Existing law requires a consumer credit reporting agency to place a security freeze for a protected consumer if it receives a request from a protected consumers representative for the placement of a security freeze, as specified, and the protected consumers representative submits the request to the consumer credit reporting agency in accordance with certain requirements. For purposes of these provisions, a protected consumer includes an individual who is under the jurisdiction of a county welfare department or county probation department, has been placed in a foster care setting, and is under 16 years of age at the time a request for placement of a security freeze is made. Existing law authorizes a consumer credit reporting agency to remove a security freeze for a protected consumer, or to delete a record of a protected consumer if the security freeze was placed or the record was created based upon a material misrepresentation of fact by the protected consumer or the protected consumers representative.

Existing law requires a county welfare department, county probation department, or the State Department of Social Services to inquire of each of the 3 major credit reporting agencies as to whether a child in foster care placement who reaches their 14th birthday has any consumer credit history, as specified. Existing law, with respect to a nonminor dependent, requires the county welfare department or county probation department to assist the young adult, on a yearly basis while the nonminor dependent is under the jurisdiction of the juvenile court, with requesting the consumer credit report from each of the 3 major credit reporting agencies, as specified. Existing law requires the county social worker or county probation officer to ensure that the child or nonminor dependent receives assistance with interpreting the consumer credit report and resolving any inaccuracies, including, but not limited to, referring the youth to a governmental or nonprofit agency that provides consumer credit.

This bill would deem certain requirements for the placement or removal of a security freeze for a protected consumer to be met if the request is from the county welfare department or county probation department appearing on the most recent list provided or made available to the consumer credit reporting agency by the State Department of Social Services, and the requesting entity provides sufficient proof of identification under a specified federal law. The bill would restrict a county welfare department or county probation department from requesting a security freeze for a protected consumer placed in foster care that continues beyond the protected consumers 18th birthday, as specified. If the child placed in a foster care setting has a consumer credit history, the bill would require any information that appears on the protected consumers credit report to be promptly blocked and not reported, in the same manner as if the credit reporting agency had received a police report pursuant to a specified provision relating to identity theft. The bill also would require the credit reporting to comply with additional requirements relating to the blocking and unblocking of credit history information that is subject to investigation by the police or the Department of Motor Vehicles.

The bill would authorize the freeze to be removed by the representative of the protected consumer or by the protected consumer if they are 16 years of age or older, under certain circumstances, including upon the protected consumers removal from foster care.

Existing law requires a consumer credit reporting agency to place a security freeze for a protected consumer if it receives a request from a protected consumers representative for the placement of a security freeze, as specified, and the protected consumers representative submits the request to the consumer credit reporting agency in accordance with certain requirements. For purposes of these provisions, a protected consumer includes an individual who is under the jurisdiction of a county welfare department or county probation department, has been placed in a foster care setting, and is under 16 years of age at the time a request for placement of a security freeze is made. Existing law authorizes a consumer credit reporting agency to remove a security freeze for a protected consumer, or to delete a record of a protected consumer if the security freeze was placed or the record was created based upon a material misrepresentation of fact by the protected consumer or the protected consumers representative.

Existing law requires a county welfare department, county probation department, or the State Department of Social Services to inquire of each of the 3 major credit reporting agencies as to whether a child in foster care placement who reaches their 14th birthday has any consumer credit history, as specified. Existing law, with respect to a nonminor dependent, requires the county welfare department or county probation department to assist the young adult, on a yearly basis while the nonminor dependent is under the jurisdiction of the juvenile court, with requesting the consumer credit report from each of the 3 major credit reporting agencies, as specified. Existing law requires the county social worker or county probation officer to ensure that the child or nonminor dependent receives assistance with interpreting the consumer credit report and resolving any inaccuracies, including, but not limited to, referring the youth to a governmental or nonprofit agency that provides consumer credit.

This bill would deem certain requirements for the placement or removal of a security freeze for a protected consumer to be met if the request is from the county welfare department or county probation department appearing on the most recent list provided or made available to the consumer credit reporting agency by the State Department of Social Services, and the requesting entity provides sufficient proof of identification under a specified federal law. The bill would restrict a county welfare department or county probation department from requesting a security freeze for a protected consumer placed in foster care that continues beyond the protected consumers 18th birthday, as specified. If the child placed in a foster care setting has a consumer credit history, the bill would require any information that appears on the protected consumers credit report to be promptly blocked and not reported, in the same manner as if the credit reporting agency had received a police report pursuant to a specified provision relating to identity theft. The bill also would require the credit reporting to comply with additional requirements relating to the blocking and unblocking of credit history information that is subject to investigation by the police or the Department of Motor Vehicles.

The bill would authorize the freeze to be removed by the representative of the protected consumer or by the protected consumer if they are 16 years of age or older, under certain circumstances, including upon the protected consumers removal from foster care.

Existing law requires a consumer credit reporting agency to place a security freeze for a protected consumer if it receives a request from a protected consumers representative for the placement of a security freeze, as specified, or if the protected consumers representative submits the request to the consumer credit reporting agency in accordance with certain requirements. For purposes of these provisions, a protected consumer includes an individual who is under the jurisdiction of a county welfare department or county probation department, has been placed in a foster care setting, and is under 16 years of age at the time a request for placement of a security freeze is made. Existing law authorizes a consumer credit reporting agency to remove a security freeze for a protected consumer, or to delete a record of a protected consumer or to delete a record of a protected consumer if the security freeze was placed or the record was created based upon a material misrepresentation of fact by the protected consumer or the protected consumers representative.

Existing law requires a county welfare department, county probation department, or the State Department of Social Services to inquire of each of the 3 major credit reporting agencies as to whether a child in foster care placement who reaches their 14th birthday has any consumer credit history, as specified. Existing law, with respect to a nonminor dependent, requires the county welfare department or county probation department to assist the young adult, on a yearly basis while the nonminor dependent is under the jurisdiction of the juvenile court, with requesting the consumer credit report from each of the 3 major credit reporting agencies, as specified. Existing law requires the county social worker or county probation officer to ensure that the child or nonminor dependent receives assistance with interpreting the consumer credit report and resolving any inaccuracies, including, but not limited to, referring the youth to a governmental or nonprofit agency that provides consumer credit.

This bill would deem certain requirements for the placement or removal of a security freeze for a protected consumer to be met if the inquiry is verifiably from the county welfare department or county probation department, or their designee, department appearing on the most recent list provided or made available to the consumer credit reporting agency by the State Department of Social Services, and the requesting entity provides sufficient proof of identification under a specified federal law. The bill would restrict a county welfare department or county probation department, or their designee department from requesting a security freeze for a protected consumer placed in foster care that continues beyond the protected consumers 18th birthday, as specified. The bill would also specify that, for the purposes of those provisions, the State Department of Social Services is the designee of a county welfare department or county probation department. If the security freeze request received indicates that the If the child placed in a foster care setting has a consumer credit history, the bill would require any information that appears on the protected consumers credit report to be promptly blocked and not reported, in the same manner as if the credit reporting agency had received a police report pursuant to a specified provision relating to identity theft. The bill also would require the credit reporting to comply with additional requirements relating to the blocking and unblocking of credit history information that is subject to investigation by the police or the Department of Motor Vehicles.

The bill would authorize the freeze to be removed by the representative of the protected consumer or by the protected consumer if they are 16 years of age or older. If a request to remove the security freeze is not received, the bill would require the freeze to automatically expire on the consumers 18th birthday unless the consumer instructs the agency to maintain the freeze beyond that date. older, under certain circumstances, including upon the protected consumers removal from foster care.

Existing law requires a consumer credit reporting agency to place a security freeze for a protected consumer if it receives a request from a protected consumers representative for the placement of a security freeze, as specified, or if the protected consumers representative submits the request to the consumer credit reporting agency in accordance with certain requirements. For purposes of these provisions, a protected consumer includes an individual who is under the jurisdiction of a county welfare department or county probation department, has been placed in a foster care setting, and is under 16 years of age at the time a request for placement of a security freeze is made. Existing law authorizes a consumer credit reporting agency to remove a security freeze for a protected consumer, or to delete a record of a protected consumer or to delete a record of a protected consumer if the security freeze was placed or the record was created based upon a material misrepresentation of fact by the protected consumer or the protected consumers representative.

Existing law requires a county welfare department, county probation department, or the State Department of Social Services to inquire of each of the 3 major credit reporting agencies as to whether a child in foster care placement who reaches their 14th birthday has any consumer credit history, as specified. Existing law, with respect to a nonminor dependent, requires the county welfare department or county probation department to assist the young adult, on a yearly basis while the nonminor dependent is under the jurisdiction of the juvenile court, with requesting the consumer credit report from each of the 3 major credit reporting agencies, as specified. Existing law requires the county social worker or county probation officer to ensure that the child or nonminor dependent receives assistance with interpreting the consumer credit report and resolving any inaccuracies, including, but not limited to, referring the youth to a governmental or nonprofit agency that provides consumer credit.

This bill would deem certain requirements for the placement or removal of a security freeze for a protected consumer to be met if the inquiry is verifiably from the county welfare department, department or county probation department, or the State Department of Social Services, department, or their designee, and the requesting entity provides sufficient proof of identification under a specified federal law. The bill would restrict a county welfare department, department or county probation department, or the State Department of Social Services department, or their designee from requesting a security freeze for a protected consumer placed in foster care that continues beyond the protected consumers 18th birthday, as specified. The bill would also specify that, for the purposes of those provisions, the State Department of Social Services is the designee of a county welfare department or county probation department. If an inquiry the security freeze request received by one of those entities indicates that the child placed in a foster care setting has a consumer credit history, the bill would require any information that appears on the protected consumers credit report to be promptly blocked and not reported, in the same manner as if the credit reporting agency had received a police report pursuant to a specified provision relating to identity theft. The bill also would require the credit reporting to comply with additional requirements relating to the blocking and unblocking of credit history information that is subject to investigation by the police or the Department of Motor Vehicles.

The bill would authorize the freeze to be removed by the representative of the protected consumer or by the protected consumer if they are 16 years of age or older. If a request to remove the security freeze is not received, the bill would require the freeze to automatically expire on the consumers 18th birthday unless the consumer instructs the agency to maintain the freeze beyond that date directly or through their representative. Notwithstanding that limitation, the bill also would permit the freeze to be removed at the request of the representative of a protected consumer placed in a foster care setting after the protected consumers 16th birthday. date.

Existing law requires a consumer credit reporting agency to place a security freeze for a protected consumer if it receives a request from a protected consumers representative for the placement of a security freeze, as specified, or if the protected consumers representative submits the request to the consumer credit reporting agency in accordance with certain requirements. For purposes of these provisions, a protected consumer includes an individual who is under the jurisdiction of a county welfare department or county probation department, has been placed in a foster care setting, and is under 16 years of age at the time a request for placement of a security freeze is made. Existing law authorizes a consumer credit reporting agency to remove a security freeze for a protected consumer, or to delete a record of a protected consumer or to delete a record of a protected consumer if the security freeze was placed or the record was created based upon a material misrepresentation of fact by the protected consumer or the protected consumers representative.

Existing law requires a county welfare department, county probation department, or the State Department of Social Services to inquire of each of the 3 major credit reporting agencies as to whether a child in foster care placement who reaches their 14th birthday has any consumer credit history, as specified. Existing law, with respect to a nonminor dependent, requires the county welfare department or county probation department to assist the young adult, on a yearly basis while the nonminor dependent is under the jurisdiction of the juvenile court, with requesting the consumer credit report from each of the 3 major credit reporting agencies, as specified. Existing law requires the county social worker or county probation officer to ensure that the child or nonminor dependent receives assistance with interpreting the consumer credit report and resolving any inaccuracies, including, but not limited to, referring the youth to a governmental or nonprofit agency that provides consumer credit.

This bill would deem certain requirements for the placement or removal of a security freeze for a protected consumer to be met if the inquiry is verifiably from the county welfare department, county probation department, or the State Department of Social Services. Services, and the requesting entity provides sufficient proof of identification under a specified federal law. The bill would restrict a county welfare department, county probation department, or the State Department of Social Services from requesting a security freeze for a protected consumer placed in foster care that continues beyond the protected consumers 18th birthday, as specified. If an inquiry received by one of those entities indicates that the child placed in a foster care setting has a consumer credit history, the bill would require any information that appears on the protected consumers credit report to be promptly blocked and not reported, in the same manner as if the credit reporting agency had received a police report pursuant to a specified provision relating to identity theft. The bill also would require the credit reporting to comply with additional requirements relating to the blocking and unblocking of credit history information that is subject to investigation by the police or the Department of Motor Vehicles.

The bill would require the freeze to automatically expire on the consumers 18th birthday unless the consumer instructs the agency to maintain the freeze beyond that date directly or through their representative. Notwithstanding that limitation, the bill also would permit the freeze to be removed at the request of the representative of a protected consumer placed in a foster care setting after the protected consumers 16th birthday.

Existing law requires a consumer credit reporting agency to place a security freeze for a protected consumer if it receives a request from a protected consumers representative for the placement of a security freeze, as specified, or if the protected consumers representative submits the request to the consumer credit reporting agency in accordance with certain requirements. For purposes of these provisions, a protected consumer includes an individual who is under the jurisdiction of a county welfare department or county probation department, has been placed in a foster care setting, and is under 16 years of age at the time a request for placement of a security freeze is made. Existing law authorizes a consumer credit reporting agency to remove a security freeze for a protected consumer, or to delete a record of a protected consumer or to delete a record of a protected consumer if the security freeze was placed or the record was created based upon a material misrepresentation of fact by the protected consumer or the protected consumers representative.

Existing law requires a county welfare department, county probation department, or the State Department of Social Services to inquire of each of the 3 major credit reporting agencies as to whether a child in foster care placement who reaches their 14th birthday has any consumer credit history, as specified. Existing law, with respect to a nonminor dependent, requires the county welfare department or county probation department to assist the young adult, on a yearly basis while the nonminor dependent is under the jurisdiction of the juvenile court, with requesting the consumer credit report from each of the 3 major credit reporting agencies, as specified. Existing law requires the county social worker or county probation officer to ensure that the child or nonminor dependent receives assistance with interpreting the consumer credit report and resolving any inaccuracies, including, but not limited to, referring the youth to a governmental or nonprofit agency that provides consumer credit.

This bill would deem the certain requirements for the placement or removal of a security freeze for a protected consumer to be met if the inquiry is verifiably from the county welfare department, county probation department, or the State Department of Social Services. If an inquiry received by one of those entities indicates that the child placed in a foster care setting has a consumer credit history, the bill would require any information that appears on the protected consumers credit report to be promptly blocked and not reported, in the same manner as if the credit reporting agency had received a police report pursuant to a specified provision relating to identity theft. The bill also would require the credit reporting to comply with additional requirements relating to the blocking and unblocking of credit history information that is subject to investigation by the police or the Department of Motor Vehicles.

The bill would require the freeze to automatically expire on the consumers 18th birthday unless the consumer instructs the agency to maintain the freeze beyond that date directly or through their representative. Notwithstanding that limitation, the bill also would permit the freeze to be removed at the request of the representative of a protected consumer placed in a foster care setting after the protected consumers 16th birthday.

Existing law requires a consumer credit reporting agency to place a security freeze for a protected consumer if it receives a request from a protected consumers representative for the placement of a security freeze, as specified, or if the protected consumers representative submits the request to the consumer credit reporting agency in accordance with certain requirements. For purposes of these provisions, a protected consumer includes an individual who is under the jurisdiction of a county welfare department or county probation department, has been placed in a foster care setting, and is under 16 years of age at the time a request for placement of a security freeze is made. Existing law authorizes a consumer credit reporting agency to remove a security freeze for a protected consumer, or to delete a record of a protected consumer or to delete a record of a protected consumer if the security freeze was placed or the record was created based upon a material misrepresentation of fact by the protected consumer or the protected consumers representative.

Existing law requires a county welfare department, county probation department, or the State Department of Social Services to inquire of each of the 3 major credit reporting agencies as to whether a child in foster care placement who reaches their 14th birthday has any consumer credit history, as specified. Existing law, with respect to a nonminor dependent, requires the county welfare department or county probation department to assist the young adult, on a yearly basis while the nonminor dependent is under the jurisdiction of the juvenile court, with requesting the consumer credit report from each of the 3 major credit reporting agencies, as specified. Existing law requires the county social worker or county probation officer to ensure that the child or nonminor dependent receives assistance with interpreting the consumer credit report and resolving any inaccuracies, including, but not limited to, referring the youth to a governmental or nonprofit agency that provides consumer credit.

