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The Hazards of Holiday Shopping
The holiday season is a time for cheer, good wishes and that favorite pastime, shopping. Retailers estimate that shopping during the holiday season accounts for the bulk of their profits. In fact “Black Friday” (the day after Thanksgiving), the kick-off to the holiday “shopathon,” is the traditional day retailers move in the “black” for the year. And for many consumers, those purchases are done by credit card. For those who have their credit card stolen or somehow allow thieves access to their personal financial information, the consequences can be devastating. Denise Curro, a Long Island resident, found out just how devastating a stolen credit card can be. In 1998, Denise had her wallet stolen when she stopped in North Carolina on her way back from a Florida vacation. Her family immediately reported the loss of her Social Security card and other items in her wallet. The theft was bad, but the worst was yet to come. One year later, collection agencies began to pressure her for utility bills from North and South Carolina. She is still deluged with demands to pay debts she never incurred. As a result, she now has a hard time obtaining loans and credit. Millions of Americans become identity theft victims every year. According to experts, victims spend an average of 330 hours resolving disputes that arise from the crime and spend roughly $1,000 in out-of-pocket expenses dealing with the problem. For many of them, such as Denise, even reporting such loss of personal information is simply not enough protection. As long as criminals still have access to their personal financial information, credit lines can be established and huge debts run up for these unwitting victims. Until recently, there was little that consumers could proactively do to protect themselves from identity theft or prevent the unauthorized release of their credit reports. In the past few years, however, some states have enacted new laws to help consumers like Denise. Twelve states, including California and Texas, have enacted laws that allow consumers to place a “security freeze” on their credit reports. Here is how it works. The laws allow consumers the option of blocking access to their credit reports unless they contact the credit bureaus and okay the release of their credit history. This protection ensures that if a thief steals a consumer’s valuable financial information – like Denise’s situation – and tries to open a credit card account, no credit information could be obtained quickly and as a result the request for the credit card would be denied These laws give consumers control over their accounts and thus make it harder for criminals to create bogus credit lines – leaving victims stuck with the tab. Giving consumers who have been the victim of theft control over their own credit accounts seems reasonable. So, why hasn’t it happened yet in New York? Opposition from banks, credit bureaus and retailers is the major obstacle. Retailers, who want to hawk their credit to consumers, want no impediments to credit information. Retailers want consumers to instantly obtain credit cards so they can buy on the spot. These new laws slow down that process – and may cost retailers business. Banks want consumers to rack up more plastic debt. And credit bureaus want to sell more credit reports and avoid tightening their security—even though identity theft costs Americans some $58 billion a year. And while that concern is understandable, retailers can also lose business if consumers are so worried about identity theft that they refuse to obtain credit now. Either way, retailers could end up at a loss. But consumers are suffering now. So-called “freeze” laws are a reasonable way to help consumers prevent identity theft and add a layer of protection to those already victimized by identity theft to protect themselves from additional loss – both financial losses and access to credit when it is needed, like when buying a house. Retailers stand to make lots of money this holiday season. And the use of credit will be an important factor in their success. But the losses caused by identity thefts harm consumers and businesses alike. One way for lawmakers to help consumers victimized by theft is to mandate the option of a “security freeze” on credit information. Retailers, banks and credit bureaus should support this effort. That’s all for now. I’ll be keeping an eye on the Capitol and will talk to you again next week. |
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