Legislature(2003 - 2004)

02/20/2003 01:33 PM Senate L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                   SB  64-CREDIT INFORMATION                                                                                
CHAIR CON BUNDE announced SB 64 to be up for consideration.                                                                     
SENATOR HOLLIS  FRENCH, sponsor of  SB 64, said this  is consumer                                                               
protection legislation.  It is designed to  allow Alaskans annual                                                               
access to his or her  consumer report from any consumer reporting                                                               
agency  that does  business in  the state.  There are  only three                                                               
nationwide  consumer reporting  agencies that  compete with  each                                                               
other. Many  people have no  experience getting  consumer reports                                                               
and, for some, the $9 cost is  an issue. Six or seven states have                                                               
enacted similar  legislation. He said  there is no  hidden agenda                                                               
behind SB 64 and it is easy to understand.                                                                                      
SENATOR FRENCH  referred to  an article from  CNN about  a recent                                                               
theft  of  credit  card  numbers  from  a  mail  order  catalogue                                                               
company. It said  that as many as 8 million  account numbers were                                                               
accessed. At  least one company  cancelled 8,000 credit  cards in                                                               
response to the theft.                                                                                                          
CHAIR BUNDE asked how many  folks he thought would take advantage                                                               
of this if it was available to them.                                                                                            
SENATOR  FRENCH replied  that  currently 1  in  10 people  access                                                               
their credit reports nationwide. He  noted, "I would be surprised                                                               
if  this would  double the  number of  folks who  were to  access                                                               
their credit reports..."                                                                                                        
CHAIR BUNDE  asked what financial  impact this  legislation would                                                               
have on the credit card companies.                                                                                              
SENATOR  FRENCH answered  that no  one knows,  but he  thought it                                                               
might actually be beneficial.                                                                                                   
CHAIR BUNDE  noted that any  cost for  the credit check  would be                                                               
passed on  to the  consumer. He  asked Senator  French if  he had                                                               
considered the  impact this bill might  have on the $9  charge if                                                               
this service were free.                                                                                                         
SENATOR FRENCH said that is a  good question that he has referred                                                               
to  credit  companies,  but  they hadn't  responded  so  far.  He                                                               
stressed that this is information  that ultimately belongs to the                                                               
SENATOR  BETTYE DAVIS  remarked  that this  might help  consumers                                                               
because  now they  have  to pay  a  fee to  get  a credit  report                                                               
through credit card companies.                                                                                                  
SENATOR GARY  STEVENS asked if  the three companies  provide this                                                               
information to  the consumer in hard  copy only or whether  it is                                                               
available over the Internet.                                                                                                    
SENATOR FRENCH replied that he went  on the Internet two days ago                                                               
and paid  $30 to have all  three reporting agencies give  him his                                                               
credit report  in a single  document. He  got a password  and was                                                               
able to access the  report one time. He printed it  out and has a                                                               
SENATOR  GARY STEVENS  remarked  that fraud  might  be even  more                                                               
pervasive if the reports were available on the Internet.                                                                        
SENATOR  SEEKINS   asked  if   information  about   a  particular                                                               
consumer's  financial  transactions  is  considered  to  be  that                                                               
person's property.                                                                                                              
SENATOR  FRENCH replied  that at  some  level it  belongs to  the                                                               
consumer at least once because it is the consumer's transaction.                                                                
SENATOR SEEKINS  asked if  a consumer  would benefit  from having                                                               
recorded  transactions  in  a  credit  collecting  and  reporting                                                               
agency and if  they weren't selling that  information by allowing                                                               
it to be collected.                                                                                                             
SENATOR FRENCH  replied that he  didn't dispute the value  of the                                                               
service   credit    reporting   companies   provide,    but   the                                                               
countervailing value is openness, access and accuracy.                                                                          
SENATOR  SEEKINS said  that based  on his  own experience,  if he                                                               
knows  a  person's  social  security  number,  he  can  get  that                                                               
person's credit history.  He wanted to know from  the credit card                                                               
companies their estimate of the added  cost of a free report that                                                               
would be spread  out among existing customers. He  asked how many                                                               
people in  the room  have checked  to see  if someone  had stolen                                                               
their identity. [Two people indicated they had.]                                                                                