Existing law requires a consumer credit reporting agency to place a security freeze for a protected consumer if it receives a request from a protected consumers representative for the placement of a security freeze, as specified, or if the protected consumers representative submits the request to the consumer credit reporting agency in accordance with certain requirements. For purposes of these provisions, a protected consumer includes an individual who is under the jurisdiction of a county welfare department or county probation department, has been placed in a foster care setting, and is under 16 years of age at the time a request for placement of a security freeze is made.

Existing law requires a county welfare department, county probation department, or the State Department of Social Services to inquire of each of the 3 major credit reporting agencies as to whether a child in foster care placement who reaches their 14th birthday has any consumer credit history, as specified. Existing law, with respect to a nonminor dependent, requires the county welfare department or county probation department to assist the young adult, on a yearly basis while the nonminor dependent is under the jurisdiction of the juvenile court, with requesting the consumer credit report from each of the 3 major credit reporting agencies, as specified. Existing law requires the county social worker or county probation officer to ensure that the child or nonminor dependent receives assistance with interpreting the consumer credit report and resolving any inaccuracies, including, but not limited to, referring the youth to a governmental or nonprofit agency that provides consumer credit.

This bill additionally would require the assistance provided by the county social worker or county probation worker to include verifying that the child has availed themself of those consumer credit services, pursuant to a specified provision. The bill would require a credit freeze placed pursuant to the above provisions to be removed upon the childs request if the child is 16 years of age or older, or upon a determination by the responsible department that the removal of the freeze is in the best interest of the child, as specified.

By increasing the duties of county social workers and county probation officers, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 2935

Author:(Maienschein)

As Amended Ver:August 21, 2024

Majority vote

SUMMARY

Revises requirements related to the placement of a security freeze, and the removal of a security freeze, on the credit report of a minor under the age of 16 years who has been placed in a foster care setting.

Senate Amendments

Modify the bill's requirements to lessen the burden on consumer credit reporting agencies and clarify the bill's obligations, including clarifying when a credit freeze may be lifted prior to a child's 18th birthday and how a consumer credit reporting agency may determine whether a request from a county welfare department or county probation office to freeze a child's credit is authorized.

COMMENTS

Identity theft can take on different forms but is generally defined as a fraud that is committed using a person's identity information without that person's authority. Some of the most common types of identity theft include using someone else's information to claim a tax refund, obtaining credit, obtain medical care using someone else's health insurance, or using someone else's information to claim government benefits.

Identity theft can have a severe and long-lasting repercussions for victims. FTC's Identity Theft: Aftermath survey shows the extent to which victims endure significant and long-term fiscal, financial, and emotional harm as a result of identity theft. Victims often cannot obtain housing, employment, or medical service, and they report ongoing issues with stress and emotional health. Moreover, it can be tremendously frustrating for victims to resolve identity theft issues with government agencies and other institutions.

Unfortunately, identity theft is also common for children and especially foster youth. In these cases, someone uses a minor child's personal information, such as name and Social Security number, usually to obtain credit or employment. Identity thieves may target children because the crime can go undetected for years, often until the child applies for his or her first loan or credit card.

Foster youth are uniquely vulnerable to identity theft because their personal information can be accessed by a range of adults they interact with, including noncustodial family members, social services personnel, and foster parents. A 2011 study by the then-called California Office of Privacy Protection evaluating a Los Angeles pilot program was instrumental in furthering California policymakers' understanding of the extent of the problem facing foster youth. The pilot project conducted credit checks on 2,110 foster youth between the ages of 16 and 17 years of age. It was discovered that 104 children were found to have had 247 financial accounts of varying types; credit cards, bank accounts, utility accounts, cellular phone and cable contracts, etc., opened in their name. Several children were found to have auto loans and one was identified as having a $217,000 mortgage listed in the child's name.

This bill is intended to improve the protections for foster youth and nonminor dependents by clarifying the existing security freeze process for freezes placed for foster youth at the request of a county welfare or probation department; authorizing the Department of Social Services (DSS) to provide a list of authorized county welfare and probation officers who may make requests on behalf of children in a foster care setting; and requiring a credit reporting agency to automatically block information on a credit report, if it is determined that the foster youth has a credit report as a minor.

According to the Author

"Foster youth are especially vulnerable to having their identities stolen due to the large number of people who have access to their personal information. Each time a foster child changes placements, additional individuals gain access to their information, including their social security number. It is estimated that at least fifteen percent of foster youth become the victims of identity theft. Children have always been an attractive target for identity thieves because their credit reports are clean and are often left unmonitored for many years, providing ample time to cause substantial damage to the child's credit. Once a foster youth reaches 14, or if they come into the system after the age of 14, current law requires county welfare departments to check with the three credit bureaus to see if a credit report exists. Because children should not have credit reports, the existence of a report is likely the result of fraud. If a report does exist, social workers must provide foster youth with information and assistance to fix credit inaccuracies. However, our current laws only come into play after a youth has been victimized. AB 2935 seeks to prevent identity theft in the first place by requiring the credit bureaus to automatically freeze an individual's credit reports when they receive an inquiry from a county welfare department regarding a foster youth. Placing the automatic freeze will prevent nefarious actors from being able to open accounts in a child's name."

Arguments in Support

According to Dependency Legal Services San Diego:

"As the Department of Social Services correctly observes, "minors should not have a credit report."5 However, while exact numbers are hard to ascertain, between half and 15% of all of California's abused and neglected foster children become victims of identity theft…

AB 2935 starts from the same premise as the Department of Social Services above: minors should not have credit reports, period. Starting from that premise, AB 2935 would enact the following:

1. If a credit freeze request verifiably comes from the county welfare department, county probation department, or the State Department of Social Services, this bill would deem the requirements for the placement or removal of a security freeze for a foster youth to be met.
2. If an inquiry received by one of those entities indicates that the foster child who should not have a credit report at all actually has a consumer credit history, the bill would require the credit bureau to promptly and permanently block reporting any such information on the consumer's credit report because it is presumptively fraudulent. Under current law, the simple submission of a copy of a police report by a consumer triggers a requirement for the bureaus automatically to block listed information from being reported as presumed fraud. The same is true here, given that children should not have reports at all.
3. The bill would require the freeze to automatically expire on the foster child's 18th birthday unless the child instructs the bureau to maintain the freeze beyond that date directly or through their representative. The bill also would permit the freeze to be removed at the request of the representative of a protected consumer placed in a foster care setting after the protected consumer's 16th birthday.

Please, let's help our foster children simply by making it easier to remedy the consequences of a crime committed against them on our watch by enacting AB 2935 (Maienschein)."

Arguments in Opposition

According to the Consumer Data Industry Association:

"A safe and sound credit economy needs a reliable credit reporting system that also protects consumers and our most vulnerable populations from identity theft. This is why Congress included language in the Economic Growth, Regulatory Relief, and Consumer Protection Act (the "EGRRCPA") of 2018 to create national credit freezes for adults and minors. The law contains a national, free credit freeze; and a national credit freeze for protected persons (for persons under 16 years of age and incapacitated adults)…

The preemption analysis remains the same regardless of whether a state security freeze law was enacted before the EGRRCPA became law, during the period between when FCRA § 625(b)(1)(J) is enacted and is effective, or after FCRA § 625(b)(1)(J) takes effect. In short, when the EGRRCPA became effective, all state credit freeze laws looking backward and all state legislation looking forward no longer had or will have legal effect.

We support your goal to assist foster children and our industry has continued to work towards protecting this vulnerable population. We are committed to working with county welfare departments, county probation departments and the Department of Social Services to ensure that foster children have their information protected. However, AB 2935 does not provide sufficient protection for the authentication of a child's information when a freeze is placed…Finally, while we have made suggestions to improve the bill, any changes to the placement or removal of a credit freeze we still believe is preempted by federal law."

FISCAL COMMENTS

Minor and absorbable state costs.

VOTES:

ASM BANKING AND FINANCE: 9-0-0

YES: Grayson, Chen, Cervantes, Dixon, Mike Fong, Maienschein, Petrie-Norris, Blanca Rubio, Soria

ASM HUMAN SERVICES: 6-0-1

YES: Lee, Essayli, Calderon, Gipson, Jackson, Ortega

ABS, ABST OR NV: Mathis

ASM APPROPRIATIONS: 15-0-0

YES: Wicks, Sanchez, Arambula, Bryan, Calderon, Wendy Carrillo, Dixon, Mike Fong, Friedman, Haney, Hart, Jim Patterson, Pellerin, Ta, Villapudua

ASSEMBLY FLOOR: 71-0-9

YES: Aguiar-Curry, Alanis, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Dixon, Essayli, Mike Fong, Friedman, Gabriel, Gallagher, Garcia, Grayson, Haney, Hart, Holden, Hoover, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

ABS, ABST OR NV: Addis, Alvarez, Cervantes, Megan Dahle, Flora, Vince Fong, Gipson, Irwin, Mathis

SENATE FLOOR: 40-0-0

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

UPDATED

VERSION: August 21, 2024

CONSULTANT: Luke Reidenbach / B. & F. / (916) 319-3081 FN: 0004859

 THIRD READING  

Bill No: AB 2935

Author: Maienschein (D), et al.

Amended: 8/23/24 in Senate

Vote: 21

SENATE JUDICIARY COMMITTEE: 10-0, 6/18/24

AYES: Umberg, Wilk, Allen, Ashby, Caballero, Durazo, Niello, Roth, Stern, Wahab

NO VOTE RECORDED: Laird

SENATE HUMAN SERVICES COMMITTEE: 5-0, 7/1/24

AYES: Alvarado-Gil, Ochoa Bogh, Blakespear, Limón, Menjivar

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 71-0, 5/16/24 (Consent) - See last page for vote

SUBJECT: Foster children: consumer credit reports

SOURCE: Children’s Advocacy Institute

Just In Time for Foster Youth

DIGEST:

This bill revises requirements related to the placement of a security freeze, and the removal of a security freeze, on the credit report of a minor under the age of 16 years who has been placed in a foster care setting.

Senate Floor Amendments of 8/23/24 modify the bill’s requirements to lessen the burden on consumer credit reporting agencies and clarify the bill’s obligations, including clarifying when a credit freeze may be lifted prior to a child’s 18th birthday and how a consumer credit reporting agency may determine whether a request from a county welfare department or county probation office to freeze a child’s credit is authorized.

ANALYSIS:

Existing federal law:

1. Establishes the Fair Credit Reporting Act (FCRA), which regulates consumer reporting agencies. (16 U.S.C., tit. 15, ch. 41, subch. III, §§ 1681 et seq.)
2. Provides that, except as provided in 3), the FCRA does not annul, alter, affect, or exempt any person subject to those laws from complying with the laws of any state law with respect to the collection, distribution, or use of any information on consumers, or for the prevention or mitigation of identity theft, except to the extent that those laws are inconsistent with federal law, and then only to the extent of the inconsistency. (16 U.S.C. § 1681t(a).)
3. Provides that no state law may impose requirements or prohibitions with respect to any subject matter related under specific federal Code sections, including the federal requirements relating to security freezes set forth in 4). (16 U.S.C. § 1681t(b)(1)(J).)
4. Establishes procedures by which a credit reporting agency must place a security freeze on the files and credit records of a protected consumer who is under the age of 16 at the time the request for the placement of a security freeze is made, or who is incapacitated and for whom a guardian or conservator has been appointed. (16 U.S.C. § 1681c-1(j).)

Existing state law:

1. Establishes the Consumer Credit Reporting Agencies Act (CCRA), which requires consumer credit reporting agencies to adopt procedures for meeting the needs of commerce for consumer credit, personnel, insurance, hiring of a dwelling unit, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information. (Civ. Code, div. 3, pt. 4, tit. 1.6, §§ 1785.1 et seq.)
2. Defines the following relevant terms:
   1. “Consumer credit report” means any written, oral, or other communication of any information by a consumer credit reporting agency bearing on a consumer’s creditworthiness, credit standing, or credit capacity, which is used or is expected to be used, or collected on whole or in part, for the purpose of serving as a factor in establishing the consumer’s eligibility for credit, employment purposes, hiring of a dwelling unit, or other specified purposes, subject to specified exceptions. (Civ. Code, § 1785.3(c).)
   2. “Protected consumer” is an individual who is (1) under 16 years of age at the time a request for a security freeze is made; (2) an incapacitated person or protected person for whom a guardian or conservator has been appointed; or (3) under the jurisdiction of a county welfare department or county probation department, has been placed in a foster care setting, and is under 16 years of age at the time a request for placement of a security freeze is made. (Civ. Code, § 1785.11.9(a).)
   3. “Representative,” for the purpose of a protected consumer who has been placed in a foster care setting, “representative” means a county welfare department or county probation department, or their agent or designee, but does not include a foster parent. (Civ. Code, § 1785.11.9(c).)
   4. “Sufficient proof of authority” means documentation that shows that a representative has authority to act on behalf of a protected consumer in a financial matter, as specified. (Civ. Code, § 1785.11.9(e).)
3. Requires a consumer credit reporting agency to place a security freeze for a protected consumer if both of the following occur:
   1. The consumer credit reporting agency receives a request from the protected consumer’s representative for the placement of a security freeze, as specified.
   2. The protected consumer’s representative (i) submits the request to the consumer credit reporting agency as specified by the agency; (ii) provides to the consumer credit reporting agency sufficient proof of identification of the protected consumer and the representative; (iii) provides to the consumer credit reporting agency sufficient proof of authority to act on behalf of the protected consumer; and (iv) pays to the consumer credit reporting agency the required fee. (Civ. Code, § 1785.11(a).)
4. Provides that once a security freeze has been placed, a consumer credit reporting agency shall not release the protected consumer’s credit report, any information derived from the protected consumer’s credit report, or any record created for the protected consumer, unless a security freeze for a protected consumer is removed, as specified. (Civ. Code, § 1785.11.11(e).)
5. Provides that a security freeze can be removed if either of the following occurs:
   1. The consumer credit reporting agency receives a request from a protected consumer or a protected consumers’ representative, as specified.
   2. The security freeze was placed or the record of the protected person was created based upon a material misrepresentation of fact by the protected consumer or the protected consumers’ representative. (Civ. Code, § 1785.11.11(f)-(h), (j).)
6. Requires, for a child in foster care aged 14 years of age and each year thereafter, while the child is under the jurisdiction of the juvenile court, the county welfare department, county probation department, or California Department of Social Services (CDSS), if an automated process is available, to inquire of each of the three major credit reporting agencies as to whether the child has any consumer credit history, and provide the child with assistance in interpreting the credit report and resolving inaccuracies, as specified. (Welf. & Inst. Code, § 10618.6(a), (c).)
7. Requires, for a nonminor dependent, the county welfare department or county probation department to assist the young adult, on a yearly basis while the nonminor dependent is under the jurisdiction of the juvenile court, with requesting the consumer credit report from each of the three major credit reporting agencies and provide assistance with interpreting the consumer credit report and resolving any inaccuracies. (Welf. & Inst. Code, § 10618.6(b), (c).)

This bill:

1. Provides that, if a request for the placement for a security freeze is for a protected consumer who has been placed in a foster care setting, the consumer credit reporting agency shall deem the requirements of providing sufficient proof of identification of the protected consumer and the representative, and of providing sufficient proof of authority to act on behalf of the protected consumer, to be met if:
   1. The request is from a county welfare department, a county probation department appearing on the most recent list provided or available to the consumer credit reporting agency by CDSS; and
   2. The requesting entity provides sufficient proof of the protected consumer’s identity under the FRCA.
2. Provides that a county welfare department or county probation department does not have the authority to request a security freeze for a protected consumer placed in foster care that continues beyond the protected consumer’s 18th birthday.
3. Permits a consumer credit reporting agency to use whatever lawful mechanism is available to it, including mechanisms for thawing or unfreezing reports by dates certain, to ensure a freeze implemented for a child in a foster care setting does not extend beyond their 18th birthday.
4. Permits CDSS, at its discretion, to make available to consumer credit reporting agencies a list of county welfare departments or county probation departments whose employees may be representatives of protected consumers who have been placed in a foster care setting; CDSS may also make that information available at the request of a consumer credit reporting agency.
5. Provides that, with respect to a protected consumer for whom a security freeze has been placed under 1), the freeze shall automatically expire on the protected consumer’s 18th birthday.
6. Provides that a security freeze may be removed prior to the protected consumer’s 18th birthday at the request of the protected consumer (if they are 16 years of age or older) or through their representative, under any of the following circumstances:
   1. Upon the protected consumer’s removal from foster care;
   2. Upon the protected consumer’s request;
   3. Upon a determination of the protected consumer’s representative that the removal of the freeze is in the best interest of the protected consumer.
7. Permits a security freeze to be lifted, in addition to the circumstances in 6), at the request of a representative of the protected consumer at a time when the representative is making an inquiry into the protected consumer’s credit with the three major reporting agencies, as specified.
8. Provides that, if a credit inquiry received by a credit reporting agency pursuant to a request from a social worker or probation officer indicates that a child who has been placed in a foster care setting has a consumer credit history, any information that appears on the protected consumer’s credit report shall be promptly blocked and not reported, and the credit reporting agency shall promptly and permanently block reporting any information identified as fraudulent, and comply with unblocking requirements, as specified.
9. Includes a severability clause.

