Senator Charles Schumer is proposing a new way to help curtail identity theft: He wants to make it mandatory for the three big credit-reporting firms—Equifax, TransUnion and Experian—to send a 'credit inquiry alert' whenever a credit report is requested. Since a credit report is requested whenever a new account is opened, the Democratic senator believes this will provide a proactive way to stop identity thieves in their tracks.
Schumer sent a letter directly to the three credit-reporting firms asking them to implement such a system to alert consumers whenever a loan or other type of credit is requested. He believes consumers should be given the option to sign up for these alerts, delivered in the form of an email or a phone call, free of charge. The senator proposes that consumers are also given the option to immediately freeze their accounts if they've been alerted and suspect fraudulent activity.
This type of alert would tip off consumers whenever an individual is applying for a loan, credit card or mortgage, as well as looking to sign up for cable, buy a car, or rent an apartment, for example. Schumer argues that since there is no immediate notification when credit inquiries are made, consumers may not be aware that criminals have stolen their personal information and accessed their credit until it is too late.
“Too many people have faced the reality of learning that someone else has opened new lines of credit in their names only once their score has already been run into the ground,” Sen. Schumer wrote in the letter to the credit-reporting firms.
As of now, consumers do have the option to set up notifications on their credit cards so that they know when their card is used, and they can also set up notifications on their e-mail accounts to be alerted whenever their account is accessed from a new computer. However, no such notification system is currently in place for credit inquiries.
Schumer has indicated that if he's met with resistance from the credit-reporting firms, he might pursue the idea with the Consumer Financial Protection Bureau.
Schumer believes this proposal is particularly important given recent data breaches. He explained in his letter: "As you are well aware, theft of Americans' most personal, sensitive data has become disturbingly commonplace. The recently-reported hack of the Office of Personnel Management, which targeted millions of federal employees, is a large-scale version of what is taking place every day in smaller, less visible ways. We don't always know what hackers have planned for the data, but we know what they can do with it - use it to assume the identity and wreak havoc on the credit and finances of innocent Americans."