2005 Legislative Update from the
As Chair of the Assembly Consumer Affairs and Protection Committee, I am pleased to report the results of a very successful legislative session. Among the Committee’s top priorities were protecting consumers from identity theft and improving access to prescription drug prices.
This year the Committee maintained its focus on protecting individual privacy by advancing legislation to allow consumers to “freeze” their credit files to protect their personal information from identity thieves as well as legislation to protect the privacy of consumers’ wireless telephone numbers.
I am very proud of these and many other accomplishments. The Committee on Consumer Affairs and Protection will continue to pursue its goal of protecting consumers throughout all of New York State.
Internet Drug Pricing
As prescription drug prices continue to rise, many New Yorkers who carry little or no drug insurance coverage are increasingly faced with tough choices. An April 2005 survey of prescription drug prices conducted by the New York Public Interest Research Group (NYPIRG) found substantial price differences in pharmacies located in the same community. The study revealed that consumers on Long Island, for example, could pay nearly $80 more than the lowest available price for the antidepressant Wellbutrin and consumers in Queens could pay nearly $30 more for the sleep aid Ambien.
In 2002 the Legislature passed a law requiring pharmacies to provide a weekly retail price list of commonly prescribed drugs to consumers. While this information has been helpful, many consumers who need prescription drugs, most notably seniors, are often the least able to travel from one pharmacy to another to find the lowest price. In order to make drug price information more accessible, the Legislature passed and the Governor signed, A.5403-A (Gottfried) requiring the Department of Health to establish and maintain a database on its Web site enabling consumers to compare the retail drug prices of pharmacies (Chapter 293 of the Laws of 2005). The Web site will contain the one-hundred-and-fifty most prescribed drugs and be searchable by zip code and other factors. This new law will allow consumers to comparison shop from home or their local library, providing easier access to drug prices and increasing consumers’ ability to save on prescription drugs.
|Teresa A. Santiago, Chairperson and Executive Director of the NYS Consumer Protection Board addresses the Committee.|
One of the most prevalent forms of identity theft is commonly referred to as “phishing.” Phishing fraudsters send e-mails or pop-up messages asking consumers to divulge personal information such as account passwords, account numbers, credit card numbers, social security numbers, or other sensitive information. These e-mails often claim to be from a business or organization with which you may already be familiar, such as an internet service provider, bank, credit card company, online payment service, or government agency. These e-mails ask recipients to “confirm” or “validate” account information by responding and providing sensitive personal information, and sometimes these scams threaten that severe consequences will occur if the recipient does not respond.
To protect consumers from phishing scams, the Assembly passed A.8025-B (Brodsky). This bill would provide additional means for the prosecution of identity thieves engaged in this deceptive activity. Unfortunately, the Senate failed to act on this bill.
Legitimate businesses and organizations never request personal information through e-mail. If you ever receive a request for personal information through e-mail or a pop-up, do not respond or click on the link. If you are concerned about your account, contact the business or organization named in the e-mail or pop-up using a phone number that you know to be valid. You should also forward the e-mail to the named organization or business as well as to email@example.com. Additionally, you may wish to file a complaint at the Federal Trade Commission’s Web site, www.ftc.gov.
Identity Theft Hearing
Identity theft costs consumers and businesses millions of dollars each year. This increasingly common financial crime also levies an incalculable toll on the lives of its victims. Identity theft victims often spend months or even years clearing their accounts of fraudulent charges and restoring their credit histories. In recent years, methods of committing identity theft have increased dramatically alongside fast-paced advances in technology. Identity thieves are now employing new and increasingly deceptive methods in their efforts to gain access to personal information. Some of these new technologies were unavailable when the Legislature enacted the Identity Theft Law (Chapter 619 of the Laws of 2002), which Assemblywoman Pheffer sponsored. This landmark law criminalized the theft of identity and enhanced consumers’ ability to recover damages suffered due to identity theft.
On April 7, 2005, the Committee on Consumer Affairs and Protection, the Committee on Banks, and the Committee on Codes held a joint public hearing to examine the effectiveness of this law; to address several identity theft issues that have arisen since its enactment; and to explore legislative solutions to these concerns. The Committees heard testimony from the Office of the Attorney General, the New York State Banking Department, Queens District Attorney Richard A. Brown and representatives of the financial services industry. These witnesses provided the Committee with information regarding new forms of identity theft, policy options to facilitate the prosecution of persons engaged in these financial crimes and suggestions on legislation to combat identity theft. The Committee will use this valuable information as it continues to examine and advance legislation to protect New York residents from identity theft.