Comments

Foster youth and nonminor dependents face a disheartening number of challenges as they grow up and age out of the foster system. One of those challenges is dealing with the consumer credit system. Foster youth and nonminor dependents are less likely to have adult role models who can educate them on the ins and outs of consumer credit, and are also more likely to be the victims of credit fraud. Current state law requires, beginning on a foster youth’s 14th birthday and each year thereafter, a county welfare department, county probation department, or CDSS to request the minor’s credit report from each of the three major credit agencies, and to assist nonminor dependents with their credit reports as specified. State and federal law also permit a county welfare department or county probation department to request a credit freeze on behalf of a minor under the age of 16 years who is in a foster setting at the time of the request.

This bill is intended to improve the protections for foster youth and nonminor dependents by clarifying the existing security freeze process for freezes placed for foster youth at the request of a county welfare or probation department; authorizing CDSS to provide a list of authorized county welfare and probation officers who may make requests on behalf of children in a foster care setting; requiring that freezes lift automatically when a foster youth turns 18 years of age; and requiring a credit reporting agency to automatically block information on a credit report, if it is determined that the foster youth has a credit report as a minor.

The FCRA contains a partial preemption clause, including a provision stating that state laws “relating to any subject matter” covered by specific FCRA provisions, including provisions “relating to security freezes.”^[1] In 2022, the Consumer Financial Protection Bureau issued an interpretive rule clarifying the preemptive scope of the FCRA, stating that the preemption provisions “have a narrow and targeted scope.”^[2] Under the guidance, “State laws that are not ‘inconsistent’ with the FCRA—including state laws that are more protective of consumers than the FCRA—are generally not preempted.”^[3] It is an open question whether a court would rule that this bill’s provisions are preempted by federal law, though this bill appears to be a modest law that “reflect[s] emerging problems affecting [California’s] citizens,”^[4] namely, the challenges faced by California’s foster youth and nonminor dependents.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT: (Verified 8/26/24)

Children’s Advocacy Institute (co-source)
Just In Time for Foster Youth (co-source)

Advokids

Angels Foster Family Network

California Alliance of Caregivers

California State University San Marcos Department of Social Work

Children Now

Children’s Legal Services of San Diego
Dependency Legal Services San Diego

East Bay Children’s Law Offices

Los Angeles Dependency Lawyers Inc.

National Center for Lesbian Rights

Redenbacher & Brown

Straight From The Heart Inc.

Sycamores

The Law Offices of Dale S. Wilson

OPPOSITION: (Verified 8/26/24)

Consumer Data Industry Association

ARGUMENTS IN SUPPORT: According to Dependency Legal Services San Diego:

As the Department of Social Services correctly observes, “minors should not have a credit report.”5 However, while exact numbers are hard to ascertain, between half and 15% of all of California’s abused and neglected foster children become victims of identity theft…

AB 2935 starts from the same premise as the Department of Social Services above: minors should not have credit reports, period. Starting from that premise, AB 2935 would enact the following:

• • • • If a credit freeze request verifiably comes from the county welfare department, county probation department, or the State Department of Social Services, this bill would deem the requirements for the placement or removal of a security freeze for a foster youth to be met.
      • If an inquiry received by one of those entities indicates that the foster child who should not have a credit report at all actually has a consumer credit history, the bill would require the credit bureau to promptly and permanently block reporting any such information on the consumer’s credit report because it is presumptively fraudulent. Under current law, the simple submission of a copy of a police report by a consumer triggers a requirement for the bureaus automatically to block listed information from being reported as presumed fraud. The same is true here, given that children should not have reports at all.
      • The bill would require the freeze to automatically expire on the foster child’s 18th birthday unless the child instructs the bureau to maintain the freeze beyond that date directly or through their representative. The bill also would permit the freeze to be removed at the request of the representative of a protected consumer placed in a foster care setting after the protected consumer’s 16th birthday.

Please, let’s help our foster children simply by making it easier to remedy the consequences of a crime committed against them on our watch by enacting AB 2935 (Maienschein).

ARGUMENTS IN OPPOSITION: According to the Consumer Data Industry Association:

A safe and sound credit economy needs a reliable credit reporting system that also protects consumers and our most vulnerable populations from identity theft. This is why Congress included language in the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “EGRRCPA”) of 2018 to create national credit freezes for adults and minors. The law contains a national, free credit freeze; and a national credit freeze for protected persons (for persons under 16 years of age and incapacitated adults)…

The preemption analysis remains the same regardless of whether a state security freeze law was enacted before the EGRRCPA became law, during the period between when FCRA § 625(b)(1)(J) is enacted and is effective, or after FCRA § 625(b)(1)(J) takes effect. In short, when the EGRRCPA became effective, all state credit freeze laws looking backward and all state legislation looking forward no longer had or will have legal effect.

We support your goal to assist foster children and our industry has continued to work towards protecting this vulnerable population. We are committed to working with county welfare departments, county probation departments and the Department of Social Services to ensure that foster children have their information protected. However, AB 2935 does not provide sufficient protection for the authentication of a child’s information when a freeze is placed. Additionally, automatically removing a credit freeze for all foster children at age 18, has the potential to allow family members and friends the opportunity to take advantage of the youth’s credit history. We believe it is essential that the foster youth have the sole discretion to determine whether the removal of a freeze is prudent. Finally, while we have made suggestions to improve the bill, any changes to the placement or removal of a credit freeze we still believe is preempted by federal law.

ASSEMBLY FLOOR: 71-0, 5/16/24

AYES: Aguiar-Curry, Alanis, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Dixon, Essayli, Mike Fong, Friedman, Gabriel, Gallagher, Garcia, Grayson, Haney, Hart, Holden, Hoover, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

NO VOTE RECORDED: Addis, Alvarez, Cervantes, Megan Dahle, Flora, Vince Fong, Gipson, Irwin, Mathis

Prepared by: Allison Whitt Meredith / JUD. / (916) 651-4113

8/27/24 20:56:00

**** END ****

1. 18 U.S.C. § 1681t(b)(1)(J). ↑

2. The Fair Credit Reporting Act’s Limited Preemption of State Laws (87 Fed. Reg. 41042-01, 41043 (Jul. 11, 2022)). ↑

3. Ibid. ↑

4. See id. at p. 41044. ↑

 THIRD READING  

Bill No: AB 2935

Author: Maienschein (D), et al.

Amended: 8/21/24 in Senate

Vote: 21

SENATE JUDICIARY COMMITTEE: 10-0, 6/18/24

AYES: Umberg, Wilk, Allen, Ashby, Caballero, Durazo, Niello, Roth, Stern, Wahab

NO VOTE RECORDED: Laird

SENATE HUMAN SERVICES COMMITTEE: 5-0, 7/1/24

AYES: Alvarado-Gil, Ochoa Bogh, Blakespear, Limón, Menjivar

ASSEMBLY FLOOR: 71-0, 5/16/24 (Consent) - See last page for vote

SUBJECT: Foster children: consumer credit reports

SOURCE: Children’s Advocacy Institute;

Just In Time for Foster Youth

DIGEST:

This bill revises requirements related to the placement of a security freeze, and the removal of a security freeze, on the credit report of a minor under the age of 16 years who has been placed in a foster care setting.

Senate Floor Amendments of 8/21/24 modify the bill’s requirements to lessen the burden on consumer credit reporting agencies and clarify the bill’s obligations, including clarifying when a credit freeze may be lifted prior to a child’s 18th birthday and how a consumer credit reporting agency may determine whether a request from a county welfare department or county probation office to freeze a child’s credit is authorized.

ANALYSIS:

Existing federal law:

1. Establishes the Fair Credit Reporting Act (FCRA), which regulates consumer reporting agencies. (16 U.S.C., tit. 15, ch. 41, subch. III, §§ 1681 et seq.)
2. Provides that, except as provided in 3), the FCRA does not annul, alter, affect, or exempt any person subject to those laws from complying with the laws of any state law with respect to the collection, distribution, or use of any information on consumers, or for the prevention or mitigation of identity theft, except to the extent that those laws are inconsistent with federal law, and then only to the extent of the inconsistency. (16 U.S.C. § 1681t(a).)
3. Provides that no state law may impose requirements or prohibitions with respect to any subject matter related under specific federal Code sections, including the federal requirements relating to security freezes set forth in 4). (16 U.S.C. § 1681t(b)(1)(J).)
4. Establishes procedures by which a credit reporting agency must place a security freeze on the files and credit records of a protected consumer who is under the age of 16 at the time the request for the placement of a security freeze is made, or who is incapacitated and for whom a guardian or conservator has been appointed. (16 U.S.C. § 1681c-1(j).)

Existing state law:

1. Establishes the Consumer Credit Reporting Agencies Act (CCRA), which requires consumer credit reporting agencies to adopt procedures for meeting the needs of commerce for consumer credit, personnel, insurance, hiring of a dwelling unit, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information. (Civ. Code, div. 3, pt. 4, tit. 1.6, §§ 1785.1 et seq.)
2. Defines the following relevant terms:
   1. “Consumer credit report” means any written, oral, or other communication of any information by a consumer credit reporting agency bearing on a consumer’s creditworthiness, credit standing, or credit capacity, which is used or is expected to be used, or collected on whole or in part, for the purpose of serving as a factor in establishing the consumer’s eligibility for credit, employment purposes, hiring of a dwelling unit, or other specified purposes, subject to specified exceptions. (Civ. Code, § 1785.3(c).)
   2. “Protected consumer” is an individual who is (1) under 16 years of age at the time a request for a security freeze is made; (2) an incapacitated person or protected person for whom a guardian or conservator has been appointed; or (3) under the jurisdiction of a county welfare department or county probation department, has been placed in a foster care setting, and is under 16 years of age at the time a request for placement of a security freeze is made. (Civ. Code, § 1785.11.9(a).)
   3. “Representative,” for the purpose of a protected consumer who has been placed in a foster care setting, “representative” means a county welfare department or county probation department, or their agent or designee, but does not include a foster parent. (Civ. Code, § 1785.11.9(c).)
   4. “Sufficient proof of authority” means documentation that shows that a representative has authority to act on behalf of a protected consumer in a financial matter, as specified. (Civ. Code, § 1785.11.9(e).)
3. Requires a consumer credit reporting agency to place a security freeze for a protected consumer if both of the following occur:
   1. The consumer credit reporting agency receives a request from the protected consumer’s representative for the placement of a security freeze, as specified.
   2. The protected consumer’s representative (i) submits the request to the consumer credit reporting agency as specified by the agency; (ii) provides to the consumer credit reporting agency sufficient proof of identification of the protected consumer and the representative; (iii) provides to the consumer credit reporting agency sufficient proof of authority to act on behalf of the protected consumer; and (iv) pays to the consumer credit reporting agency the required fee. (Civ. Code, § 1785.11(a).)
4. Provides that once a security freeze has been placed, a consumer credit reporting agency shall not release the protected consumer’s credit report, any information derived from the protected consumer’s credit report, or any record created for the protected consumer, unless a security freeze for a protected consumer is removed, as specified. (Civ. Code, § 1785.11.11(e).)
5. Provides that a security freeze can be removed if either of the following occurs:
   1. The consumer credit reporting agency receives a request from a protected consumer or a protected consumers’ representative, as specified.
   2. The security freeze was placed or the record of the protected person was created based upon a material misrepresentation of fact by the protected consumer or the protected consumers’ representative. (Civ. Code, § 1785.11.11(f)-(h), (j).)
6. Requires, for a child in foster care aged 14 years of age and each year thereafter, while the child is under the jurisdiction of the juvenile court, the county welfare department, county probation department, or California Department of Social Services (CDSS), if an automated process is available, to inquire of each of the three major credit reporting agencies as to whether the child has any consumer credit history, and provide the child with assistance in interpreting the credit report and resolving inaccuracies, as specified. (Welf. & Inst. Code, § 10618.6(a), (c).)
7. Requires, for a nonminor dependent, the county welfare department or county probation department to assist the young adult, on a yearly basis while the nonminor dependent is under the jurisdiction of the juvenile court, with requesting the consumer credit report from each of the three major credit reporting agencies and provide assistance with interpreting the consumer credit report and resolving any inaccuracies. (Welf. & Inst. Code, § 10618.6(b), (c).)

This bill:

1. Provides that, if a request for the placement for a security freeze is for a protected consumer who has been placed in a foster care setting, the consumer credit reporting agency shall deem the requirements of providing sufficient proof of identification of the protected consumer and the representative, and of providing sufficient proof of authority to act on behalf of the protected consumer, to be met if:
   1. The request is from a county welfare department, a county probation department appearing on the most recent list provided or available to the consumer credit reporting agency by CDSS; and
   2. The requesting entity provides sufficient proof of the protected consumer’s identity under the FRCA.
2. Provides that a county welfare department or county probation department does not have the authority to request a security freeze for a protected consumer placed in foster care that continues beyond the protected consumer’s 18th birthday.
3. Permits a consumer credit reporting agency to use whatever lawful mechanism is available to it, including mechanisms for thawing or unfreezing reports by dates certain, to ensure a freeze implemented for a child in a foster care setting does not extend beyond their 18th birthday.
4. Permits CDSS, at its discretion, to make available to consumer credit reporting agencies a list of county welfare departments or county probation departments whose employees may be representatives of protected consumers who have been placed in a foster care setting; CDSS may also make that information available at the request of a consumer credit reporting agency.
5. Provides that, with respect to a protected consumer for whom a security freeze has been placed under 1), the freeze shall automatically expire on the protected consumer’s 18th birthday.
6. Provides that a security freeze may be removed prior to the protected consumer’s 18th birthday at the request of the protected consumer (if they are 16 years of age or older) or through their representative, under any of the following circumstances:
   1. Upon the protected consumer’s removal from foster care;
   2. Upon the protected consumer’s request;
   3. Upon a determination of the protected consumer’s representative that the removal of the freeze is in the best interest of the protected consumer.
7. Permits a security freeze to be lifted, in addition to the circumstances in 6), at the request of a representative of the protected consumer at a time when the representative is making an inquiry into the protected consumer’s credit with the three major reporting agencies, as specified.
8. Provides that, if a credit inquiry received by a credit reporting agency pursuant to a request from a social worker or probation officer indicates that a child who has been placed in a foster care setting has a consumer credit history, any information that appears on the protected consumer’s credit report shall be promptly blocked and not reported, and the credit reporting agency shall promptly and permanently block reporting any information identified as fraudulent, and comply with unblocking requirements, as specified.
9. Includes a severability clause.

Comments

Foster youth and nonminor dependents face a disheartening number of challenges as they grow up and age out of the foster system. One of those challenges is dealing with the consumer credit system. Foster youth and nonminor dependents are less likely to have adult role models who can educate them on the ins and outs of consumer credit, and are also more likely to be the victims of credit fraud. Current state law requires, beginning on a foster youth’s 14th birthday and each year thereafter, a county welfare department, county probation department, or CDSS to request the minor’s credit report from each of the three major credit agencies, and to assist nonminor dependents with their credit reports as specified. State and federal law also permit a county welfare department or county probation department to request a credit freeze on behalf of a minor under the age of 16 years who is in a foster setting at the time of the request.

This bill is intended to improve the protections for foster youth and nonminor dependents by clarifying the existing security freeze process for freezes placed for foster youth at the request of a county welfare or probation department; authorizing CDSS to provide a list of authorized county welfare and probation officers who may make requests on behalf of children in a foster care setting; requiring that freezes lift automatically when a foster youth turns 18 years of age; and requiring a credit reporting agency to automatically block information on a credit report, if it is determined that the foster youth has a credit report as a minor.

The FCRA contains a partial preemption clause, including a provision stating that state laws “relating to any subject matter” covered by specific FCRA provisions, including provisions “relating to security freezes.”^[1] In 2022, the Consumer Financial Protection Bureau issued an interpretive rule clarifying the preemptive scope of the FCRA, stating that the preemption provisions “have a narrow and targeted scope.”^[2] Under the guidance, “State laws that are not ‘inconsistent’ with the FCRA—including state laws that are more protective of consumers than the FCRA—are generally not preempted.”^[3] It is an open question whether a court would rule that this bill’s provisions are preempted by federal law, though this bill appears to be a modest law that “reflect[s] emerging problems affecting [California’s] citizens,”^[4] namely, the challenges faced by California’s foster youth and nonminor dependents.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT: (Verified 8/21/24)

Children’s Advocacy Institute (co-source)
Just In Time for Foster Youth (co-source)

Advokids

Angels Foster Family Network

California Alliance of Caregivers

California State University San Marcos Department of Social Work

Children Now

Children’s Legal Services of San Diego
Dependency Legal Services San Diego

East Bay Children’s Law Offices

Los Angeles Dependency Lawyers Inc.

