Insurance trade groups urged New York State legislators yesterday to avoid enacting measures to safeguard against data theft that they said could be burdensome for both industry and consumers.
Their comments were made to a joint session of two committees drafting legislation that would make New York the 13th state to enact a measure allowing consumers to freeze access to their data. Twenty states are pondering such legislation, according to legislative staff.
The hearing was held by the Senate Committee on Consumer Protection and Assembly Committee on Consumer Affairs and Protection. So far, five bills have been submitted in the Assembly and one in the Senate.
Robert Caroppoli, an aide to the head of the Senate panel, Sen. Charles J. Fuschillo, R- Merrick, said in addition to concerns raised by insurance representatives, witnesses had voiced worries that a security freeze could be used to block child support payment data.
He said there is no set timetable for producing a final measure because the legislators wanted to hear from witnesses before going ahead.
The basic framework in use by a number of states provides for allowing a consumer to freeze or block access to credit reports through the use of a PIN number.
Speaking in support of the concept were Charles Bell, program director Consumers Union and several other consumer representatives, who argued that the public should have the option of blocking records against credit identity thieves.
Gary Henning, assistant vice president Northeast Region for the American Insurance Association said his group supports fraud prevention and insurers offer protection for fixing records damaged by identity thieves, but that insurers should be exempt from any security freeze on records.
He said it was difficult to imagine, "an identity thief purchasing an automobile or homeowners insurance policy, using someone else's identity, for monetary gain.
"Even if such a scenario is imagined, the identity thief would still need to produce the car or home of the person whose identity was being stolen in order to secure insurance."
He noted that some of the bills in committee would freeze "consumer reports," which could include vehicle accident reports and loss history.
Since the legislature approved insurer use of credit reports last year, restricting the practice "would seem counterproductive."
The panels also heard from Michelle Mancias, representing State Farm Insurance, and Kristina Baldwin, regional manager and counsel for Property Casualty Insurers Association of America.
Ms. Baldwin, interviewed later, said the freeze idea would cause "a burden inconvenience and confusion" for consumers and business without providing additional theft protection beyond what is already in federal statutes.
She said it would get in the way of consumers efforts to obtain both insurance and mortgages. In most states, she said, it is a three-day process to unlock a credit freeze, although New Jersey had adopted a measure effective next month that is supposed to provide a freeze that can be unlocked in 15 minutes.
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