SENATOR FRENCH responded that he had  at least one inquiry from a                                                               
consumer  protection group  in Washington  D.C.  asking how  this                                                               
bill  was proceeding  and  he hadn't  notified  them. He  thought                                                               
there must be a way to monitor  bills that are filed and that the                                                               
credit reporting  agencies have  not responded because  they have                                                               
not heard about the bill yet, not because they do not care.                                                                     
SENATOR  SEEKINS  asked  which   states  currently  have  similar                                                               
legislation and whether they have experiences to relate.                                                                        
1:50 p.m.                                                                                                                     
SENATOR  FRENCH  replied  he is  aware  that  Colorado,  Georgia,                                                               
Maryland,  Massachusetts, New  Jersey  and  Vermont have  similar                                                               
CHAIR BUNDE said it would be  interesting to see if the number of                                                               
inquiries  increased in  those  states and  whether  the cost  of                                                               
reports beyond the free one increased.                                                                                          
MR.  STEVE  CLEARY,  Executive  Director  of  the  Alaska  Public                                                               
Interest Research  Group, said this bill  benefits both consumers                                                               
and   companies  because   fraud   costs   everybody  money.   He                                                               
maintained,  "It's  not  just  people  who  have  their  identity                                                               
stolen...but  it's also  the credit  bureaus and  credit agencies                                                               
that  have to  deal with  identity theft...."  He noted  that the                                                               
access provided  by this  bill does  not put  an undue  burden on                                                               
He noted  that this bill  is directed toward identity  theft, but                                                               
credit  scores  are  often  used  to  deny  folks  credit  or  to                                                               
discriminate against them  in other venues such  as insurance and                                                               
they need to be looked at, as well, in other legislation.                                                                       
SENATOR GARY  STEVENS asked if  this bill would actually  lead to                                                               
less fraud  or whether  it would simply  identify fraud  after it                                                               
has occurred.                                                                                                                   
MR. CLEARY replied he hopes it  will lead to less fraud, although                                                               
people will  pick up  on problems after  the fact.  It recognizes                                                               
the increasing  threat of  identity theft  that people  should be                                                               
aware of.                                                                                                                       
SENATOR SEEKINS asked  Mr. Cleary why he would say  that a record                                                               
of his transactions belongs to him.                                                                                             
MR. CLEARY  replied that  a person's  credit history  blends into                                                               
their  future  credit  and  it  can be  used  as  a  device  that                                                               
determines a lot  of future actions. If people are  going to make                                                               
decisions based  on a person's  transactions, that  person should                                                               
have  access to  that same  information for  full disclosure.  He                                                               
added  this bill  could protect  a consumer  from credit  errors,                                                               
which are  very common.  Sometimes just a  misspelling of  a name                                                               
can lead to credit complications.                                                                                               
SENATOR SEEKINS asked  how people would become aware  of this law                                                               
if it passed.                                                                                                                   
MR. CLEARY  replied people  who had  been formally  denied credit                                                               
through  a credit  card  application process  could  find out  on                                                               
their letter of denial. He thought  word of mouth might also help                                                               
or it could be printed on the Permanent Fund application.                                                                       
SENATOR SEEKINS  said he would  not want the  consumer protection                                                               
section of  the Attorney General's  office to  have to put  out a                                                               
business advisory for notification.                                                                                             
MR. ED SNIFFEN, Department of Law,  said the department had to do                                                               
that once.                                                                                                                      
CHAIR BUNDE  asked Mr. Cleary if  he was aware of  anyone who was                                                               
not getting a credit report because of the cost.                                                                                
MR.  CLEARY  replied  that  he   hadn't  heard  that.  There  are                                                               
provisions   for  consumers   who   are   receiving  welfare   or                                                               
unemployment to receive free credit  reports, but this bill lends                                                               
itself to  routine maintenance through more  awareness. He noted,                                                               
"Nine  dollars isn't  all that  much,  but this  bill would  save                                                               
industry money as well, so I think that cost is well spent."                                                                    
CHAIR  BUNDE  thanked him  for  his  testimony  and said  he  was                                                               
looking forward  to getting  more information  on this  issue and                                                               
held SB 64 in committee.                                                                                                        

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