National Center for Lesbian Rights

Redenbacher & Brown

Straight From The Heart Inc.

Sycamores

The Law Offices of Dale S. Wilson

OPPOSITION: (Verified 8/21/24)

Consumer Data Industry Association

ARGUMENTS IN SUPPORT: According to Dependency Legal Services San Diego:

As the Department of Social Services correctly observes, “minors should not have a credit report.”5 However, while exact numbers are hard to ascertain, between half and 15% of all of California’s abused and neglected foster children become victims of identity theft…

AB 2935 starts from the same premise as the Department of Social Services above: minors should not have credit reports, period. Starting from that premise, AB 2935 would enact the following:

• • • • If a credit freeze request verifiably comes from the county welfare department, county probation department, or the State Department of Social Services, this bill would deem the requirements for the placement or removal of a security freeze for a foster youth to be met.
      • If an inquiry received by one of those entities indicates that the foster child who should not have a credit report at all actually has a consumer credit history, the bill would require the credit bureau to promptly and permanently block reporting any such information on the consumer’s credit report because it is presumptively fraudulent. Under current law, the simple submission of a copy of a police report by a consumer triggers a requirement for the bureaus automatically to block listed information from being reported as presumed fraud. The same is true here, given that children should not have reports at all.
      • The bill would require the freeze to automatically expire on the foster child’s 18th birthday unless the child instructs the bureau to maintain the freeze beyond that date directly or through their representative. The bill also would permit the freeze to be removed at the request of the representative of a protected consumer placed in a foster care setting after the protected consumer’s 16th birthday.

Please, let’s help our foster children simply by making it easier to remedy the consequences of a crime committed against them on our watch by enacting AB 2935 (Maienschein).

ARGUMENTS IN OPPOSITION: According to the Consumer Data Industry Association:

A safe and sound credit economy needs a reliable credit reporting system that also protects consumers and our most vulnerable populations from identity theft. This is why Congress included language in the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “EGRRCPA”) of 2018 to create national credit freezes for adults and minors. The law contains a national, free credit freeze; and a national credit freeze for protected persons (for persons under 16 years of age and incapacitated adults)…

The preemption analysis remains the same regardless of whether a state security freeze law was enacted before the EGRRCPA became law, during the period between when FCRA § 625(b)(1)(J) is enacted and is effective, or after FCRA § 625(b)(1)(J) takes effect. In short, when the EGRRCPA became effective, all state credit freeze laws looking backward and all state legislation looking forward no longer had or will have legal effect.

We support your goal to assist foster children and our industry has continued to work towards protecting this vulnerable population. We are committed to working with county welfare departments, county probation departments and the Department of Social Services to ensure that foster children have their information protected. However, AB 2935 does not provide sufficient protection for the authentication of a child’s information when a freeze is placed. Additionally, automatically removing a credit freeze for all foster children at age 18, has the potential to allow family members and friends the opportunity to take advantage of the youth’s credit history. We believe it is essential that the foster youth have the sole discretion to determine whether the removal of a freeze is prudent. Finally, while we have made suggestions to improve the bill, any changes to the placement or removal of a credit freeze we still believe is preempted by federal law.

ASSEMBLY FLOOR: 71-0, 5/16/24

AYES: Aguiar-Curry, Alanis, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Dixon, Essayli, Mike Fong, Friedman, Gabriel, Gallagher, Garcia, Grayson, Haney, Hart, Holden, Hoover, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

NO VOTE RECORDED: Addis, Alvarez, Cervantes, Megan Dahle, Flora, Vince Fong, Gipson, Irwin, Mathis

Prepared by: Allison Whitt Meredith / JUD. / (916) 651-4113

8/22/24 16:10:42

**** END ****

1. 18 U.S.C. § 1681t(b)(1)(J). ↑

2. The Fair Credit Reporting Act’s Limited Preemption of State Laws (87 Fed. Reg. 41042-01, 41043 (Jul. 11, 2022)). ↑

3. Ibid. ↑

4. See id. at p. 41044. ↑

 THIRD READING  

Bill No: AB 2935

Author: Maienschein (D), et al.

Amended: 6/20/24 in Senate

Vote: 21

SENATE JUDICIARY COMMITTEE: 10-0, 6/18/24

AYES: Umberg, Wilk, Allen, Ashby, Caballero, Durazo, Niello, Roth, Stern, Wahab

NO VOTE RECORDED: Laird

SENATE HUMAN SERVICES COMMITTEE: 5-0, 7/1/24

AYES: Alvarado-Gil, Ochoa Bogh, Blakespear, Limón, Menjivar

ASSEMBLY FLOOR: 71-0, 5/16/24 (Consent) - See last page for vote

SUBJECT: Foster children: consumer credit reports

SOURCE: Children’s Advocacy Institute;

Just In Time for Foster Youth

DIGEST:

This bill revises requirements related to the placement of a security freeze, and the removal of a security freeze, on the credit report of a minor under the age of 16 years who has been placed in a foster care setting.

ANALYSIS:

Existing federal law:

1. Establishes the Fair Credit Reporting Act (FCRA), which regulates consumer reporting agencies. (16 U.S.C., tit. 15, ch. 41, subch. III, §§ 1681 et seq.)
2. Provides that, except as provided in 3), the FCRA does not annul, alter, affect, or exempt any person subject to those laws from complying with the laws of any state law with respect to the collection, distribution, or use of any information on consumers, or for the prevention or mitigation of identity theft, except to the extent that those laws are inconsistent with federal law, and then only to the extent of the inconsistency. (16 U.S.C. § 1681t(a).)
3. Provides that no state law may impose requirements or prohibitions with respect to any subject matter related under specific federal Code sections, including the federal requirements relating to security freezes set forth in 4). (16 U.S.C. § 1681t(b)(1)(J).)
4. Establishes procedures by which a credit reporting agency must place a security freeze on the files and credit records of a protected consumer who is under the age of 16 at the time the request for the placement of a security freeze is made, or who is incapacitated and for whom a guardian or conservator has been appointed. (16 U.S.C. § 1681c-1(j).)
5. Establishes the Fair Credit Reporting Act (FCRA), which regulates consumer reporting agencies. (16 U.S.C., tit. 15, ch. 41, subch. III, §§ 1681 et seq.)
6. Provides that, except as provided in 3), the FCRA does not annul, alter, affect, or exempt any person subject to those laws from complying with the laws of any state law with respect to the collection, distribution, or use of any information on consumers, or for the prevention or mitigation of identity theft, except to the extent that those laws are inconsistent with federal law, and then only to the extent of the inconsistency. (16 U.S.C. § 1681t(a).)
7. Provides that no state law may impose requirements or prohibitions with respect to any subject matter related under specific federal Code sections, including the federal requirements relating to security freezes set forth in 4). (16 U.S.C. § 1681t(b)(1)(J).)
8. Establishes procedures by which a credit reporting agency must place a security freeze on the files and credit records of a protected consumer who is under the age of 16 at the time the request for the placement of a security freeze is made, or who is incapacitated and for whom a guardian or conservator has been appointed. (16 U.S.C. § 1681c-1(j).)

Existing state law:

1. Establishes the Consumer Credit Reporting Agencies Act (CCRA), which requires consumer credit reporting agencies to adopt procedures for meeting the needs of commerce for consumer credit, personnel, insurance, hiring of a dwelling unit, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information. (Civ. Code, div. 3, pt. 4, tit. 1.6, §§ 1785.1 et seq.)
2. Defines the following relevant terms:
   1. “Consumer credit report” means any written, oral, or other communication of any information by a consumer credit reporting agency bearing on a consumer’s creditworthiness, credit standing, or credit capacity, which is used or is expected to be used, or collected on whole or in part, for the purpose of serving as a factor in establishing the consumer’s eligibility for credit, employment purposes, hiring of a dwelling unit, or other specified purposes, subject to specified exceptions. (Civ. Code, § 1785.3(c).)
   2. “Protected consumer” is an individual who is (1) under 16 years of age at the time a request for a security freeze is made; (2) an incapacitated person or protected person for whom a guardian or conservator has been appointed; or (3) under the jurisdiction of a county welfare department or county probation department, has been placed in a foster care setting, and is under 16 years of age at the time a request for placement of a security freeze is made. (Civ. Code, § 1785.11.9(a).)
   3. “Representative,” for the purpose of a protected consumer who has been placed in a foster care setting, “representative” means a county welfare department or county probation department, or their agent or designee, but does not include a foster parent. (Civ. Code, § 1785.11.9(c).)
   4. “Sufficient proof of authority” means documentation that shows that a representative has authority to act on behalf of a protected consumer in a financial matter, as specified. (Civ. Code, § 1785.11.9(e).)
3. Requires a consumer credit reporting agency to place a security freeze for a protected consumer if both of the following occur:
   1. The consumer credit reporting agency receives a request from the protected consumer’s representative for the placement of a security freeze, as specified.
   2. The protected consumer’s representative (i) submits the request to the consumer credit reporting agency as specified by the agency; (ii) provides to the consumer credit reporting agency sufficient proof of identification of the protected consumer and the representative; (iii) provides to the consumer credit reporting agency sufficient proof of authority to act on behalf of the protected consumer; and (iv) pays to the consumer credit reporting agency the required fee. (Civ. Code, § 1785.11(a).)
4. Provides that once a security freeze has been placed, a consumer credit reporting agency shall not release the protected consumer’s credit report, any information derived from the protected consumer’s credit report, or any record created for the protected consumer, unless a security freeze for a protected consumer is removed, as specified. (Civ. Code, § 1785.11.11(e).)
5. Provides that a security freeze can be removed if either of the following occurs:
   1. The consumer credit reporting agency receives a request from a protected consumer or a protected consumers’ representative, as specified.
   2. The security freeze was placed or the record of the protected person was created based upon a material misrepresentation of fact by the protected consumer or the protected consumers’ representative. (Civ. Code, § 1785.11.11(f)-(h), (j).)
6. Requires, for a child in foster care aged 14 years of age and each year thereafter, while the child is under the jurisdiction of the juvenile court, the county welfare department, county probation department, or California Department of Social Services (CDSS), if an automated process is available, to inquire of each of the three major credit reporting agencies as to whether the child has any consumer credit history, and provide the child with assistance in interpreting the credit report and resolving inaccuracies, as specified. (Welf. & Inst. Code, § 10618.6(a), (c).)
7. Requires, for a nonminor dependent, the county welfare department or county probation department to assist the young adult, on a yearly basis while the nonminor dependent is under the jurisdiction of the juvenile court, with requesting the consumer credit report from each of the three major credit reporting agencies and provide assistance with interpreting the consumer credit report and resolving any inaccuracies. (Welf. & Inst. Code, § 10618.6(b), (c).)

This bill:

1. Provides that, if a request for the placement for a security freeze is for a protected consumer who has been placed in a foster care setting, the credit reporting agency shall deem the requirements of providing sufficient proof of identification of the protected consumer and the representative, and of providing sufficient proof of authority to act on behalf of the protected consumer, to be met if:
   1. The request is verifiably from a county welfare department, a county probation department, or CDSS as the county’s designee; and
   2. The requesting entity provides sufficient proof of the protected consumer’s identity under the FRCA.
2. Provides that a county welfare department, county probation department, or CDSS does not have the authority to request a security freeze for a protected consumer placed in foster care that continues beyond the protected consumer’s 18th birthday.
3. Provides that, if a credit inquiry received by a credit reporting agency pursuant to a request from a social worker or probation officer indicates that a child who has been placed in a foster care setting has a consumer credit history, any information that appears on the protected consumer’s credit report shall be promptly blocked and not reported, and the credit reporting agency shall promptly and permanently block reporting any information identified as fraudulent, and comply with unblocking requirements, as specified.
4. Provides that, with respect to a protected consumer for whom a security freeze has been placed under 1), the freeze shall automatically expire on the protected consumer’s 18th birthday unless the consumer, either directly (if they are 16 years of age or older) or through their representative, instructs the credit agency to maintain the freeze beyond that date.
5. Includes a severability clause.

Comments

Foster youth and nonminor dependents face a disheartening number of challenges as they grow up and age out of the foster system. One of those challenges is dealing with the consumer credit system. Foster youth and nonminor dependents are less likely to have adult role models who can educate them on the ins and outs of consumer credit, and are also more likely to be the victims of credit fraud. Current state law requires, beginning on a foster youth’s 14th birthday and each year thereafter, a county welfare department, county probation department, or CDSS to request the minor’s credit report from each of the three major credit agencies, and to assist nonminor dependents with their credit reports as specified. State and federal law also permit a county welfare department or county probation department to request a credit freeze on behalf of a minor under the age of 16 years who is in a foster setting at the time of the request.

This bill is intended to improve the protections for foster youth and nonminor dependents by clarifying the existing security freeze process for freezes placed for foster youth at the request of a county welfare or probation department, or CDSS on behalf of those departments; requiring a credit reporting agency to automatically block information on a credit report, if it is determined that the foster youth has a credit report as a minor; and requiring that such freezes lift automatically when the foster youth turns 18 years of age.

The FCRA contains a partial preemption clause, including a provision stating that state laws “relating to any subject matter” covered by specific FCRA provisions, including provisions “relating to security freezes.”^[1] In 2022, the Consumer Financial Protection Bureau issued an interpretive rule clarifying the preemptive scope of the FCRA, stating that the preemption provisions “have a narrow and targeted scope.”^[2] Under the guidance, “State laws that are not ‘inconsistent’ with the FCRA—including state laws that are more protective of consumers than the FCRA—are generally not preempted.”^[3] It is an open question whether a court would rule that this bill’s provisions are preempted by federal law, though this bill appears to be a modest law that “reflect[s] emerging problems affecting [California’s] citizens,”^[4] namely, the challenges faced by California’s foster youth and nonminor dependents.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 7/3/24)

Children’s Advocacy Institute (co-source)
Just In Time for Foster Youth (co-source)

Advokids

Angels Foster Family Network

California Alliance of Caregivers

California State University San Marcos Department of Social Work

Children Now

Children’s Legal Services of San Diego
Dependency Legal Services San Diego

East Bay Children’s Law Offices

Los Angeles Dependency Lawyers Inc.

National Center for Lesbian Rights

Redenbacher & Brown

Straight From The Heart Inc.

Sycamores

The Law Offices of Dale S. Wilson

OPPOSITION: (Verified 7/3/24)

Consumer Data Industry Association

ARGUMENTS IN SUPPORT: According to Dependency Legal Services San Diego:

As the Department of Social Services correctly observes, “minors should not have a credit report.”5 However, while exact numbers are hard to ascertain, between half and 15% of all of California’s abused and neglected foster children become victims of identity theft…

AB 2935 starts from the same premise as the Department of Social Services above: minors should not have credit reports, period. Starting from that premise, AB 2935 would enact the following:

• • • • If a credit freeze request verifiably comes from the county welfare department, county probation department, or the State Department of Social Services, this bill would deem the requirements for the placement or removal of a security freeze for a foster youth to be met.
      • If an inquiry received by one of those entities indicates that the foster child who should not have a credit report at all actually has a consumer credit history, the bill would require the credit bureau to promptly and permanently block reporting any such information on the consumer’s credit report because it is presumptively fraudulent. Under current law, the simple submission of a copy of a police report by a consumer triggers a requirement for the bureaus automatically to block listed information from being reported as presumed fraud. The same is true here, given that children should not have reports at all.
      • The bill would require the freeze to automatically expire on the foster child’s 18th birthday unless the child instructs the bureau to maintain the freeze beyond that date directly or through their representative. The bill also would permit the freeze to be removed at the request of the representative of a protected consumer placed in a foster care setting after the protected consumer’s 16th birthday.

Please, let’s help our foster children simply by making it easier to remedy the consequences of a crime committed against them on our watch by enacting AB 2935 (Maienschein).

ARGUMENTS IN OPPOSITION: According to the Consumer Data Industry Association:

A safe and sound credit economy needs a reliable credit reporting system that also protects consumers and our most vulnerable populations from identity theft. This is why Congress included language in the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “EGRRCPA”) of 2018 to create national credit freezes for adults and minors. The law contains a national, free credit freeze; and a national credit freeze for protected persons (for persons under 16 years of age and incapacitated adults)…

The preemption analysis remains the same regardless of whether a state security freeze law was enacted before the EGRRCPA became law, during the period between when FCRA § 625(b)(1)(J) is enacted and is effective, or after FCRA § 625(b)(1)(J) takes effect. In short, when the EGRRCPA became effective, all state credit freeze laws looking backward and all state legislation looking forward no longer had or will have legal effect.

