Now that TransUnion LLC has decided to let consumers across the country block access to their credit reports, the other two major credit bureaus are expected to follow suit.
Thirty-nine states and the District of Columbia now require the bureaus to offer freezes to at least some consumers. TransUnion announced this week that beginning in mid-October it will make the service available nationwide, regardless of legal imperatives.
Experian Information Solutions told American Banker it is considering adopting the same policy. The third major bureau, Equifax Inc., would not discuss its plans, but observers said the pressure will be on it and on Experian to follow TransUnion's lead.
"When one of them builds a successful service, the other two bureaus aren't too far behind," said John Ulzheimer, a former Equifax executive and now the president of educational services at the lead aggregator Credit.com Inc.
Mark Marinko, TransUnion's president of consumer services, said in an interview Wednesday that its move would help the market by reducing fraudulent transactions. The Chicago company wanted to be proactive in meeting consumers' demands, he said.
"We understand that consumers are concerned about identity theft and we wanted to take the lead and give them all the tools that are best for them," Mr. Marinko said.
"We've received calls from consumers in the states where there were no laws, and essentially we couldn't put a freeze on their account … only because they were in the wrong geographical area, and we thought that we needed to rectify that."
A spokeswoman for Experian wrote in an e-mail that the Costa Mesa, Calif., company "is analyzing implementing a nationwide freeze." David Rubinger, a spokesman for Equifax, said Tuesday that the Atlanta company's policy is not to discuss its plans.
Though the bureaus' bread and butter is selling information about consumers to lenders for things like credit checks and direct marketing, Mr. Marino said any impact on TransUnion's revenues from letting consumers block access to the records would be "minimal."
Mr. Ulzheimer said the bureaus have enough names to replace those who have opted out of the system and that when consumers need to apply for a loan they could simply lift the freezes.
TransUnion's credit freezes will be free to victims of identity theft. For all others, it will charge $10 to place a credit freeze or to remove one either temporarily or permanently, unless the state sets a lower ceiling. (Permitted fees range from $3 for placing or lifting a freeze in Montana to $20 for placing one in Delaware.)
Five states mandate only that credit freezes be offered to victims of identity theft, and in some of those states the consumer must provide proof of the theft.
Thirty-four other states and the District of Columbia require that the service be made available to all consumers.
Observers said that more states inevitably would adopt credit-freeze laws and that TransUnion's decision put it ahead in this environment.
"Clearly, they've figured that's where the regulatory market is going and they've decided to be in the front," said Ken Paterson, a research director for Mercator Advisory Group Inc.
However, Mr. Marinko also said that for consumers who actively use credit, services that alert them to changes to their files would be cheaper and more ideal.
Consumers who subscribe to TransUnion's TrueCredit.com credit monitoring service can lock or unlock the service anytime for free.
Gilbert T. Schwartz, a lawyer at Schwartz & Ballen LLP, estimated that less than 5% of consumers have frozen their accounts in states that allow them to do so.
"It's a pain if you want to get credit," he said.
When states began considering credit-freeze legislation, the industry initially opposed the measures because they limit the availability of credit to consumers, Mr. Schwartz said.
But Mr. Ulzheimer argued that freezes are "one of the only ways to really — and I mean really in bold and capital letters — to prevent yourself from becoming a victim of credit theft."
Credit thieves often prey on consumers by stealing their information from direct mail solicitations, and consumers who freeze their accounts will not be receiving those offers, because they take themselves "out of the system," Mr. Ulzheimer said.
Adam Levin, the president of Credit.com and the chairman of the credit-protection consulting firm Identity Theft 911, said freezing an account is much more effective than getting alerts.
"One-third of consumers don't pay attention to alerts, so credit freezes are more thorough," said Mr. Levin, who is also a former director of the New Jersey Division of Consumer Affairs.
Rep. Carolyn Maloney, D-N.Y., and Rep. Paul Gillmor, R-Ohio, introduced a bill Aug. 2 that would allow all consumers to freeze access to their credit files. (Mr. Gillmor died this month.)
Rep. Maloney sponsored a similar bill in the last Congress, but this year's version would let consumers temporarily or permanently remove a freeze within 15 minutes when making the request by phone or online.
The bill would let consumers whose identity had been stolen or whose information had been breached to freeze their credit for free, and all consumers would be able to remove a freeze without charge. There has been no action on the bill.
