Alaska lawmakers debate protections from identity theft

Posted: Tuesday, February 19, 2008

Alaska lags behind most other states when it comes to protecting its citizens against identity theft, but it could surge to the forefront under bipartisan legislation moving through the House.

The bill is being heard in the House Finance Committee and could move out of committee as early as today.

Sponsors are optimistic about the bill even though similar proposals have foundered over the last four years.

"I think this is our best shot," said Rep. John Coghill, R-North Pole, who has worked with legislators from both parties and both legislative chambers in crafting the bill's numerous provisions.

The bill would require any businesses or government agencies to notify consumers in Alaska if their personal or financial information has been breached and establish penalties for such a breach. It also would institute a "security freeze" so that consumers victimized by identity theft can halt the unauthorized use of their credit and other information.

About 40 other states have similar privacy rights in law. Coghill said the laws have been well vetted in the courts.

But the Alaska bill also proposes to ban the sale or trade of social security numbers, a provision that would put the state on the cutting edge, said Coghill.

"It wasn't too many years ago, I would freely tell people my social security number over the phone," said Coghill. "But we are in a much more dangerous world now and this sets up barriers for what you can and cannot do with these numbers."

Gail Hillebrand, the senior attorney for Consumers Union, a nonprofit consumer advocacy group, said Alaska would be taking consumer protection a step forward by protecting what she calls the "key to our financial front doors."

"There are people in the business of selling social security numbers. It's legal now to sell it, put it on the Internet, put it on a card and send it to someone. This strikes at that practice," she said.

An estimated 8.3 million Americans fall victim to identity theft every year, according to a Federal Trade Commission report, and Hillebrand said awareness of the problem has grown as states have passed notification laws.

The first big announcement came in early 2005, when ChoicePoint Inc., a national provider of identification and credential verification services, informed its clients that thieves had gained access to personal information on almost 140,000 consumers through the company.

Eldon Mulder, a former state legislator and now a lobbyist for ChoicePoint, said his company is supportive of the concepts in the bill but wants to make sure the provisions are consistent with laws in other states.

As far as use of social security numbers, he said Alaskans need protection but they still need to use interstate commerce, too.

"Fortunately or unfortunately in today's world, your social security number is your most common identifier. Federal law recognizes that that has a legitimate business purpose and this law recognizes that it has a legitimate purpose. We just want to make sure that it's clear and that it works," said Mulder.

Other industries, like banking and insurance companies, and even state agencies also have had concerns that provisions in the bill could be burdensome.

Coghill said exceptions were carved out for some government uses such as worker's compensation and unemployment, but the bill lays out standardized rules for business.

"I don't want to forbid businesses from handling information they have good legitimate purposes for, but I want a consumer who is somehow violated to have some recourse," Coghill said.

If the bill passes the House, it would move onto the Senate where Labor and Commerce Committee Chairman Johnny Ellis, D-Anchorage, said he plans to hear the bill immediately.

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