State Credit Freeze Law Ruled Unconstitutional

by Mike Bevel, CollectionIndustry.com

Californian consumers hoping to protect their identity by putting temporary freezes on the dissemination of their credit reports are in violation of the First Amendment – at least according to the Court of Appeals.

For those who don’t have the First Amendment memorized: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.” The law ostensibly violates the constitution because it precludes the reporting of information containing in public records, the Court of Appeal for this district has ruled.

Division Five, according to Metropolitan News Online, ruled Monday that U.D. Registry, Inc., which maintains information on tens of millions of people in California and elsewhere and provides landlords and property managers with reports about prospective tenants, had established that Civil Code Sec. 1785.11.2, the “security freeze” law, is unconstitutional as applied to those reports.

The law, which took effect Jan. 1, 2003, provides that a consumer may place a notice on his or her credit report, which generally prohibits reporting agencies from releasing credit information without a specific authorization from the consumer.

Los Angeles Superior Court Judge Andria K. Richey found that the law was unconstitutional on its face to the extent that it barred dissemination of information based on public records, but was otherwise constitutional, and granted an injunction allowing the state to enforce the law, against U.D. Registry and others, only with respect to information not obtained from public records.

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