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Freezing out ID theft
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However advocates, such as Ed Mierzwinski, U.S. PIRG consumer program director, say instant credit is not necessarily the main issue when it comes to a credit freeze.

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"The three credit reporting agencies oppose credit freezes because they think consumers' credit information is their product to sell. They make money every time they sell your information to banks, mortgage brokers, car dealerships and other retailers. Of course they don't want consumers to have control over their credit files; it takes away their bread and butter."

Hoofnagle agrees, saying credit reporting agencies are the gatekeepers of consumers' financial information.

"Giving consumers the right to see and monitor their own credit threatens them," he says.

Some creditors such as ING Direct support credit freezes, saying that consumers should be able to monitor their own credit.

Jim Kelly, executive vice president for ING Direct, says, "People need to be more aware of their credit report because our financial information is going offshore, so it's becoming easier for thieves to get our credit records and misuse them."

Kelly says that ING recognizes that credit freezes are good for consumers and the benefits far outweigh what he says is the slight inconvenience of not having instant credit approval.

"There might be a couple of extra steps that people with a credit freeze might have to take in the application process, but overall we are pro-consumer and therefore, welcome uniform credit freeze legislation."

As easy as instant credit has become, advocates say credit freezes could be managed similarly.

As it stands right now, it takes three days to thaw a credit file, which means if you are looking to open a new line of credit such as a car loan or need to have your credit checked because you need to rent an apartment, a person would need to start the thaw several days before the actual application process.

Caplovitz says, "Credit freezes in no way need to interfere or compete with instant credit if they were as easy and free to use as instant credit. It wouldn't inhibit anything. If a consumer can open a new line of credit within a couple of minutes, even seconds, why shouldn't they be allowed to freeze and unfreeze their credit file the same way?"

The situation with a uniform way to freeze and unfreeze credit files is that currently the states with credit freezes have different rules about who can place credit freezes on their files, how much they cost and how long it takes to thaw the freeze.

Federal legislation on credit freezes would make them more uniform and easier to access. But some advocates worry that a federal bill would pre-empt state measures that take a more aggressive, customer-friendly stance.

Next: Whose job is it to protect the information?
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