We support your goal to assist foster children and our industry has continued to work towards protecting this vulnerable population. We are committed to working with county welfare departments, county probation departments and the Department of Social Services to ensure that foster children have their information protected. However, AB 2935 does not provide sufficient protection for the authentication of a child’s information when a freeze is placed. Additionally, automatically removing a credit freeze for all foster children at age 18, has the potential to allow family members and friends the opportunity to take advantage of the youth’s credit history. We believe it is essential that the foster youth have the sole discretion to determine whether the removal of a freeze is prudent. Finally, while we have made suggestions to improve the bill, any changes to the placement or removal of a credit freeze we still believe is preempted by federal law.

ASSEMBLY FLOOR: 71-0, 5/16/24

AYES: Aguiar-Curry, Alanis, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Dixon, Essayli, Mike Fong, Friedman, Gabriel, Gallagher, Garcia, Grayson, Haney, Hart, Holden, Hoover, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

NO VOTE RECORDED: Addis, Alvarez, Cervantes, Megan Dahle, Flora, Vince Fong, Gipson, Irwin, Mathis

Prepared by: Allison Whitt Meredith / JUD. / (916) 651-4113

7/31/24 15:30:54

**** END ****

1. 18 U.S.C. § 1681t(b)(1)(J). ↑

2. The Fair Credit Reporting Act’s Limited Preemption of State Laws (87 Fed. Reg. 41042-01, 41043 (Jul. 11, 2022)). ↑

3. Ibid. ↑

4. See id. at p. 41044. ↑

SENATE COMMITTEE ON HUMAN SERVICES

Senator Alvarado-Gil, Chair

2023 - 2024 Regular

Subject: Foster children: consumer credit reports

SUMMARY

This bill revises requirements for the placement and removal of a security freeze on the credit report of a minor, under the age of 16, who has been placed in a foster care setting.

ABSTRACT

Existing Law:

1. Requires, when a child in a foster care placement reaches their 14th birthday, and each year thereafter, while the child is under the jurisdiction of the juvenile court, the county welfare department, the county probation department, or, if an automated process is available, the California Department of Social Services (CDSS), to inquire of each of the three major Credit Reporting Agencies as to whether the child has any consumer credit history. Requires, if CDSS makes the inquiry, to notify the county welfare department or county probation department in the county having jurisdiction over the child of the results of that inquiry. (WIC 10618.6(a)
   
2. Establishes the Consumer Credit Reporting Agencies Act. The Consumer Credit Reporting Agencies Act defines “consumer credit report” as any written, oral, or other communication of any information by a consumer Credit Reporting Agency bearing on a consumer’s creditworthiness, credit standing, or credit capacity, which is used or is expected to be used, or collected in whole or in part, for the purpose of serving as a factor in establishing the consumer’s eligibility for a specified purpose. (Civil Code 1785.3.)
   
3. Requires a Credit Reporting Agency to place a security freeze for a protected consumer under specified conditions. (Civil Code 1785.11.11)
   
4. Provides for the Fair Credit Reporting Act, which regulates the collection, dissemination, and use of consumer credit information. Requires a consumer reporting agency to block the reporting of any information in the file of a consumer that the consumer identifies as information that resulted from an alleged identity theft. (15 USC 1681 et seq.)
   
5. Pursuant to the Fair Credit Reporting Act, requires, if an inquiry performed indicates that a child has a consumer credit history with any major Credit Reporting Agency, the responsible county welfare department or county probation department to request a consumer credit report from that Credit Reporting Agency. (15 USC 1681 et seq)
   
6. Requires each foster youth 16 years of age or older to receive a free copy of any credit report pertaining to the youth annually until discharged from care and assistance in interpreting and clearing any inaccuracies in the credit report. (Public Law 112-34)
   

This Bill:

1. Provides that if the request for the placement or removal of a security freeze is for a protected consumer who has been placed in the foster care setting, the credit reporting agency shall deem the requirements of providing sufficient proof of identity and sufficient proof of authority to act on behalf of the protected consumer to have been met if the request is verifiably from a county welfare department or a county probation department or a designee, as specified, and the requesting entity provides sufficient proof of identification, as specified.
   
2. Provides that a county welfare department or county probation department shall not have the authority to request a security freeze for a protected consumer placed in foster care that continues beyond the protected consumer’s 18^th birthday.
   
3. Provides that security freezes described above shall be deemed to expire on the protected consumer’s 18^th birthday.
   
4. Provides that CDSS shall be considered the designee of a county welfare department or county probation department for purposes of this bill.
   
5. Provides that if a request for a security freeze indicates that the protected consumer who has been placed in a foster care setting has a consumer credit history, any information that appears on the protected consumer’s credit report shall be promptly blocked and not reported.
   
6. Provides that for a security freeze placed for a protected consumer in foster care, the freeze may be removed at the request of the representative of the protected consumer or by the protected consumer if they are 16 years of age or older at the time they make the request.
   
7. Provides that if a request to remove the security freeze is not received, the security freeze shall automatically expire on the consumer’s 18^th birthday unless the protected consumer instructs the agency to maintain the freeze beyond that date.

FISCAL IMPACT

According to the Assembly Appropriations Committee analysis, “Minor and absorbable costs to the Department of Financial Protection and Innovation. Pursuant to the California Consumer Financial Protection Law, the Department of Financial Protection and Innovation has the authority to oversee providers of certain financial products and services that are not licensed by the department, including credit reporting agencies.”

BACKGROUND AND DISCUSSION

Purpose of the Bill:

According to the author, “Foster youth are especially vulnerable to having their identities stolen due to the large number of people who have access to their personal information. Each time a foster child changes placements, additional individuals gain access to their information, including their social security number. It is estimated that at least fifteen percent of foster youth become the victims of identity theft. Children have always been an attractive target for identity thieves because their credit reports are clean and are often left unmonitored for many years, providing ample time to cause substantial damage to the child’s credit. Once a foster youth reaches 14, or if they come into the system after the age of 14, current law requires county welfare departments to check with the three credit bureaus to see if a credit report exists. Because children should not have credit reports, the existence of a report is likely the result of fraud. If a report does exist, social workers must provide foster youth with information and assistance to fix credit inaccuracies. However, our current laws only come into play after a youth has been victimized. AB 2935 seeks to prevent identity theft in the first place by requiring the credit bureaus to automatically freeze an individual’s credit reports when they receive an inquiry from a county welfare department regarding a foster youth. Placing the automatic freeze will prevent nefarious actors from being able to open accounts in a child’s name.”

Child Welfare Services (CWS)

The CWS system is an essential component of the state’s safety net. Social workers in each county who receive reports of abuse or neglect, investigate and resolve those reports. When a case is substantiated, a family is either provided with services to ensure a child’s well-being and avoid court involvement, or a child is removed and placed into foster care. In 2023, the state’s child welfare agencies received 433,571 reports of abuse or neglect and 18,147 children were removed from their homes and placed into foster care via the CWS. As of January 1, 2024, there were 43,633 children in the CWS in California.

Identity Theft and Foster Youth

The California Office of Privacy Protection published a report^[1] in 2011 discussing the results of a pilot project between the Los Angeles County Department of Consumer Affairs and the Los Angeles County Department of Children and Family Services. The pilot project tested procedures to achieve the intent of a California law which required county agencies to check credit reports for foster and probation youth over the age of 14. The project involved 2,110 foster children in Los Angles and key findings included:

• 104 foster youth had all negative items cleared from their credit report and found these 104 children had 247 separate accounts in their name, resulting from errors or identity theft.
• The largest account balance was a home loan of over $200,000 and the average account balance was $1,811.
• The accounts were opened when the child was on average 14 years old.
• Over 10% of the youth involved in the study had records loosely linked to them only by Social Security number. While this did not affect their credit rating, it posed potential future problems for them.
  

This activity on a youth’s account is almost always the result of fraud. This bill would help to address these issues by creating an easier process to put credit freezes on the credit reports of foster youths.

Related/Prior Legislation:

AB 90 (Valladares, 2021) would have revised the definition of a protected consumer, for purposes of the Consumer Credit Reporting Agencies Act, to include individuals under the jurisdiction of a county welfare department or a county probation department who have been placed in foster care and are under 18 years of age at the time the security freeze request is made (up from 16 years of age). AB 90 was referred to the Assembly Banking and Finance Committee but never set for a hearing.

AB 2748 (Fong, 2020) would have revised the definition of a protected consumer, for purposes of the Consumer Credit Reporting Agencies Act, to include individuals under the jurisdiction of a county welfare department or a county probation department who have been placed in foster care and are under 19 years of age at the time the security freeze request is made (up from 16 years of age). AB 2748 was referred to the Assembly Privacy and Consumer Protection Committee but never set for a hearing.

COMMENTS

Children are easy targets for identity theft as they typically have no credit cards or credit records. As such, parents or guardians have no reason to suspect there is an issue. This means identity theft of youth can go undetected for years. Foster youth face even more risk as their personal information is shared more often as they move placements. A California State Bar Association journal article^[2] explored the experience of a 22 year old woman, Kareena, who had lived in 14 different foster homes. As a victim of identity theft she found herself with thousands of dollars of debt that dated back to when she was a child. These undeserved credit problems have resulted in Kareena being unable to obtain a car loan, student loan, or even a credit card. Her story is not unique. This bill seeks to protect foster youth like Kareena by giving counties the ability to put a credit freeze on the credit report of a foster youth, thus protecting foster youth against identity theft and associated obstacles.

PRIOR VOTES

POSITIONS

Support:

Childrens Advocacy Institute (Sponsor)
Advokids
California Alliance of Caregivers
Children Now
Children's Legal Services of San Diego
Dependency Legal Services San Diego
East Bay Children's Law Offices
Just in Time for Foster Youth (JIT)
Los Angeles Dependency Lawyers, INC.

Oppose:

None

-- END --

1. https://oag.ca.gov/sites/all/files/agweb/pdfs/privacy/foster_youth_credit_records.pdf ↑

2. https://www.calbarjournal.com/October2011/TopHeadlines/TH4.aspx ↑

SENATE JUDICIARY COMMITTEE

Senator Thomas Umberg, Chair

2023-2024 Regular Session

Bill No: AB 2935 (Author:Maienschein)

Version: June 10, 2024

Hearing Date: June 18, 2024

Fiscal: No

Urgency: No

Consultant: AWM

SUBJECT

Foster children: consumer credit reports

DIGEST

This bill revises requirements related to the placement of a security freeze, and the removal of a security freeze, on the credit report of a minor under the age of 16 years who has been placed in a foster care setting.

EXECUTIVE SUMMARY

Foster youth and nonminor dependents face a disheartening number of challenges as they grow up and age out of the foster system. One of those challenges is dealing with the consumer credit system. Not only are foster youth and nonminor dependents less likely to have adult role models who can educate them on the ins and outs of consumer credit, but they are also significantly more likely to be the victims of credit fraud. Current state law requires, beginning on a foster youth’s 14th birthday and each year thereafter, a county welfare department, county probation department, or the California Department of Social Services (CDSS) to request the minor’s credit report from each of the three major credit agencies, and to assist nonminor dependents with their credit reports as specified. State and federal law also permit a county welfare department or county probation department to request a credit freeze on behalf of a minor under the age of 16 years who is in a foster setting at the time of the request.

This bill is intended to improve the protections for foster youth and nonminor dependents by clarifying the existing security freeze process for freezes placed for foster youth at the request of a county welfare or probation department, or CDSS on behalf of those departments; requiring a credit reporting agency to automatically block information on a credit report, if it is determined that the foster youth has a credit report as a minor; and requiring that such freezes lift automatically when the foster youth turns 18 years of age. The author has agreed to amendments to clarify certain of the bill’s provisions and to conform certain requirements with federal law.

This bill is sponsored by the Children’s Advocacy Institute and Just in Time for Foster Youth and is supported by Advokids, Angels Foster Family Network, the California Alliance of Caregivers, the California State University San Marcos Department of Social Work, Children Now, Dependency Legal Services San Diego, East Bay Children’s Law Offices, Los Angeles Dependency Lawyers Inc., Redenbacher & Brown, Straight From The Heart Inc., Sycamores, and The Law Offices of Dale S. Wilson. This bill is opposed by the Consumer Data Industry Association. If this Committee passes this bill, it will next be heard by the Senate Human Services Committee.

PROPOSED CHANGES TO THE LAW

Existing law:

1. Establishes the Consumer Credit Reporting Agencies Act (CCRA), which requires consumer credit reporting agencies to adopt procedures for meeting the needs of commerce for consumer credit, personnel, insurance, hiring of a dwelling unit, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information. (Civ. Code, div. 3, pt. 4, tit. 1.6, §§ 1785.1 et seq.)
2. Defines the following relevant terms:
   1. “Consumer” means a natural individual.
   2. “Consumer credit report” means any written, oral, or other communication of any information by a consumer credit reporting agency bearing on a consumer’s creditworthiness, credit standing, or credit capacity, which is used or is expected to be used, or collected on whole or in part, for the purpose of serving as a factor in establishing the consumer’s eligibility for credit, employment purposes, hiring of a dwelling unit, or other specified purposes, subject to specified exceptions.
   3. “Consumer credit reporting agency” means any person who, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the business of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer credit reports to third parties, but does not include any governmental agency whose records are maintained primarily for traffic safety, law enforcement, or licensing purposes. (Civ. Code, § 1785.3.)
3. Authorizes a consumer to elect to place a security freeze on their credit report by making a request in writing, as specified.
   1. A “security freeze” means a notice placed in a consumer’s credit report, subject to certain exceptions, that prohibits the consumer credit reporting agency from releasing the consumer’s credit report or any information from it without the express authorization of the consumer.
   2. If a security freeze is in place, information from a consumer’s credit report may not be released to a third party without prior express authorization from the consumer.
   3. A consumer may contact the consumer credit reporting agency and request that the freeze be temporarily or permanently lifted, as specified. (Civ. Code, § 1785.11.2.)
4. Defines, for purposes of 5)-8), the following relevant terms:
   1. “Protected consumer” is an individual who is (1) under 16 years of age at the time a request for a security freeze is made; (2) an incapacitated person or protected person for whom a guardian or conservator has been appointed; or (3) under the jurisdiction of a county welfare department or county probation department, has been placed in a foster care setting, and is under 16 years of age at the time a request for placement of a security freeze is made.
   2. “Representative” means a person who provides to a consumer credit reporting agency sufficient proof of authority to act on behalf of a protected consumer; for purpose of a protected consumer who has been placed in a foster care setting, “representative” means a county welfare department or county probation department, or their agent or designee, but does not include a foster parent.
   3. “Sufficient proof of authority” means documentation that shows that a representative has authority to act on behalf of a protected consumer in a financial matter, as specified. (Civ. Code, § 1785.11.9.)
5. Requires a consumer credit reporting agency to place a security freeze for a protected consumer if both of the following occur:
   1. The consumer credit reporting agency receives a request from the protected consumer’s representative for the placement of a security freeze, as specified.
   2. The protected consumer’s representative (1) submits the request to the consumer credit reporting agency as specified by the agency; (2) provides to the consumer credit reporting agency sufficient proof of identification of the protected consumer and the representative; (3) provides to the consumer credit reporting agency sufficient proof of authority to act on behalf of the protected consumer; and (4) pays to the consumer credit reporting agency the required fee. (Civ. Code, § 1785.11(a).)
6. Provides that once a security freeze has been placed pursuant to 5), a consumer credit reporting agency shall not release the protected consumer’s credit report, any information derived from the protected consumer’s credit report, or any record created for the protected consumer, unless a security freeze for a protected consumer is removed pursuant to 7). (Civ. Code, § 1785.11.11(e).)
7. Provides that a security freeze placed pursuant to 5) can be removed if either of the following occurs:
   1. The consumer credit reporting agency receives a request from a protected consumer or a protected consumers’ representative, as specified.
   2. The security freeze was placed or the record of the protected person was created based upon a material misrepresentation of fact by the protected consumer or the protected consumers’ representative. (Civ. Code, § 1785.11.11(f)-(h), (j).)
8. Provides that the security freeze placed pursuant to 5) does not apply to specified use of the protected consumer’s consumer credit report or credit record, including providing a copy of the credit report to the protected person’s representative or specified state agencies or law enforcement acting in specified circumstances. (Civ. Code, § 1785.11.10.)
9. Requires a credit reporting agency, upon receipt of a valid police report alleging credit fraud from a consumer, to promptly and permanently block any information that the consumer alleges is fraudulently on their credit report; the agency may unblock the information only if the information was blocked due to a material misrepresentation of fact or fraud by the consumer; the consumer agrees that the block, or portions of the block, was or were in error; or the consumer knowingly obtained goods or services as a result of the blocked transactions. (Civ. Code, § 1785.16(k).)
10. Requires a credit reporting agency, when unblocking information pursuant to 9), to comply with specified requirements in the CCRA and the FCRA relating to investigating disputed information; additionally, the agency must accept the consumer’s version of the disputed information and correct or delete the disputed item when the consumer submits specified documentation to the agency, unless the agency, in the exercise of good faith and reasonable judgment, has substantial reason based on specific facts to doubt the veracity of the authenticity of the documentation and informs the consumer of the basis for the decision. (Civ. Code, § 1785.16(l).)
11. Establishes that the juvenile court has jurisdiction over:
    1. A child who is subject to abuse or neglect. (Welf. & Inst. Code, § 300.)
    2. A child, when that child has committed acts that trigger delinquency jurisdiction rendering the child a ward. (Welf. & Inst. Code, §§ 601, 602.)
    3. Any nonminor dependent, between the age of majority and 21 years, under specified conditions. A nonminor dependent under the jurisdiction of the juvenile court retains their legal decision-making authority as an adult, except as specified. (Welf. & Inst. Code, §§ 303, 388(e).)
12. Defines “nonminor dependent” for purposes of 1)(c) as a current foster youth or a nonminor under the transition jurisdiction of the court who is between 18 and 21 years old, turned 18 years old while under an order of foster care placement, is in foster care under the responsibility of the county welfare department, county probation department, or Indian Tribe, and is participating in a transitional independent living plan, as specified. (Welf. & Inst. Code, § 11400(v).)
13. Requires, for a child in foster care aged 14 years of age and each year thereafter, while the child is under the jurisdiction of the juvenile court, the county welfare department, county probation department, or CDSS, if an automated process is available, to inquire of each of the three major credit reporting agencies as to whether the child has any consumer credit history, and provide the child with assistance in interpreting the credit report and resolving inaccuracies, as specified. (Welf. & Inst. Code, § 10618.6(a), (c).)
14. Requires, for a nonminor dependent, the county welfare department or county probation department to assist the young adult, on a yearly basis while the nonminor dependent is under the jurisdiction of the juvenile court, with requesting the consumer credit report from each of the three major credit reporting agencies and provide assistance with interpreting the consumer credit report and resolving any inaccuracies. (Welf. & Inst. Code, § 10618.6(b), (c).)

