won five Pulitzer Prizes in 2004, the second-most ever for a single paper in one year, the accolades were somewhat overshadowed. Two months after the Pulitzer sweep, Tribune Co. announced mandated layoffs of 200 employees, with the Times bearing the brunt. One hundred and sixty jobs were eliminated at the paper, including 60 editorial positions. Two-thirds of the departing journalists took voluntary buyouts.

In addition, two Times-owned newspapers in the nearby Inland Empire were shut down, while the Times national edition folded on Dec. 31, 2004.

The paper also took huge hits in circulation over the past two reporting periods. For the six months ending September 2004, daily circ slid 5.5% and Sunday dropped 6.3%. For the latest period, ending March 2005, daily copies decreased 6.4% and Sunday fell 7.9%. Total advertising revenue for the paper rose less than 1% in the second quarter of 2005.

Interesting phrasing. Why not simply say that “Daily circ slid 11.5% and Sunday circ fell 13.7% in the 12 months ended March 2005?” (the 12-month loss is less than the sum of the two 6-month losses because the second loss is calculated from a smaller base) I guess E&P doesn’t want to hurt the LAT’s feeling by printing double-digit numbers. Boo hoo.


Another hit came when General Motors announced in April that it was pulling advertising from the Times in response to a series of unfavorable articles, including one written by Pulitzer-prize winning car columnist Dan Neil on April 6. The paper would not disclose the amount of money lost, but some analysts estimated that GM, one of the paper’s largest advertisers, spent close to $20 million in 2004. As of early July, Tribune was still in negotiations with the automaker to return.

Still, Carroll has been seen as something of a savior for the editorial staff, which praised his hiring of several top editors, most notably Baquet, who left The New York Times for the West Coast job.

Last year, Carroll drew both criticism and praise when he allowed a series of scathing stories about California Gov. Arnold Schwarzenegger to run just days before his victory in a gubernatorial recall election. The stories cited accusations by several unidentified women that Schwarzenegger had made unwelcome sexual advances.

What’s really delicious about this is that while they were devoting countless hours to the pre-election Arnold hit piece and alienating their readers with the transparent pre-election timing, these so-called professionals missed something that was dreadfully obvious, namely The Terminator’s fitness magazine relationships and the inherent conflict-of-interest problems involved, that could have done real damage. Because Schwarzenegger’s opposition was so weak, it probably wouldn’t have mattered in the final election result, but it’s amazing that no one thought to investigate this angle before the recall election.

But that’s really the point: The LA Times, like its Gotham counterpart, is so consumed by its “agenda” that it misses the real news going on right under its nose, and it if happens to stumble into it anyway, routinely misreports it.

For those who are looking for a comprehensive criticism of the LA Times on a nearly daily basis, no one does it better than Patterico.

UPDATE: WOW–Tribune Company (symbol TRB), The LA Times parent, has seen its stock fall from $52.84 on 2/11/04 to Thursday’s close of $35.83–a loss of 32% in less than 18 months. The Tribune has a slew of other media properties and also owns the Chicago Cubs, so pinning all of the blame for the decline on The LA Times’ dismal performance wouldn’t be fair, but it certainly hasn’t helped.

UPDATE 2: Don’t forget that the now-deposed holier-than-thou Mr. Carroll delivered a blistering attack on Fox News (the attack begins about halfway through the article)–you know, the guys that are winning the media wars in an utter rout–at The University of Oregon a little over a year ago.

UPDATE 3: Kaus weighs in, and ridicules the conventional wisdom of Carroll’s buddies at other MSM outlets that says Carroll quit because he was being asked to accept draconian budget cuts, and wouldn’t. Well, John, these things happen when your news slants cause circulation and ad revenue to drop like a rock. I think that’s known as “just desserts.” Once again: These guys and gals really believe that “Journalism” should be exempt from the laws of economics, business, even exempt from the law itself. The shrinking will continue as long as the mindset doesn’t change.

UPDATE 4, July 24: Patterico points to a Columbia Journalism Review interview of Carroll. It is so breathtakingly clueless (both interviewer and interviewee) you have to read the whole thing, if you can stand it.