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August 2005

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.

Copyright ©2005 Wisconsin Energy Cooperative News
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