Existing federal law:

1. Establishes the Fair Credit Reporting Act (FCRA), which regulates consumer reporting agencies, with the intent of requiring that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information. (16 U.S.C., tit. 15, ch. 41, subch. III, §§ 1681 et seq.)
2. Provides that, except as provided in 3), the FCRA does not annul, alter, affect, or exempt any person subject to those laws from complying with the laws of any state law with respect to the collection, distribution, or use of any information on consumers, or for the prevention or mitigation of identity theft, except to the extent that those laws are inconsistent with federal law, and then only to the extent of the inconsistency. (16 U.S.C. § 1681t(a).)
3. Provides that no state law may impose requirements or prohibitions with respect to any subject matter related under specific federal Code sections, including the federal requirements relating to security freezes set forth in 4) and 5). (16 U.S.C. § 1681t(b)(1)(J).)
4. Establishes procedures by which a credit reporting agency must place a security freeze on the files and credit records of a consumer, in response to a direct request from the consumer. (16 U.S.C. § 1681c-1(i).)
5. Establishes procedures by which a credit reporting agency must place a security freeze on the files and credit records of a protected consumer, in response to a request from the representative of a protected consumer; a protected individual is a person who is under the age of 16 at the time the request for the placement of a security freeze is made, or who is incapacitated and for whom a guardian or conservator has been appointed. (16 U.S.C. § 1681c-1(j).)

This bill:

1. Provides that, if a request for the placement for a security freeze is for a protected consumer who has been placed in a foster care setting, the credit reporting agency shall deem the requirements of providing sufficient proof of identification of the protected consumer and the representative, and of providing sufficient proof of authority to act on behalf of the protected consumer, to be met if:
   1. The request is verifiably from a county welfare department, a county probation department, or CDSS; and
   2. The requesting entity provides sufficient proof of the protected consumer’s identity under the FRCA.
2. Provides that a county welfare department, county probation department, or CDSS does not have the authority to request a security freeze for a protected consumer placed in foster care that continues beyond the protected consumer’s 18th birthday.
3. Provides that a security freeze requested under 1) shall be deemed to expire on the protected consumer’s 18th birthday.
4. Provides that, if a credit inquiry received by a credit reporting agency pursuant to a request from a social worker, probation officer, or CDSS under Welfare and Institutions Code section 10618.6 indicates that a child who has been placed in a foster care setting has a consumer credit history:
   1. Any information that appears on the protected consumer’s credit report shall be promptly blocked and not reported, in the same manner as if the agency had received a police report pursuant to Penal Code section 530.5.
   2. The credit reporting agency shall promptly and permanently block reporting any information identified as fraudulent, and comply with unblocking requirements, in accordance with Civil Code section 1785.16(k) and (l).
5. Provides that, with respect to a protected consumer for whom a security freeze has been placed under 1), the freeze shall automatically expire on the protected consumer’s 18th birthday unless the consumer, either directly or through their representative, instructs the credit agency to maintain the freeze beyond that date.
6. Provides that, notwithstanding 5), a security freeze may be removed after the protected consumer’s 16th birthday upon the request of a representative of the protected consumer.
7. Includes a severability clause.

COMMENTS

1. Author’s comment

According to the author:

Foster youth are especially vulnerable to having their identities stolen due to the large number of people who have access to their personal information. Each time a foster child changes placements, additional individuals gain access to their information, including their social security number. It is estimated that at least fifteen percent of foster youth become the victims of identity theft. Children have always been an attractive target for identity thieves because their credit reports are clean and are often left unmonitored for many years, providing ample time to cause substantial damage to the child’s credit. Once a foster youth reaches 14, or if they come into the system after the age of 14, current law requires county welfare departments to check with the three credit bureaus to see if a credit report exists. Because children should not have credit reports, the existence of a report is likely the result of fraud. If a report does exist, social workers must provide foster youth with information and assistance to fix credit inaccuracies. However, our current laws only come into play after a youth has been victimized. AB 2935 seeks to prevent identity theft in the first place by requiring the credit bureaus to automatically freeze an individual’s credit reports when they receive an inquiry from a county welfare department regarding a foster youth. Placing the automatic freeze will prevent nefarious actors from being able to open accounts in a child’s name.

2. Foster youth and nonminor dependents are uniquely vulnerable to credit fraud

The whole system of consumer credit—understanding it, building it, making sure it’s accurate—can be daunting. Children and youth who have spent a significant amount of time in the foster system, and who may have been moving from location to location without a stable caregiver, are be left especially vulnerable to the harms that can result from inadequate credit education, including credit fraud. As explained by one of the bill’s sponsors, the Children’s Advocacy Institute:

Foster youth are at particularly high risk of identity theft and credit problems due to the large number of people with access to their personal information, including Social Security numbers. This includes the parents from whom the child was removed, as well as caseworkers, foster parents, and group home providers. Each time a foster child changes placement, additional individuals gain access to their private information. More than a third of California’s foster children in foster care for two years have experienced three or more placement changes, significantly increasing the child’s vulnerability to identity theft.

Foster youth who “age out” of foster care with their credit in a shambles often unfairly bear the responsibility for crippling debt, including mortgages, utility bills, medical bills, tax debt, and credit card debt, through no fault of their own. They may also face legal problems resulting from the fraudulent acts of those who have stolen their identity. Most of these youth at 18 or 21 years of age are unqualified and incapable of navigating the credit reporting world on their own.

Worse, credit reports are routinely checked for housing, employment, and private education loans. The persistent theft of foster child identities means that foster children under our care will — on top of all of their many other challenges — have a far harder time obtaining housing, gainful employment, and education when they are on their own between the ages of 18 to 21 than children who were not raised under our care.

To help foster children and youth avoid being sent into the world with damaged credit through no fault of their own, state law requires the child’s social worker or probation officer, beginning when a child in foster care reaches their 14th birthday, and annually thereafter, to inquire from each of the three major credit reporting agencies as to whether the child or youth has a consumer credit history.^[1] The social worker or probation officer must assist the child or youth with interpreting their credit report and any inaccuracies, which may include referring them to a governmental or nonprofit agency that provides consumer credit services.^[2] For nonminor dependents—who, at the age of 18 or older, can request their own credit history—their social worker or probation officer must assist them in requesting their credit reports on an annual basis, and in obtaining assistance with any inconsistencies contained in the reports.^[3]

3. The overlapping state and federal consumer credit reporting regimes

Consumer credit is regulated at both the federal and state level. At the federal level, the FCRA governs some aspects of consumer credit reporting and is intended to “ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy.”^[4] At the state level, the CCRA governs consumer credit reporting agencies with the goal of ensuring those agencies “exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer’s right to privacy.”^[5]

The FCRA provides that states may regulate some, but not all, subject matter in the field of consumer credit reporting also covered by the FCRA. The default is that state laws are not preempted by the FCRA unless they are inconsistent with the FCRA, stating that except as specifically provided, the FCRA:

…does not annul, affect, or exempt any person subject to the provisions of [the FCRA] from complying with the laws of any State with respect to the collection, distribution, or use of any information on consumers, or for the prevention or mitigation of identity theft, except to the extent that those laws are inconsistent with any provision of [the FCRA], and then only to the extent of the inconsistency.^[6]

This broadly permissive position has many specific exceptions, however, which provide that “[n]o requirement or prohibition may be imposed under the laws of any State…with respect to any subject matter related under” specific provisions of the FCRA.^[7] One such provision relates to the imposition of security freezes.^[8]

Relevant to this bill is the FCRA and the CCRA’s respective provisions for security freezes on the consumer credit report of a “protected consumer.” Specifically, both the FCRA and the CCRA permit the representative of a “protected consumer”—defined as a person under 16 years of age at the time the request is made, or a person who is incapacitated or for whom a guardian or conservator has been appointed^[9]—to request a security freeze of the protected consumer’s credit and credit record, provided that the representative furnishes sufficient proof of their authority to act on behalf of the protected consumer.^[10] Both regimes permit, for a protected person placed in a foster care setting, a written communication from a county welfare or probation department (together, a CWD), or their agent or designee, certifying that the protected consumer is in a foster care setting under its jurisdiction to serve as sufficient proof of authority to act on behalf of the protected person.^[11] And currently, both regimes provide that the requested freeze stays in place until the protected consumer’s representative, or the protected consumer if they are over 16 years of age, request the removal of the freeze.^[12]

4. This bill streamlines and strengthens the security freeze and freeze-lifting process for youths and nonminor dependents in the foster system

This bill is intended to improve the CCRA’s protections for foster youth and nonminor dependents, by modifying the existing security freeze process for freezes placed for foster youth at the request of a CWD, or CDSS on behalf of a CWD, as well as requiring that those freezes lift automatically when the foster youth turns 18 years of age.

With respect to the existing request procedure, the bill provides that, when a credit agency’s report indicates that a foster child or youth has a consumer credit history, the credit agency must block and not report the information in the same manner as if the agency had received a report of credit fraud under specified CCRA and Penal Code provisions. This blocking requirement reflects the fact that, as minors, foster children and youth should not have credit activity, so any such activity almost certainly indicates that they are the victims of fraud. By automating the blocking process, foster children and youth will avoid the complex and intimidating process of addressing credit fraud on their own. Additionally, the bill clarifies when a credit agency shall deem a request from a CWD on behalf of a foster youth to satisfy the CCRA’s authentication requirements.

With respect to the lifting of a credit freeze placed by a CWD, this bill provides that such a freeze lifts automatically on the foster youth’s 18th birthday (when they make the transition from foster youth to nonminor dependent). If a credit freeze is in place when the youth turns 18 years of age, they will not be able to begin building credit, which is essential for obtaining housing and other of life’s necessities. By automating the removal of the freeze, this bill is intended to ensure that nonminor dependents begin building their credit as soon as possible; the bill permits, however, a freeze to be kept in place at the request of a foster youth (when they are 16 years of age or older) or the CWD. The consumer credit agency could use any method available to it to ensure that the freeze expires on the youth’s 18th birthday absent such a request.

The author has agreed to amendments to clarify certain provisions and to address some of the potential preemption concerns, discussed below in Part 5. The amendments are set forth in Part 6.

5. Preemption questions

The Supremacy Clause provides that the laws of the United States take precedence over state laws.^[13] Accordingly, federal law may specify whether, and to what extent, it preempts state laws regulating the same subject matter.^[14] When a federal statute contains an express preemption clause, the determination of whether a particular state act is barred by the clause depends on “the question of the substance and scope of Congress’ displacement of state law.”^[15] “Invoking some brooding federal interest or appealing to a judicial policy preference should never be enough to win preemption of a state law; a litigant must point specifically to a ‘constitutional text or a federal statute’ that does the displacing or conflicts with state law.”^[16]

Instead, “the purpose of Congress is the ultimate touchstone in every preemption case,” which “primarily is discerned from the language of the preemption statute and the statutory framework surrounding it…Also relevant, however, is the structure and purpose of the statute as a whole, as revealed not only in the text, but through the reviewing court’s reasoned understanding of the way in which Congress intended the statute and its surrounding regulatory scheme to affect business, consumers, and the law.”^[17] Any preemption analysis “begins with the assumption that the historic police powers of the States are not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress…That assumption applies with particular force when Congress has legislated in a field traditionally occupied by the States.”^[18]

As discussed in Part 3 of this analysis, the FCRA contains a partial preemption clause, including a provision stating that state laws “relating to any subject matter” covered by specific FCRA provisions, including provisions “relating to security freezes.”^[19] The Consumer Data Industry Association (CDIA), writing in opposition, argues that this provision renders “anything dealing with credit freezes at the state level”—including this bill and all state credit freeze laws—“became preempted by federal law.” The CDIA, however, does not cite any case law for its sweeping preemption argument, and Committee staff were unable to locate any case law holding that the FCRA’s security freeze provision entirely displaces state law.

Guidance from the federal Consumer Financial Protection Bureau (CFPB) also indicates that the preemption analysis is not as straightforward as the CDIA claims. In 2022, the CFPB issued an interpretive rule clarifying the preemptive scope of the FCRA, stating that the preemption provisions “have a narrow and targeted scope.”^[20] Under the guidance, “State laws that are not ‘inconsistent’ with the FCRA—including state laws that are more protective of consumers than the FCRA—are generally not preempted.”^[21] In support of its interpretation, the guidance cites a federal Circuit Court case rejecting CDIA’s argument that all state statutes relating to information contained in consumer credit reports are preempted, even though the FCRA states that the FCRA’s preemption clause extends to subject matter regulated in “section 1681c of [the FCRA], relating to information contained in consumer credit reports.”^[22]

It is an open question whether a court would rule that this bill’s provisions are preempted by federal law. As explained in Part 4, this bill appears to be a modest law that “reflect[s] emerging problems affecting [California’s] citizens,”^[23] namely, the challenges faced by California’s foster youth and nonminor dependents.

6. Amendments

As noted in Part 5, the author has agreed to amend the bill to clarify certain provisions and to conform the bill more closely to the requirements of the FCRA. The amendments are set forth as follows, with additions in bold and underline and deletions in strikethrough, subject to any nonsubstantive amendments the Office of Legislative Counsel may make:

Amendment 1

Modify paragraphs (2) and (3) of subdivision (a) as follows:

(2) (A) If the request for the placement or removal of a security freeze is for a protected consumer who has been placed in a foster care setting, the credit reporting agency shall deem the requirements of clauses (ii) and (iii) of subparagraph (B) of paragraph (1) to have been met if the request is verifiably from a county welfare department, or a county probation department, or the designee pursuant to subparagraph (B), the State Department of Social Services, as described in subdivision (a) of Section 10618.6 of the Welfare and Institutions Code, and the requesting entity provides sufficient proof of identification under 15 U.S.C. Sec. 1681c-1(j)(1)(G). The A county welfare department, or a county probation department, or the State Department of Social Services shall not have the authority to request a security freeze for a protected consumer placed in foster care that continues beyond the protected consumer’s 18th birthday. A security freeze requested under this paragraph shall be deemed to expire on the protected consumer’s 18th birthday.