Home Equity Theft Hearing
Recently, there has been an alarming increase in homeowners falling victim to home equity theft scams. These homeowners, many of whom are low- and middle-income elderly, fall behind on their mortgages, at which point they are approached by unscrupulous individuals or businesses who promise to help solve their problems. Instead of receiving assistance, however, the homeowners are misled into transferring the title to their property.
In order to examine the home equity theft issue and explore how these crimes can be prevented, the Committee on Consumer Affairs and Protection, the Committee on Banks, the Committee on Housing and the Committee on Codes held a joint public hearing on May 17, 2005. The Committees received valuable testimony from the New York State Banking Department, housing and consumer advocates, legal services organizations and affected homeowners. Several witnesses recommended passage of the Home Equity Theft Prevention Act (A.7667-A), which Assemblywoman Nolan and Consumer Affairs Committee Chair Audrey Pheffer sponsored. This measure would implement several consumer protections related to home equity purchasing, most notably requiring home equity purchasers to be licensed with the Department of State. This legislation passed the Assembly, but has not been acted on by the Senate.
Security Breach Notification
Recent reports involving data security breaches at major national businesses have left consumers justifiably on edge. On June 17, 2005, MasterCard announced that a hacker may have obtained the personal information of up to 40 million credit card holders, in what may be the largest data security breach in the world to date. This alarming news follows several data security breaches revealed in February and March 2005 at national data brokers ChoicePoint and LexisNexis involving more than 177,000 consumer profiles. The shoe outlet DSW also recently announced that thousands of New York consumers and over 1.4 million customers nationwide were exposed when credit card information was stolen from their customer database.
In order to ensure that New York consumers receive notice of any security breach involving personal information that could be used to commit identity theft, Assemblyman James Brennan, Assemblywoman Pheffer and others sponsored the Information Security Breach and Notification Act (A.4254-A), which the Legislature passed and the Governor signed into law as Chapter 442 on August 9, 2005. This new law will require private businesses and government agencies to provide consumers with adequate notice of a security breach, authorize the Attorney General to recover damages on behalf of victims not receiving a required notice and establish fines for businesses that fail to provide notice.
An important new tool to protect consumers from identity theft is a security freeze. Security freezes allow consumers to prohibit access to the personal information maintained in their credit files unless they expressly consent to allow access, thus preventing identity thieves from taking out new loans and credit in their name. A consumer who files a security freeze is provided a unique PIN or password that must be given to the credit reporting agency each time the consumer wants to allow access to the information. Several states, including California, Vermont, Connecticut, and Maine have enacted legislation authorizing consumers to freeze their credit files.
In order to provide New York consumers with this powerful weapon in the fight against identity theft, Assemblywoman Pheffer introduced A.7349-A. This bill would allow victims of identity theft, and those who believe they may become victims, to place a security freeze on their consumer reports. The bill advanced to the 3rd Reading in the Assembly. This issue will continue to be a priority of the Committee.
Wireless Telephone Directory
You may have received an e-mail claiming that a wireless phone directory exists that will soon allow solicitors access to our wireless phone numbers. Fortunately, this is untrue. However, several wireless phone companies have announced their intention to establish a national directory of wireless phones used mainly for business purposes.
In order to ensure the privacy of New York wireless customers, the Legislature passed, and Governor signed, A.7180-A (Dinowitz). This bill, signed into law as Chapter 655 by the Governor on September 16, 2005, prohibits any person or business entity from obtaining any wireless telephone numbers for the purposes of creating a wireless telephone directory without first obtaining prior authorization from each customer. This new law will ensure that any future wireless directory will only contain the numbers of those wireless phone users who choose to have their number listed.
Free Credit Reports
Effective September 1, 2005, New York consumers are now entitled to receive one free credit report every 12 months from each of the nationwide consumer reporting agencies thanks to a recent amendment to the federal Fair Credit Reporting Act.
Your credit report contains information on where you live, how you pay your bills, and whether you’ve been sued, arrested, or if you filed for bankruptcy. This information is used by creditors, insurers, employers, and other businesses to evaluate your financial history and credit worthiness, and can affect whether you get credit, insurance, or even a job. Therefore, it is important to check your report for any errors or unauthorized credit activity and to make sure that all the information is accurate, complete, and up-to-date.
