The costs of freezing your credit report are coming under fire in the wake of the giant hack at Equifax .
"I didn't ask Equifax to gather data on me," Georgetown University law professor Adam Levitin said on Twitter . "That I have to pay to freeze my credit report is tantamount to extortion."
Freezing your credit report is one of the strongest defenses against identity theft. By blocking access to your report, thieves can't use your ID information to open new accounts in your name.
Lawmakers and consumer advocates are pushing to remove the costs for credit freezes in the wake of the Equifax hack that exposed identifying data of 143 million U.S. consumers.
Alternative to freeze: a credit 'lock'
Instead of waiting for an act of Congress or for credit bureaus to change their policies on credit freezes voluntarily, consumers can take steps to get a free version of a credit freeze, commonly known as "lock," on their credit reports, at three major credit bureaus.
State laws set fees for freezing your credit report , usually $5 to $10, plus fees to temporarily unfreeze it for specific uses.
"This is a very serious data breach," Federal Reserve Chair Janet Yellen said about the Equifax breach in remarks following the Sept. 20 monetary policy meeting. "We'd really urge consumers to be very careful in monitoring their credit reports and financial situation."
Current choices from credit bureaus
Here are the alternatives as they stand now at major credit bureaus:
Equifax: The company that exposed consumers' information is waiving the credit freeze fee for consumers for 30 days, customer service personnel say. It is also refunding fees for people who paid for a freeze following Sept. 7. However, it isn't clear that subsequent fees to remove or suspend the freeze will be waived after the period ends. But victims of the hack who sign up for the company's Trusted ID credit monitoring service - free for one year - can lock, and unlock, their credit report online.
TransUnion: The credit bureau is offering its TrueIdentity monitoring service free for sign-up, with no credit card required. Users may lock their TransUnion credit report within the application. Locking and unlocking can take up to 48 hours to be effective. Credit grantors are barred access to your report, shutting down new credit accounts. Not affected are government agencies, companies reviewing your application for employment, and existing creditors or their collection agencies. Also permitted are companies that make preapproved credit or insurance offers, but you can opt out of such offers at OptOutPrescreen.com .
Experian: Still charging up to $25 a month for its CreditLock service, after an initial month at $5. Costs to freeze under state law generally run $5 to $10 one time, with a per-use unlock fee when needed. However, an ID theft product called IdentityWorks advertised on the website includes the ability to lock your Experian credit report, at a cost of $10 to $20 a month, after a free 30-day trial.
Innovis: This lesser-known credit bureau offers free credit freezes by mail, phone, online or walk-in at the company's office in Pittsburgh. More information is available on the company's website .
Questions about effectiveness of credit lock services
Robert Siciliano, CEO of IDTheftSecurity.com, is skeptical that credit bureau services that claim to lock your report are as effective as credit freezes, which are a consumer right codified by state credit freeze laws .
"Unless you're actually applying for a credit freeze, you don't have a credit freeze," he said, adding, "They throw a lot of marketing technology at you to sell you something."
Credit locking from credit bureaus is essentially identity theft protection, but for a monthly fee, he said. Freezes cost a one-time fee for life, with additional fees to un-freeze your report when necessary. Since freezing his own report in 2008, Siciliano said he has paid $5 for each of three "thaw" fees; for a car loan, a home loan and a Visa card. "There's no need to spend $20 a month," he said.
"Unless you're actually applying for a credit freeze, you don't have a credit freeze. (Credit bureaus offering services that claim to lock your report) throw a lot of marketing technology at you to sell you something."
Mounting pressure to cut credit freeze fees
State attorneys general pressured the credit bureaus to make credit freezes available for free to victims of identity theft in 2008. Consumers trying to prevent ID theft before it happens are liable for the freeze fee.
In the wake of the breach at Equifax however, lawmakers, consumer advocates and many angry consumers are questioning why they should bear the cost of a credit freeze.
"[J]ust as consumers have a statutory right to a free annual credit report, they should also have a right to place credit freezes on their accounts for free," Georgetown's Levitin wrote in a blog post . "Freezes should be free in all circumstances."
Sen. Elizabeth Warren and several of her colleagues agreed, introducing a bill Sept. 15 to make credit freezes free.
"Credit reporting agencies like Equifax make billions of dollars collecting and selling personal data about consumers without their consent, and then make consumers pay if they want to stop the sharing of their own data," Warren said in a statement announcing the bill.
Consumer advocacy groups lined up to support the bill, but all 12 co-sponsors are either Democrats or independent Sen. Bernie Sanders, suggesting that the measure lacks bipartisan support. Similar proposals embedded in Rep. Maxine Waters' credit report reform bill in years past have failed to reach a vote.
"[J]ust as consumers have a statutory right to a free annual credit report, they should also have a right to place credit freezes on their accounts for free."
The credit bureau trade group, the Consumer Data Industry Association, did not respond to questions about dropping fees to freeze credit reports. Their statement about the Equifax breach says the volume of attempted cyberattacks is "at an epidemic level."
Policy analysts don't expect the outrage about the Equifax breach to bring wholesale changes in the credit reporting system, which banks rely on to make loans. For example, excluding one or more credit bureaus from having your information in the first place is unlikely, experts said.
"This mechanism we have in place with credit agencies is deeply entrenched" in the consumer economy, said Eva Velasquez, CEO of the nonprofit Identity Theft Resource Center in San Diego. Velasquez has begun a petition to drop fees for consumers' credit freezes , within limits.
That leaves the task of protecting consumers' credit in their own hands.
"Consumers affected by the breach should not wait to see if Equifax will pay for freezes at the other two credit bureaus; they should get freezes immediately if they are worried about identity theft," the National Consumer Law Center said in a statement.