(B) For purposes of this paragraph, the State Department of Social Services shall be considered the designee a county welfare department or county designee. The credit agency shall deem the requirements of clause (iii) of subparagraph (B) of paragraph (1) to have been met if the request is verifiably from the State Department of Social Services.

(3) If a request an inquiry received pursuant to paragraph (2) subdivision (a) of Section 10618.6 of the Welfare and Institutions Code indicates that the protected consumer a child who has been placed in a foster care setting has a consumer credit history, any information that appears on the protected consumer’s credit report shall be promptly blocked and not reported, in the same manner as if the agency had received a police report pursuant to Section 530.5 of the Penal Code. The credit reporting agency shall also comply with subdivisions (k) and (l) of Section 1785.16, regarding the protected consumer child who has been placed in a foster care setting.

Amendment 2

Modify paragraph (2) of subdivision (j) as follows:

(2) (A) With respect to a security freeze placed for a protected consumer for whom a security freeze has been placed under paragraph (2) of subdivision (a), the freeze may be removed at the request of the representative of the protected consumer, or by the protected consumer if the protected consumer is 16 years of age or older at the time they make the request. If no such request is received, the freeze shall automatically expire on the consumer’s 18th birthday pursuant to paragraph (2) of subdivision (a) unless the protected consumer, either directly or through their representative, instructs the agency to maintain the freeze beyond that date.

(B) Notwithstanding subparagraph (A), a security freeze may be removed upon the request of the representative of the protected consumer who has been placed in a foster care setting after the protected consumer’s 16th birthday.

7. Arguments in support

According to Dependency Legal Services San Diego:

As the Department of Social Services correctly observes, “minors should not have a credit report.”5 However, while exact numbers are hard to ascertain, between half and 15% of all of California’s abused and neglected foster children become victims of identity theft…

AB 2935 starts from the same premise as the Department of Social Services above: minors should not have credit reports, period. Starting from that premise, AB 2935 would enact the following:

• • • • If a credit freeze request verifiably comes from the county welfare department, county probation department, or the State Department of Social Services, this bill would deem the requirements for the placement or removal of a security freeze for a foster youth to be met.
      • If an inquiry received by one of those entities indicates that the foster child who should not have a credit report at all actually has a consumer credit history, the bill would require the credit bureau to promptly and permanently block reporting any such information on the consumer’s credit report because it is presumptively fraudulent. Under current law, the simple submission of a copy of a police report by a consumer triggers a requirement for the bureaus automatically to block listed information from being reported as presumed fraud. The same is true here, given that children should not have reports at all.
      • The bill would require the freeze to automatically expire on the foster child’s 18th birthday unless the child instructs the bureau to maintain the freeze beyond that date directly or through their representative. The bill also would permit the freeze to be removed at the request of the representative of a protected consumer placed in a foster care setting after the protected consumer’s 16th birthday.

Please, let’s help our foster children simply by making it easier to remedy the consequences of a crime committed against them on our watch by enacting AB 2935 (Maienschein).

8. Arguments in opposition

According to the Consumer Data Industry Association:

A safe and sound credit economy needs a reliable credit reporting system that also protects consumers and our most vulnerable populations from identity theft. This is why Congress included language in the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “EGRRCPA”) of 2018 to create national credit freezes for adults and minors. The law contains a national, free credit freeze; and a national credit freeze for protected persons (for persons under 16 years of age and incapacitated adults)…

The preemption analysis remains the same regardless of whether a state security freeze law was enacted before the EGRRCPA became law, during the period between when FCRA § 625(b)(1)(J) is enacted and is effective, or after FCRA § 625(b)(1)(J) takes effect. In short, when the EGRRCPA became effective, all state credit freeze laws looking backward and all state legislation looking forward no longer had or will have legal effect.

We support your goal to assist foster children and our industry has continued to work towards protecting this vulnerable population. We are committed to working with county welfare departments, county probation departments and the Department of Social Services to ensure that foster children have their information protected. However, AB 2935 does not provide sufficient protection for the authentication of a child’s information when a freeze is placed. Additionally, automatically removing a credit freeze for all foster children at age 18, has the potential to allow family members and friends the opportunity to take advantage of the youth’s credit history. We believe it is essential that the foster youth have the sole discretion to determine whether the removal of a freeze is prudent. Finally, while we have made suggestions to improve the bill, any changes to the placement or removal of a credit freeze we still believe is preempted by federal law.

SUPPORT

Children’s Advocacy Institute (co-sponsor)
Just In Time for Foster Youth (co-sponsor)

Advokids

Angels Foster Family Network

California Alliance of Caregivers

California State University San Marcos Department of Social Work

Children Now
Dependency Legal Services San Diego

East Bay Children’s Law Offices

Los Angeles Dependency Lawyers Inc.

Redenbacher & Brown

Straight From The Heart Inc.

Sycamores

The Law Offices of Dale S. Wilson

OPPOSITION

Consumer Data Industry Association

RELATED LEGISLATION

Pending Legislation: None known.

Prior Legislation:

AB 90 (Valladares, 2021) would have revised the definition of a protected consumer, for purposes of the CCRA, to include individuals under the jurisdiction of a county welfare department or a county probation department who have been placed in foster care and are under 18 years of age at the time the security freeze request is made (up from 16 years of age). AB 90 died in the Assembly Banking and Finance Committee.

AB 2748 (Fong, 2020) would have revised the definition of a protected consumer, for purposes of the CCRA, to include individuals under the jurisdiction of a county welfare department or a county probation department who have been placed in foster care and are under 19 years of age at the time the security freeze request is made (up from 16 years of age). AB 2748 died in the Assembly Privacy and Consumer Protection Committee.

PRIOR VOTES:

Assembly Floor (Ayes 71, Noes 0)

Assembly Appropriations Committee (Ayes 15, Noes 0)

Assembly Human Services Committee (Ayes 6, Noes 0)

Assembly Banking and Finance Committee (Ayes 9, Noes 0)

**************

1. Welf. & Inst. Code, § 10618.6(a). If an automated process is available, CDSS shall make the inquiry and report the results to the social worker or probation officer. ↑

2. Id., § 10618.6(c). ↑

3. Id., § 10618.6(b), (c). ↑

4. Safeco Ins. Co. of America v. Burr (2007) 551 U.S. 47, 52; see 15 U.S.C. §§ 1681-1681x. ↑

5. Civ. Code, § 1785.1; see generally id., §§ 1785.1-1785.36. ↑

6. 15 U.S.C. § 1681t(a). ↑

7. Id., § 1681t(b)(1). ↑

8. Id., § 1681t(b)(1)(J); see id., § 1681c-1(i), (j). ↑

9. Id., § 1681c-1(j); Civ. Code, § 1785.11.9(a). The State definition also includes, in the definition of “protected person,” a person who is “[u]nder the jurisdiction of a county welfare department or county probation department, has been placed in a foster care setting, and is under 16 years of age at the time a request for placement of a security freeze is made” (Civ. Code, § 1785.11.9(a)(3); because this still requires the person to be under 16 years of age, this is subsumed within the broader federal definition. ↑

10. 15 U.S.C. § 1681c-1(j); Civ. Code, § 1785.11.11. If the protected consumer does not yet have a credit file, the agency must create a file in order to place the freeze. (15 U.S.C. § 1681c-1(j) ↑

11. 15 U.S.C. § 1681c-1(j)(1)(F)(iv); Civ. Code, § 1785.11.9(f)(5). ↑

12. 15 U.S.C. § 1681c-1(j)(4); Civ. Code, § 1785.11.11(f). Both laws also permit a freeze to be removed if it was placed based on a material misrepresentation of fact by the protected consumer or their representative; that provision is not relevant to this bill. (15 U.S.C. § 1681c-1(j)(4)(A)(iii); Civ. Code, § 1785.11.(j).) ↑

13. U.S. Const., art. VI, cl. 2. ↑

14. Altria Group, Inc. v. Good (2008) 555 U.S. 70, 76. ↑

15. Ibid. ↑

16. Virginia Uranium, Inc. v Warren (2019) 587 U.S. 761, 767. ↑

17. Medtronic v. Lohr (1996) 518 U.S. 470, 485-486 (cleaned up). ↑

18. Altria Group, supra, 555 U.S. at p. 77. ↑

19. 18 U.S.C. § 1681t(b)(1)(J). ↑

20. The Fair Credit Reporting Act’s Limited Preemption of State Laws (87 Fed. Reg. 41042-01, 41043 (Jul. 11, 2022)). ↑

21. Ibid. ↑

22. Consumer Data Industry Association v. Frey (1st Cir. 2022) 26 F.4th 1, 6. ↑

23. See The Fair Credit Reporting Act’s Limited Preemption of State Laws, supra, 87 Fed.Reg. at 41044. ↑

Date of Hearing: May 8, 2024

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 2935

Author:(Maienschein) – As Amended Ver:April 17, 2024

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill streamlines the process of placing a security freeze on a foster youth’s credit report.

Specifically, this bill:

1. Deems existing conditions that must be met before a consumer credit reporting agency is required to place a security freeze on a protected consumer’s report to be met, if the request for placement or removal is verifiably from a county welfare department, county probation department, or the Department of Social Services (DSS) making their annual credit history inquiry required on and after a foster youth’s 14^th birthday. If such an inquiry indicates that a foster youth has a consumer credit history, any information appearing on the credit report must be promptly blocked and not reported.
2. Requires the freeze to automatically expire on the foster youth’s 18^th birthday, unless the foster youth or their representative instructs the agency to maintain the freeze beyond that date. The freeze may also be removed upon request of the foster youth’s representative after the foster youth’s 16^th birthday.

FISCAL EFFECT:

Minor and absorbable costs to the Department of Financial Protection and Innovation (DFPI). Pursuant to the California Consumer Financial Protection Law, DFPI has the authority to oversee providers of certain financial products and services that are not licensed by the department, including credit reporting agencies.

COMMENTS:

1. Purpose. According to the author:

Foster youth are especially vulnerable to having their identities stolen due to the large number of people who have access to their personal information. Each time a foster child changes placements, additional individuals gain access to their information, including their social security number…AB 2935 seeks to prevent identity theft in the first place by requiring the credit bureaus to automatically freeze an individual’s credit reports when they receive an inquiry from a county welfare department regarding a foster youth. Placing the automatic freeze will prevent nefarious actors form being able to open accounts in a child’s name.

This bill is co-sponsored by the Children’s Advocacy Institute at the University of San Diego School of Law and Just in Time for Foster Youth. This bill is also supported by other child advocacy groups.

1. Foster Youth Credit Checks. California consumers have the right to put a security freeze on their credit report to help prevent identity theft. A freeze means the consumer’s file cannot be shared with potential creditors, and most businesses will not open credit accounts without first checking a consumer’s credit history, thus preventing credit from being obtained in the consumer’s name. If a security freeze is requested for a person without a credit history, the credit reporting agency must create a file in order to place a freeze.

Since foster youth are especially vulnerable to identity theft, existing law requires a county welfare department, county probation department, or DSS to annually request a free consumer credit report on behalf of a foster youth once they turn 14 years old. Existing law also requires a credit reporting agency to place a security freeze on a protected consumer’s, such as a foster youth’s, report upon request from the consumer’s representative if the representative provides the agency with specified identifying information. This bill requires such a security freeze to occur without the provision of specified identifying information if the request is from a county welfare department, county probation department, or DSS making their annual credit report request on behalf of a foster youth. Additionally, if the annual credit report request reveals that a foster youth has a credit history, this bill requires an automatic freeze on the credit report.

Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081

Date of Hearing: April 23, 2024

ASSEMBLY COMMITTEE ON HUMAN SERVICES

Alex Lee, Chair

ABPCA Bill Id:AB 2935 (

Author:Maienschein) – As Amended Ver:April 17, 2024

SUBJECT: Foster children: consumer credit reports

SUMMARY: Revises requirements related to the placement or removal of a security freeze for a protected consumer who has been placed in a foster care setting. Specifically, this bill:

1. Requires, if the request for the placement or removal of a security freeze is for a protected consumer who has been placed in a foster care setting, the credit reporting agency (CRA) to deem existing requirements placed on the protected consumer’s representative to have been met if the request is verifiably from a county welfare department, a county probation department, or the California Department of Social Services (CDSS), as described.
2. Requires, if an inquiry received of each of the three major CRAs as to whether the child has any consumer credit history due to a foster youth reaching their 14th birthday, and each year thereafter while the child is in care, indicates that the foster youth has a consumer credit history, any information that appears on the protected consumer’s credit report shall be promptly blocked and not reported, in the same manner as if the agency had received a police report. Requires the CRA to also comply with existing law related to the submission of police reports and unblocking, regarding the child who has been placed in a foster care setting.
3. Requires, with respect to a protected consumer who has been placed in a foster care setting, the freeze to automatically expire on the consumer’s 18th birthday unless the consumer, either directly or through their representative, instructs the agency to maintain the freeze beyond that date.
4. Permits, notwithstanding 4) above, a freeze to be removed upon the request of the representative of the protected consumer who has been placed in a foster care setting after the protected consumer’s 16th birthday.

EXISTING LAW:

State Law

1. Requires, when a child in a foster care placement reaches their 14th birthday, and each year thereafter, while the child is under the jurisdiction of the juvenile court, the county welfare department, the county probation department, or, if an automated process is available, CDSS, to inquire of each of the three major CRAs as to whether the child has any consumer credit history. Requires, if CDSS makes the inquiry, to notify the county welfare department or county probation department in the county having jurisdiction over the child of the results of that inquiry. (Welfare and Institutions Code § 10618.6(a))
2. Establishes the Consumer Credit Reporting Agencies Act (the Act). The Act defines “consumer credit report” as any written, oral, or other communication of any information by a consumer CRA bearing on a consumer’s creditworthiness, credit standing, or credit capacity, which is used or is expected to be used, or collected in whole or in part, for the purpose of serving as a factor in establishing the consumer’s eligibility for a specified purpose. (Civil Code [CIV] § 1785.3.)
3. Requires a CRA to place a security freeze for a protected consumer under specified conditions. (CIV § 1785.11.11.)

Federal Law

1. Provides for the Fair Credit Reporting Act (FCRA) which regulates the collection, dissemination, and use of consumer credit information. Requires a consumer reporting agency to block the reporting of any information in the file of a consumer that the consumer identifies as information that resulted from an alleged identity theft. (15 United States Code [U.S.C.] § 1681 et seq.)
2. Pursuant to FCRA, requires, if an inquiry performed indicates that a child has a consumer credit history with any major CRA, the responsible county welfare department or county probation department to request a consumer credit report from that CRA. (15 U.S.C. § 1681 et seq)
3. Requires each foster youth 16 years of age or older to receive a free copy of any credit report pertaining to the youth annually until discharged from care and assistance in interpreting and clearing any inaccuracies in the credit report. (Public Law 112-34)

FISCAL EFFECT: This bill was keyed nonfiscal by the Legislative Counsel.

COMMENTS: This bill was double referred to the Assembly Committee on Banking and Finance and was heard by that Committee as it relates to issues under its jurisdiction. The following analysis will only discuss this bill as it pertains to the impact on foster youth.

Background: Foster Youth, Credit Reports, and Identity Theft. Foster youth are especially vulnerable to identity theft; however, the scope of the problem is unknown, but likely to happen as foster youth may experience frequent placement changes where sensitive personal information changes hands. It is often not until the minor exits foster care, and applies for credit or an apartment, that the identity theft is discovered. Identity theft can derail a foster youth's ability to successfully transition to adulthood before it has begun, as it can create costly and time-consuming barriers to applying for jobs or housing, and opening a bank account, or applying for credit. Without a parent or guardian to safeguard a minor's credit or make a written request on their behalf, it is incumbent upon the state to assume the role of the parent, including the responsibility to protect a youth's creditworthiness.

A report from the California Office of Privacy Protection in 2011, found that 5% of foster youth with credit reports had accounts reported in their names due to errors or identity theft. These errors included creditor mistakes, mixed identity, and incorrect or fraudulent use of a youth’s name or Social Security number on delinquent accounts. Sometimes there were more severe instances of identity theft and fraud. Other key findings from the report include:

• The project team successfully cleared all negative items from the credit reports of 104 foster children.
• The average account balance was $1,811, with the largest being a home loan of over $200,000.
• The accounts found were two to three years old, opened when the child was 14 years of age on average.
• 12% of the children had records loosely linked to them by Social Security number only, which while not affecting their credit ratings could nevertheless pose problems for them in the future. (California Office of Privacy Protection. A Better Start: Clearing Up Credit Records for California Foster Children, 2011)

Past and Current Efforts to Protect Foster Youth’s Credit. Federal and state laws mandate that foster care agencies take proactive measures to ensure that children in foster care have access to their credit reports and receive assistance in resolving any inaccuracies or cases of identity theft. According to federal law (Public Law 112-34), states are obligated to conduct credit checks on older foster children and address identity theft concerns before they transition out of the system. The Child and Family Services Improvement and Innovation Act amends 42 U.S.C. 675(5) to address identity theft among foster youth, ensuring that every child in state foster care who reaches 16 years of age receives annual copies of their consumer report at no charge until their discharge, along with assistance in understanding and rectifying any inaccuracies therein, potentially involving court-appointed advocates.

