Freezing Credit Becomes ID Theft Response
I wish nothing new was happening
with identity theft. However, Mastercard disclosed at the end
of June that as many as 40 million credit card holders may have
been exposed to identity theft fraud when thieves obtained personal
information from a card processor’s database. In response
to this and other incidents, 11 states have created a new weapon
against identity theft: the credit freeze. A credit freeze means
that no one, including you, can obtain new credit such as credit
cards or a mortgage until you remove the credit freeze.
In late June, Illinois and Connecticut
became the most recent states to enact credit-freeze laws, joining
California, Colorado, Louisiana, Maine, Nevada, New Jersey,
Texas, Vermont, and Washington. In these states, consumers can
contact the three big credit-reporting agencies—Equifax,
Experian, and Trans Union—and ask them to place a credit
freeze on their credit report.
The credit card industry opposes
state credit-freeze laws because consumers could be inconvenienced.
For example, if you need to raise your credit limit to buy a
large-ticket item like a new car, you have to wait several days
as you work to remove the credit freeze. The industry also notes
that a credit freeze will not stop a thief from charging up
credit cards they already possess. Rather, the credit card industry
recommends consumers place a federally authorized “fraud
alert” on their credit reports.
In response, consumer advocates
note that a fraud alert is only available to those consumers
who can prove they are or are about to become fraud victims—likely
too late to prevent the theft. Others argue this should be the
consumer’s choice. For example, USA Today editorialized
on June 27, 2005: “Industries that profit from selling
personal data need to remember one little detail. The information
is personal—and people should be able to lock the door
without asking anyone’s permission.”
The Wisconsin Legislative Reference
Bureau told me that there is no credit-freeze bill pending in
the Legislature. Should Wisconsin become the 12th state? You
can let your legislator know by calling the Legislative Hotline
at 1-800-362-9472.
Is the Employee Car Discount Right For
You?
General Motors (GM), followed
by Ford and Chrysler, has introduced “employee discount”
plans for consumers. These automakers advertise that these plans
will save consumers thousands off the sticker price on most
2005 models. The sales campaigns are responding to falling sales,
increased foreign competition, and consumer confusion over incentive
programs. The GM plan appears to work. GM recorded a 46.9-percent
jump in sales in June.
Is this promotion genuine? Yes,
but I am not a fan of calculating your savings off of the “sticker
price,” since this is often a fictional price. If no car
has been sold at that price, what sense does it make to compare
your “savings” to that price? Wisconsin’s
price comparison law prohibits this type of comparison for most
products—but not to cars.
I agree that the “employee
discount” promotion is simpler than all of the discounts
and rebates that are otherwise offered. Industry analysts also
say that automakers are offering true deep discounts to clear
inventory. My only cautions are to remember that the employee
discounts are not offered on the most popular types of cars,
and it’s still possible you may get a better deal applying
all of the discounts, rebates, and low-interest financing. You
should also consider negotiating for an even lower price, particularly
on less popular models such as SUVs.
