Relates to credit record freezes and protected minors

Summary of provisions

Section one amends the general business law by adding new definitions to the Fair Credit Reporting Act, defining "protected consumer", "record", "representative", "security freeze for a protected person", "sufficient proof of authority", and "sufficient proof of identification".

Section two amends the general business law by adding new provisions providing a mechanism for parents and guardians to freeze the credit record of their minor children. This section requires credit reporting agencies to place a credit record freeze on the account of a minor, at the request of a protected minor's representative who can provide sufficient proof of identification and sufficient proof of authority to act on behalf of the minor child. The credit reporting agency would be entitled to a reasonable fee to cover administrative costs related to such requests. If the credit record of a minor is frozen pursuant to this section, a consumer reporting agency will be prohibited from releasing the minor's report, or any information derived there from, to any third party, except in limited circumstances as required by law. A security freeze could be removed by the protected minor's representative, by the protected minor upon attaining the age of sixteen, or by the reporting agency upon a finding of a material misrepresentation of fact. The bill further provides that the exclusive remedy for a violation of these new provisions is an action commenced by the attorney general.

Section three provides for the effective date.

Justification

According to the Federal Trade Commission (FTC), a child's social security number can be used by identity thieves to apply for government benefits, open bank and credit card accounts, apply for a loan or utility service, or rent a place to live. According to a 2011 report from ID Analytics, an identity theft protection firm, an estimated 140,000 minors are at risk of becoming victims of identity theft each and every year. Another 2011 study, from CyLab, a research center at Carnegie Mellon University, examined 43,000 children who were registered with a commercial identity protection service and found that 10% of them had someone else using their social security number. The FTC advises parents to check their children's credit reports to see if their personal information is being misused, and to take immediate action if it is. However, no mechanism currently exists for parents of children in New York state to take proactive measures to protect their children's credit.

Current law allows a parent to freeze the credit of a child, only after a file already exists in the child's name. Often times this file exists because the child has already been the victim of identity theft. This bill would bring New York state law in line with state laws in Maryland, Delaware, Michigan, Wisconsin, Illinois, Texas and Oregon, which require credit reporting agencies to allow a parent to freeze their child's credit even when no file exists, thereby averting the potential for identity theft to occur in the first place. Florida, Pennsylvania, Virginia, and Indiana currently have similar legislation pending.

Child identity theft is a particularly egregious problem because it may go undetected for years, until the child applies for student loans, other forms of credit, or even a job. Further, child identity theft is particularly detrimental because it can postpone college admission due to student loan denials, gaining employment, accessing credit, and renting or purchasing a home. These delays can last for months or even years, until the child can dispute the fraudulent activity and have the activity cleared from their credit report. In our global world, and in light of data-sharing of our children's personally identifying information, it is imperative that parents have a way to protect their children's credit records.

Fiscal implications

None to the state.

Prior legislative history

New bill.

Effective date

This act shall take effect January 1, 2015.