Don’t Let it Go: Keeping Your Child’s Credit Report Frozen

May 20, 2014

Here’s the scene: you take your child out on his or her eighteenth birthday to help buy that first car, which your child will be financing. Imagine your surprise, and your child’s, when you learn he or she already has a car. And a treadmill. And two credit cards. Well, your child doesn’t, but someone using his or her name and identification does.

Identity theft has become one of the fastest growing crimes in the U.S. A recent Wisconsin law gives parents more tools to help protect their children from identity theft. In December 2013, the Governor signed 2013 Wisconsin Act 78, sometimes referred to as the “Child Credit Protection Act.” The new law’s protections are available for parents of children under 16, and guardians of individuals, regardless of age, who have an appointed guardian or conservator, also referred to as a “protected consumer.”

What Does the New Law Do?

The new law, effective January 14, 2014, now allows parents and guardians the ability to place a security freeze on the credit report for a child under 16, or another protected consumer.

What Does the Security Freeze Do?

It prohibits a credit reporting agency from releasing the credit report or information derived from the credit report. To place a security freeze, a parent must submit a request to a credit reporting agency (each reporting agency will have its own forms and process), and provide proof of identification of the parent and child or guardian and protected consumer, along with proof of authority to act on behalf of the child or protected consumer.

What Can Be Used for Proof of Identification?

The law notes a copy of a social security card, driver’s license, or other government-issued ID – or a social security number or an official or certified copy of a birth certificate – can be used.

What Does ‘Proof of Authority’ Mean?

The law requires a guardian have ‘sufficient proof of authority’ to place the security freeze. The law notes a court order, power of attorney, or a written and notarized statement describing the representative’s authority to act on behalf of the protected consumer can be used. The Department of Agriculture, Trade, and Consumer Protection describes this as documentation of “their relationship to the dependent.”

Are There Any Fees to Set a Security Freeze?

Yes, the law allows credit reporting agencies to charge a fee of not more than $10 to either place or remove a credit freeze for a protected consumer over the age of 16. However, the law does not permit agencies to charge a fee when there is a police report alleging identity fraud against the child or protected consumer and the guardian provides the report to the agency – or to place a freeze for a child under 16, when the agency already has a file on the child.

Can the Freeze Be Removed?

Yes, the procedure is similar to the procedure to request a freeze: submit a request to a credit reporting agency (each reporting agency will have its own forms and process), and provide proof of identification of the parent and child or guardian and protected consumer, along with proof of authority to act on behalf of the child or protected consumer. If the child or protected consumer is making the request, he or she must also provide the sufficient proof of authority of the parent, guardian, or representative, is no longer valid.

Are There Exceptions When a Credit Report May Be Released, Even if There Is a Freeze in Place?

Yes, the law allows a credit reporting agency to release a credit report to the protected consumer or his or her guardian, at the request of the consumer or guardian, to an insurance company, or for the purposes of criminal record information, fraud prevention or detection, personal loss history, or employment, tenant, or background screening.

Why Place a Freeze?

With this new law, Wisconsin is now one of a small number of states where, by law, parents and guardians can place credit freezes on a child’s credit report. The new law gives parents a low-cost option to provide another layer of protection for their children and their children’s credit history.

Research assistance provided by Jane Crandall, librarian.

To subscribe to email alerts from Axley Law Firm, click here.

For more information about "Don’t Let it Go: Keeping Your Child’s Credit Report Frozen," contact Jane Crandall at jcrandall@axley.com or 608.283.6739.