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F I S C A L I M P A C T R E P O R T

SPONSOR Rawson

ORIGINAL DATE

LAST UPDATED

2/20/07

HB

SHORT TITLE Credit Report Freezes

SB 787

ANALYST Ortiz

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to SB448 and SB165

SOURCES OF INFORMATION

LFC Files

Responses Received From

Administrative Office of the Courts (AOC)

Attorney General’s Office (AGO)

SUMMARY

Synopsis of Bill

Senate Bill 787 amends and enacts statutory provisions allowing consumers to place security

alerts or security freezes on their credit reports and to have information in their credit reports

blocked if their identities may have been used without their consent.

Section 1

: amends Section 56-3-1 NMSA 1978 to define “identity theft" as “willfully obtaining,

recording or transferring personal or financial information of another person without that

person’s authorization or consent."

Section 2

: provides that a consumer may request that a credit bureau place a security alert in the

consumer’s credit report to warn anyone receiving information in the report that the consumer’s

identity may have been used without the consumer’s consent. The request may be made by mail,

telephone or in person. The alert shall be maintained for 90 days. The bill requires a recipient of

a credit report containing a security alert to take reasonable steps to verify the consumer’s

identity prior to lending money, extending credit or completing the purchase, lease or rental of

Senate Bill 787 – Page

2

goods or services. Under the bill, upon receiving a request for a security alert, a credit bureau

shall provide notice to the consumer that the security alert may prevent or delay the approval of

financial services.

Section 3

: provides that a consumer may request the placement of a security freeze on the

consumer’s credit report that will prohibit a credit bureau from releasing information in the

consumer’s credit report without the consumer’s express authorization. The request must be

made in writing by certified mail. When a freeze is placed on a credit report, the credit bureau

must provide the consumer with a personal ID number or password to use if the consumer

chooses to remove the freeze or to authorize the release of the credit report to a specific person or

for a specific period of time after the freeze is in place. A credit bureau shall authorize the

release of the consumer’s credit report within 3 business days of receiving the authorizing

information. The bill provides that upon receiving a request for a security freeze, a credit bureau

must provide notice to the consumer that using the security freeze may delay, interfere or

prohibit the timely approval of financial services.

Section 4

: provides that if a consumer alleges identity theft and provides to a credit bureau a

copy of a valid police report describing the identity theft circumstances, information that the

consumer lists as allegedly being the result of the theft shall be promptly blocked by the credit

bureau so that it cannot be contained in a credit report. The information can only be unblocked

under certain circumstances and only upon notification by the credit bureau to the consumer. A

consumer providing a police report describing the identity theft circumstances has a right to

receive from the credit bureau, free of charge and upon request, a copy of the consumer’s credit

report each month for up to 12 consecutive months.

SIGNIFICANT ISSUES

According to the AGO, the bill states that the consumer "may request" placement of a security

alert or freeze, not does not say specifically that the credit bureau is required to place them,

although that certainly is implied.

The AGO further adds that SB 787 provides for placement of a security "alert," which the other

two Senate credit security bills pending (SB 165 and SB 448) do not. However, the Fair and

Accurate Credit Transaction Act of 2003, which significantly amends the Fair Credit Reporting

Act, 15 USC 1681a et seq., currently allows a consumer to place a fraud alert with a credit

reporting agency. 15 USC 1681c-1(a) [§ 605A].

According to Consumers Union, 26 states have enacted some form of credit report security

legislation (CA, CO, CT, DE, FL, HI, IL, KS, KY, LA, ME, MN, NC, NH, NJ, NV, NY, OK,

PA, RI, SD, TX, UT, VT, WA, WI). SB 787's security freeze provisions (Section 3) are far less

detailed and comprehensive than those in SB 165, SB 448, and the Model State Clean Credit and

Identity Theft Protection Act, upon which the referenced Senate bills and most of the states'

credit freeze bills are based. SB 787 does not provide for exemptions to the information freeze,

which may violate some provisions of the Fair Credit Reporting Act, 15 USC 1681a et seq. (e.g.,

right to prescreen potential credit applicants for credit and insurance purposes, 15 USC 1681a(1),

1681b(c), 1681b(e), 1681m(d)). State laws relating to the creation and use of prescreened

reports are preempted. 1681t(b)(1)(A), 1681b(c).

Senate Bill 787 – Page

3

PERFORMANCE IMPLICATIONS

The courts are participating in performance-based budgeting. This bill may have an impact on

the measures of the district courts in the following areas:

•

Cases disposed of as a percent of cases filed

•

Percent change in case filings by case type

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

Senate Bill 165 and Senate Bill 448 enacts the Credit Report Security Act, providing consumers

with the opportunity to place a security freeze on the consumer’s credit report by making a

request to a consumer reporting agency to refrain from releasing any part of the consumer’s

credit report or any information derived from the report without the express authorization of the

consumer.

OTHER SUBSTANTIVE ISSUES

The AOC lists the following issues:

1)

There is no requirement that the credit bureau place either a security freeze or security alert

upon a credit report within a specified number of days.

2)

There is no provision for notification to the consumer if a credit bureau releases information

on a credit report while a freeze is in effect and without authorization.

3)

There are no exceptions that allow a credit bureau to provide information to a person with a

current debtor-creditor relationship with a consumer, a person acting pursuant to a court

order, warrant or subpoena, the Child Support Enforcement Division, or a governmental

agency acting to investigate fraud, to investigate or collect delinquent taxes or unpaid court

orders or to fulfill any of its other statutory duties.

4)

There is no provision for the bringing of a civil action by a consumer, in the event a bureau

releases information placed under a security freeze, or does not place a security freeze or

security alert upon a consumer’s report, or does not block appropriate information from being

released. Neither does the act contain penalties for such violations of the act.

EO/csd