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The merits of the credit freeze

On Monday, I wrote about my favorite source for InfoSec and Equifax breach-related news. Today, I wanted to add some important follow-up based on yesterday’s testimony.

Brian Krebs, my favored InfoSec resource, strongly recommends individual citizens pursue a legal credit freeze over a contractual credit lock. While a credit freeze might cost you a few dollars (depending on which state you’re in), it also affords you–the individual citizen–much more robust protection than does a credit lock.

Why? Krebs quickly gets to the heart of it:

Lawmakers on today’s panel seemed content with Smith’s answer that [a credit freeze and a credit lock] were effectively the same, only that a freeze was more cumbersome and costly, whereas credit locks were free and far more consumer-friendly.

It’s not only Krebs refuting this. He explains that Consumers Union staff attorney Christina Tetreault

notes that perhaps the main reason a security freeze is the better option is that its promise to guard your credit accounts is guaranteed by law, whereas a credit lock is simply an agreement between you and the credit monitoring company.

Krebs concludes:

What’s more, placing a freeze on your file is exactly what Equifax and the other bureaus do not want you to do, because it prevents them from making money by selling your credit file to banks and others (including ID thieves) who wish to grant new lines of credit in your name. If that’s not the best reason for opting for a freeze, I don’t know what is.

On a related note, now … retired … Equifax CEO Richard Smith made clear that “the company’s customers are in fact banks and other businesses – not consumers.” With credit bureau profits deriving from companies, not individual citizens, the bureaus have very little incentive to protect individual citizens’ data. This mindset shows in Smith’s testimony.

Once upon a time, I believed it was unequivocally good that tablet computers and EpiPens (for example) were made more widely available in schools. While there are indubitably some benefits, I now understand that improving citizens’ lives was not the corporate inspiration for such moves. Rather, that inspiration is in their profit margins.

Individual citizens can only pay pennies compared to what governmental customers can.

Recall from my last post my note on how “deregulation” is really re-regulation. Basically, when corporations lobby for “deregulation,” they invoke the idea of “free markets” while (1) transferring the costs of so-called market freedom to individual citizens and (2) reaping ample profits from the transfer.* As Kate Raworth succinctly put it, “financial deregulation actually just shifts the costs and benefits of financial crisis onto a different group of people.” Namely, you and me.

Doesn’t feel very “free,” does it? It sure doesn’t to me. This is why it’s so important to understand the difference between a credit freeze and a credit lock, and to show your legislators you both know the difference and expect them to favor your protections over corporate ones in the future.

* If you’d like to read an excellent explanation on the merger between corporation and U.S. government, check out Sheldon S. Wolin’s 2008 book Democracy Incorporated: Managed Democracy and the Specter of Inverted Totalitarianism.

 

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