Financial Data Protection Act of 2006 Is WEAK

The Financial Data Protection Act of 2006 (HR 3399) would prevent you, if you lived in one of 17 states that permitted this, from freezing your credit unless you were the victim of identity theft. Why is this significant? Since a creditor will have to check your credit history before issuing credit, they likely won’t if they can’t see your history, by freezing your credit you’ve effectively taken away a major reason why someone would steal your identity.

The bill mainly establishes a federal standard for the protection of financial and personal data as well as what reporting agencies must do, but a lot of them are weaker than the state standards that exist already. To make matters worse, this document also supersedes those protections in the individual states which mean the federal government is taking a little bit more power away from the state’s attorney generals.

Rep. Steven LaTourette, R.-Ohio, the bill’s co-author, says credit freezes must be held in check to keep the financial system from unraveling. “Even the simplest process of buying groceries with your credit or debit card will break down if we allow a patchwork of competing and conflicting state laws,” he says.

Representative LaTourette needs to either freshen up on how credit cards work or he needs to figure out what happens at the grocery store. The vendor doesn’t check your credit history when you buy a bag of peaches or a box of cereal. In fact, a consumer should know beforehand every single time someone is legally requesting their credit history so the complaint that credit freezes will unravel our financial system is ludicrous (and stupid). Clearly option adjustable rate mortgages and ridiculous deficit spending will do that - not credit freezes.

via USA Today.