President Bush recently signed into law the most aggressive credit legislation in four years named the Fair and Accurate Credit Transactions Act of 2003. As reported by The Wall Street Journal earlier this month, the new law attempts to prevent the growing problem of identity theft. What exactly does the law entail? Under the new legislation, consumers are offered the opportunity to obtain one free credit report per year from each of the three credit bureaus. Some states have already incorporated this feature into regulation while others (such as Pennsylvania) have only provided free credit reports to consumers when there was suspicion of identity theft crime occurring. The free credit reports feature will be incorporated within one year of when the law is enacted on January 1, 2004. The role of merchants will also be altered as a result of this law. Merchants will now be required to inform consumers of any missed payments before reporting them to credit bureaus. This feature will benefit consumers not only by detecting fraudulent charges in a more timely fashion, but will also remind consumers to stay on top of their bill payments.

It is common that victims of identity theft are unaware of fraudulent behavior for months at a time and sometimes years after the crime occurred. With the new law, bogus charges will be detected more quickly. In addition, the sharing of sensitive information of credit bureaus with businesses will be restricted. Cracking down on this activity will deter identity thieves from obtaining credit in potential victims’ names. Overall, the passing of this new law is a preemptive win in the campaign against identity theft.