New York residents can order their free annual credit report online at www.annualcreditreport.com, by calling 877-322-8228, or by completing the Annual Credit Report Request Form available at www.ftc.gov and mailing it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
Federal law requires both consumer reporting agencies and the companies providing information about you to these agencies to correct any inaccurate or incomplete information in your report. Should you find any errors in your report, it is necessary to contact both the consumer reporting agency and the company providing the information you believe to be inaccurate in writing.
Unfortunately, your credit score is not included in your credit report. Credit scores are based, in part, on the information contained in your credit report, and are used by creditors to help determine whether to give you credit. You can purchase your credit scores when you request your credit reports online at www.annualcreditreport.com or by contacting one of the nationwide consumer reporting agencies. You can expect to pay between four and eight dollars for your credit score. Lastly, in order to protect the personal information contained in your credit reports, it is recommended that you destroy or shred the reports before disposal.
Credit Card Protection Disclosure
For a small monthly fee, many consumers feel extra credit card protection is a good deal. Unfortunately, many credit card protection services do not provide more meaningful protection than is currently found in federal law. For example, under the Fair Credit Billing Act, credit card holders are only liable for up to fifty dollars in unauthorized charges, and some credit card companies will even waive this fee.
In order to allow consumers to make an informed decision prior to entering into any credit card protection service agreement, the Legislature passed A.75-A (Pheffer). This bill, signed into law as Chapter 433 by the Governor on August 9, 2005, requires any written solicitation offering credit card protection services to include a disclosure regarding the consumer’s rights that already exist free of charge under the Fair Credit Billing Act. This new law will also prohibit the automatic renewal of credit card protection services and require written solicitations to disclose that the purchase of such services is not required to secure or retain a credit card.
Magazine subscribers are constantly bombarded with renewal notices, regardless of how many issues still remain as part of their current subscription. Very often, these notices lead consumers to believe that their subscription will run out soon, causing an interruption of service. In addition, magazine publishers are currently allowed to direct consumers to coded dates in the mailing label to obtain the expiration date of their subscription in any written offer to renew. Many consumers do not read the fine print and renew, resulting in months and even years of pre-paid issues.
In order to reduce the occurrence of unnecessary or superfluous renewals, the Legislature passed A.3494-A (Pheffer). This bill would require publishers to provide magazine subscribers with enhanced disclosure of the month and year in which their subscription expires in any written renewal invitation. This bill was vetoed by the Governor over concerns that, in some instances, it fails to provide consumers with a convenient means of accessing their subscription status, by allowing publishers to refer subscribers to a customer service Web site and toll-free number for such information. The Committee intends to consider a revised version of this bill next year that will address the Governor’s concerns.
Limiting Preapproved Solicitations of Credit or Insurance
Is your mailbox cluttered with “preapproved” offers for credit or insurance? Have these offers become a nuisance? Thanks to the federal Fair Credit Reporting Act you have the right to opt out of receiving future “preapproved” or “prescreened” solicitations for credit or insurance.
In addition to reducing the amount of unwanted mail you receive, opting out of preapproved offers can reduce your risk of identity theft resulting from stolen mail. To exercise your right to opt out of preapproved solicitations, call 1-888-5OPTOUT or visit www.optoutprescreen.com. You may choose to opt out for five years or permanently, and may opt back in at any time. Your request must be processed within five days, but it may take up to sixty days before you stop receiving preapproved offers. Lastly, if you choose to opt-out, you will no longer be included on certain preapproved offer lists maintained by the major credit reporting companies, but you may, however, continue to receive commercial mailings based on lists from other sources.
Protecting Consumers from Unfair “Universal Default” Policies
An increasing number of credit card issuers are including “universal default” clauses in their agreements, allowing them to raise a customer’s interest rate based on the customer’s indebtedness or late payments to other creditors. For instance, a late payment on a telephone bill could cause a card holder’s interest rate to increase. Notice of this policy is almost always buried in the fine print of the card agreement, leaving many customers unaware that their interest rate could be impacted by late payments to other creditors. This results in credit card holders being penalized, even if they have never been late on a payment to their credit card issuer.
In order to put an end to this unfair practice, the Assembly passed A.809 (Rivera, P). This bill would prohibit “universal default” policies and provide that any violation of the prohibition would be a criminal offense.
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