A new law will give D.C. residents a tool to fight identity theft, which affects an estimated 10 million victims nationwide every year, according to the Federal Trade Commission.
Scheduled to go into effect tomorrow, the Consumer Security Freeze Act of 2006 gives consumers the ability to lock access to their credit files, so a criminal cannot open a fraudulent account in their name using stolen information, such as a Social Security number.
A security freeze will not allow a criminal to open an account or get new credit in a stolen name because it will keep a potential creditor, like a credit card company, from accessing the credit file. The creditor then will automatically deny the person trying to open the fraudulent account.
About 25 percent of all identity theft complaints involve credit card fraud, 15 percent of which involve new accounts opened illegally. A security freeze would bar criminals from opening such accounts.
To place a security freeze, D.C. and Maryland consumers will have to use certified mail to notify each of the three major credit bureaus: Equifax, Experian and TransUnion. Each may charge a $10 fee to D.C. consumers and a $5 to Maryland consumers.
But a consumer must lift the freeze he placed if he wants to buy a house or car or any other action that requires a credit score.
In the transition stages of the law, lifting the freeze can take up to three days, which critics have called unnecessarily burdensome since consumers often need to access their own credit. But starting in September 2008 and January 2009, D.C. and Maryland consumers, respectively, will be able to lift the freeze in a matter of minutes by simply going online.
"That is a really important provision because it means you will be able to use your credit easily, but crooks can't," said Gail Hillebrand, senior attorney for Consumers Union, the nonprofit publisher of Consumer Reports magazine.
The District is joining a growing trend. California pioneered the law in January 2003 and 38 states have since passed security freeze laws. Maryland's law goes into effect in January, while Virginia does not have such a law.
In 2006, the District had the second-highest percentage of reported identity theft victims in the country with 765 victims, or 131.5 victims per 100,000 consumers, according to the FTC. Many identity thefts go unreported, according to the agency.
Though a security freeze will prevent fraudulent new accounts, consumers may not necessarily ever find out someone has tried, Ms. Hillebrand said.
"It's kind of like if you deadbolt your door and someone tries the doorknob but can't get in," she said. "You may not know they were there, but they still won't get into your house."
Avoiding identity theft can help save consumers time and money, she said.
It takes an average of 134 days to realize a fraudulent account has been opened, according to the FTC. It then takes an average of $1,180 and 40 hours or more to correct the problem.