Additionally, California mandates county welfare and probation departments to solicit credit reports for foster children starting at 14 years of age, as per the federal Fair Credit Reporting Act's provision for free annual disclosures. This process continues annually while the child remains under juvenile court jurisdiction, aiming to detect any instances of identity theft and provide support in deciphering the credit report and rectifying inaccuracies. SB 794 (Committee on Human Services), Chapter 425, Statutes of 2015, further stipulated that inquiries about a dependent child's credit history must commence at 14 years of age instead of 16 years of age.

This bill requires a CRA to block and stop reporting information on a foster youth’s credit report if such information is shown to exist following a specified inquiry, and requires a CRA to automatically lift a security freeze when a foster youth turns 18 years of age. Making it easier to remedy identify theft for foster youth is another step in past efforts to protect foster youth’s credit.

Author’s Statement: According to the Author, “Foster youth are especially vulnerable to having their identities stolen due to the large number of people who have access to their personal information. Each time a foster child changes placements, additional individuals gain access to their information, including their social security number. It is estimated that at least fifteen percent of foster youth become the victims of identity theft. Children have always been an attractive target for identity thieves because their credit reports are clean and are often left unmonitored for many years, providing ample time to cause substantial damage to the child’s credit. Once a foster youth reaches 14, or if they come into the system after the age of 14, current law requires county welfare departments to check with the three credit bureaus to see if a credit report exists. Because children should not have credit reports, the existence of a report is likely the result of fraud. If a report does exist, social workers must provide foster youth with information and assistance to fix credit inaccuracies. However, our current laws only come into play after a youth has been victimized. [This bill] seeks to prevent identity theft in the first place by requiring the credit bureaus to automatically freeze an individual’s credit reports when they receive an inquiry from a county welfare department regarding a foster youth. Placing the automatic freeze will prevent nefarious actors from being able to open accounts in a child’s name.”

Equity Implications: Foster youth already face enormous barriers to educational attainment, employment, and access to housing. Foster youth often endure trauma both prior to care and while living in the system. Often, foster youth come from communities which already experience disproportionate levels of high unemployment rates which are impacted by factors such as low education rates, young parenthood, homelessness and incarceration. It is important that on top of the barriers these vulnerable youth face, that identity theft is not one of them. The provisions of this bill aims to provide solutions to foster youth to help them navigate a financial future free from erroneous credit reports.

Double referral: This bill was previously heard in the Assembly Banking and Finance Committee on April 15, 2024, and was approved on a 9-0 vote.

RELATED AND PRIOR LEGISLATION:

AB 1580 (Gatto), Chapter 494, Statutes of 2016, amended the Consumer Credit Reporting Agencies Act to require a CRA to place a security freeze for a protected consumer under 16 years of age after a request from the child’s representative.

SB 794 (Committee on Human Services), Chapter 425, Statutes of 2015, see comments above.

AB 1658 (Jones-Sawyer), Chapter 762, Statutes of 2014, required that when a child in foster care reaches their 16th birthday, and each year thereafter, while the child is under the jurisdiction of the juvenile court, the county welfare department, county probation department, or, CDSS to inquire of each of the three major CRAs as to whether the child has any consumer credit history instead of requesting a consumer credit disclosure.

SB 1521 (Liu), Chapter 847, Statutes of 2012, required, among other provisions, county welfare agencies to annually request a free consumer credit report when they turn 16 years of age and for each year thereafter, bringing California into compliance with new federal rules.

AB 846 (Bonilla) of 2011, would have clarified how county welfare departments request consumer credit reports on youth in foster care and the procedures of handling any identity theft that is suspected.

AB 2698 (Block) of 2010, would have clarified requirements for county welfare departments to request credit reports on behalf of youth in foster care at 16 years of age in order to detect and correct identity theft and would have required CDSS to share in this responsibility. AB 2698 was vetoed by Governor Schwarzenegger.

AB 2985 (Maze), Chapter 387, Statutes of 2006, required a county welfare department to request a consumer credit disclosure on a foster youth turning 16 years of age, and to refer that foster youth to a credit counseling organization upon evidence of identity theft.

REGISTERED SUPPORT / OPPOSITION:

Support

Childrens Advocacy Institute (Co-Sponsor)

Just in Time for Foster Youth (JIT) (Co-Sponsor)

Advokids

Angels Foster Family Network

California Alliance of Caregivers

California State University San Marcos Department of Social Work

Children Now

East Bay Children's Law Offices

Los Angeles Dependency Lawyers, INC.

Redenbacher & Brown

Straight From the Heart INC.

Sycamores

The Law Offices of Dale Wilson

Opposition

None on file.

Analysis Prepared by: Jessica Langtry / HUM. S. / (916) 319-2089

Date of Hearing: April 15, 2024

ASSEMBLY COMMITTEE ON BANKING AND FINANCE

Timothy Grayson, Chair

ABPCA Bill Id:AB 2935 (

Author:Maienschein) – As Amended Ver:April 1, 2024

SUBJECT: Foster children: consumer credit reports

SUMMARY: Requires a credit reporting agency (CRA) to block and stop reporting information on a foster youth’s credit report if such information is shown to exist following a specified inquiry, and requires a CRA to automatically lift a security freeze when a foster youth turns 18.

Specifically, this bill:

1. Deems specified requirements for a protected consumer’s representative, as a condition to them requesting a security freeze, to have been met if the request is verifiability from a county welfare department, a county probation department, or the State Department of Social Services (DSS).
2. Requires a credit reporting agency, in the event that any information appears on foster youth’s credit report following an inquiry from a county welfare department, county probation department or DSS, to promptly block and not report that information in the same manner as if the agency had received a police report.
3. Requires a credit reporting agency to comply with existing provisions governing their duties to notify data furnishers and consumers about certain blocked and unblocked information and investigate and reinvestigate disputed information.
4. Requires a security freeze placed on behalf of a foster youth to automatically expire on their 18^th birthday unless they, either directly or through their representative, instructs the credit reporting agency to maintain the freeze beyond that date.
5. Authorizes a freeze to be removed upon the request of a foster youth’s representative after their 16^th birthday.

EXISTING LAW:

State Law

1. Establishes the Consumer Credit Reporting Agencies Act (the Act). The Act defines “consumer credit report” as any written, oral, or other communication of any information by a consumer credit reporting agency bearing on a consumer’s credit worthiness, credit standing, or credit capacity, which is used or is expected to be used, or collected in whole or in part, for the purpose of serving as a factor in establishing the consumer’s eligibility for specified purpose. (Civil Code Section 1785.3.)
2. Requires a CRA to place a security freeze for a protected consumer under specified conditions. (Section1785.11.11.)

Federal Law

1. Provides for the Fair Credit Reporting Act (FCRA) .which regulates the collection, dissemination, and use of consumer credit information. (15 U.S.C. Section 1681 et seq.)
2. Requires a consumer reporting agency to block the reporting of any information in the file of a consumer that the consumer identifies as information that resulted from an alleged identity theft.
3. States that no requirement or prohibition may be imposed under the laws of any state with respect to any subject matter regulated under specified FCRA provisions, including subsections (i) and (j) of section 1681c–1 of this title relating to security freezes. (15 U.S.C. Section 1681t(b)).

FISCAL EFFECT: Unknown. This bill is keyed Nonfiscal by Legislative Counsel.

COMMENTS:

1. Purpose.

According to the author:

Foster youth are especially vulnerable to having their identities stolen due to the large number of people who have access to their personal information. Each time a foster child changes placements, additional individuals gain access to their information, including their social security number. It is estimated that at least fifteen percent of foster youth become the victims of identity theft. Children have always been an attractive target for identity thieves because their credit reports are clean and are often left unmonitored for many years, providing ample time to cause substantial damage to the child’s credit. Once a foster youth reaches 14, or if they come into the system after the age of 14, current law requires county welfare departments to check with the three credit bureaus to see if a credit report exists. Because children should not have credit reports, the existence of a report is likely the result of fraud. If a report does exist, social workers must provide foster youth with information and assistance to fix credit inaccuracies. However, our current laws only come into play after a youth has been victimized. AB 2935 seeks to prevent identity theft in the first place by requiring the credit bureaus to automatically freeze an individual’s credit reports when they receive an inquiry from a county welfare department regarding a foster youth. Placing the automatic freeze will prevent nefarious actors from being able to open accounts in a child’s name.

1. Background: security freezes.

Under both federal and state law, California consumers have the right to put a "security freeze" on their credit file to help prevent identity theft. A security freeze means that the consumer's file cannot be shared with potential creditors, and most businesses will not open credit accounts without first checking a consumer's credit history. If credit files are frozen, even someone who has the consumer's name and Social Security number would most likely not be able to get credit in the consumer's name.

Security freezes are designed to prevent a credit reporting agency from releasing a credit report without the consumer's consent. Using a security freeze to take control over who is allowed access to the information in a file may delay or prohibit the timely approval of any subsequent request or application the consumer makes regarding a new loan, credit, mortgage, or other services, including an extension of credit at point of sale. Thus, while security freezes help prevent identify theft, they can also complicate legitimate efforts to obtain credit.

Importantly, a security freeze cannot be placed on a credit file unless a credit file has been created. Therefore, if a security freeze is requested for someone who does not have any credit history, then the CRA must create the file in order to place the freeze.

1. Background: foster youth and identify theft.

Identity theft can take on different forms but is generally defined as a fraud that is committed using a person’s identity information without that person’s authority. Some of the most common types of identity theft include using someone else’s information to claim a tax refund, obtaining credit, obtain medical care using someone else’s health insurance, or using someone else’s information to claim government benefits.

Identity theft can have a severe and long-lasting repercussions for victims. FTC’s Identity Theft: Aftermath survey shows the extent to which victims endure significant and long-term fiscal, financial, and emotional harm as a result of identity theft.^[1] Victims often cannot obtain housing, employment, or medical service, and they report ongoing issues with stress and emotional health. Moreover, it can be tremendously frustrating for victims to resolve identity theft issues with government agencies and other institutions.

Unfortunately, identity theft is also common for children and especially foster youth. In these cases, someone uses a minor child's personal information, such as name and Social Security number, usually to obtain credit or employment. Identity thieves may target children because the crime can go undetected for years, often until the child applies for his or her first loan or credit card.

Foster youth are uniquely vulnerable to identity theft because their personal information can be accessed by a range of adults they interact with, including noncustodial family members, social services personnel, and foster parents. A 2011 study by the then-called California Office of Privacy Protection evaluating a Los Angeles pilot program was instrumental in furthering California policymakers’ understanding of the extent of the problem facing foster youth. The pilot project conducted credit checks on 2,110 foster youth between the ages of 16 and 17 years of age. It was discovered that 104 children were found to have had 247 financial accounts of varying types; credit cards, bank accounts, utility accounts, cellular phone and cable contracts, etc., opened in their name. Several children were found to have auto loans and one was identified as having a $217,000 mortgage listed in the child's name.

1. Policy efforts to combat foster youth identify theft.

The privacy and identity theft challenges facing foster youth have been known for nearly two decades, and a number of state and federal legislative laws established new processes to better protect foster youth, their credit, and their ability to be financially independent once they age out of the foster system. The trajectory of these legislative efforts have been to ramp up obligations on CRAs, states, and the foster youth’s representatives to take increasingly more proactive steps to intervene on child’s behalf.

State Legislation

California first enacted legislation related to credit reports and foster youth in 2006. AB 2985 (Maze), Chapter 387, Statutes of 2006, required a county welfare department to request a consumer credit disclosure for a foster youth turning 16 and to foster that youth to a credit counseling organization if there were negative items or evidence of foster youth. AB 2985’s success was helped by new information gathered by the Assembly Select Committee on Foster Care that brought to light the widespread challenge of identity theft in the foster care system.

In 2012, the Legislature passed SB 1521 (Liu), Chapter 847, Statutes of 2012, which among other provisions required county welfare agencies to annually request a free consumer credit report when they turn 16 and for each year thereafter, therefore bringing California into compliance with new federal rules. Then, AB 1658 (Jones-Sawyer), Chapter 762, Statutes of 2014, was passed to require better coordination across county departments and the DSS. Senate Bill 794 (Committee on Human Services), Chapter 425, Statutes of 2015, lowered the age at which an inquiry must be submitted about a dependent child's credit history to the age of 14 from 16.

The Legislature also passed legislation imposing new requirements on CRAs related to security freeze requests for foster youth. Specifically, AB 1580 (Gatto), Chapter 494, Statutes of 2016, amended the Consumer Credit Reporting Agencies Act to require a CRA to place a security freeze for a protected consumer (such as a foster youth) under 16 years of age after a request from the child’s representative.

Federal Legislation

Federal legislation has imposed additional requirements on states and CRAs. In 2011, Congress passed the Child and Family Services Improvement and Innovation Act which, among other things, required states to more proactively intervene on behalf of foster youth. Under the law, a state must run a credit check on foster youth of a certain age and help resolve cases before they leave the foster care system. Subsequently, the Preventing Sex Trafficking and Strengthening Families Act further modified these requirements.

Despite the above-mentioned two federal laws that require states to take certain steps to protect foster youth’s credit, there remain indications that problems persist. In September 2022, the US Department Health and Human Services’ Office of the Inspector General announced it as reviewing states’ compliance with the federal rules requiring states to request an annual credit check for children aged 14 or older and help address inaccuracies. As the HHS website notes, “The surge in reports of identity theft and stakeholder concerns could indicate that credit checks and the resolution of credit reports may not be occurring as required by Federal law.^[2]” That report is due sometime in 2024.

Like in California, Congress has also passed new rules for the CRAs. In 2018, The Economic Growth, Regulatory Relief, and Consumer Protection Act amended the Fair Credit Reporting Act (FCRA) to among other things, require CRAs to provide a security freeze free of charge. As part of these new rules, a parent or child welfare representative of people under the age of 16 can request a security freeze on their behalf. And, a welfare or probation agency representatives acting on behalf of a young person in foster care can request a security freeze for that child. They have to show documentation certifying that the child is in the agency’s care, such as a written communication or an official letter from the child welfare or probation agency or its designee. This law also included a number of provisions related to federal preemption of state laws applying to CRAs, which are discussed in Comment #5.

1. Federal preemption considerations.

As noted above, the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act amended FCRA to create new requirements on CRAs regarding their obligations to foster youth. Simultaneously, the Act constrained states' ability to legislate on certain topics covered by the federal law. Specifically, FCRA now preempts specific categories of state laws, while those that are not "inconsistent" with FCRA generally are not preempted.

A 2022 interpretive rule issued by the Consumer Financial Protection Bureau delineate what is preempted by FCRA and what is not. While the CFPB guidance clearly authorizes states to pursue legislation on certain topics, such as the inclusion of information in credit reports, other areas remain less clear, leading stakeholders to continue debating the scope of FCRA's preemption.

CRAs argue that most state laws regarding "security freezes" are now preempted by FCRA. The CFBP notes in its guidance that “FCRA also expressly preempts certain categories of state laws,” including state laws with respect to specified subject areas, such as security freezes. Moreover, legal practitioners in other states have determined that their own laws related to security freezes are now preempted by FCRA. In a post by Eva Lorenz and Suzanne Begnoche of the North Carolina Bar Association argue that FCRA’s security freeze provisions preempt North Carolina’s security freeze law.^[3]

However, the author's office and the Children’s Advocacy Institute (CAI), the sponsor of AB 2935, disagree with this analysis. They contend that, using the same logic in the CFPB's analysis, the provisions in AB 2935 are not inconsistent with FCRA and therefore not preempted. For example, since FCRA does not include a provision governing the “automatic” removal of a security freeze for foster youth by a certain date, it is not a subject matter regulated by FCRA.

The issue of whether AB 2935 is wholly, partly, or not at all preempted by FCRA is not going to be definitively resolved in this analysis or by this committee. The history of preemption disputes between the federal government and the states is one filled with surprises and nuances. It is possible the supporters’ legal analysis will prevail. A key policy consideration for the committee, then, if preemption issues are put aside, is whether the requirements placed on CRAs are appropriate and provide a meaningful intervention on behalf of foster youth.

1. What does AB 2935 do?

AB 2935 would establish automatic processes in order to protect foster youth’s identify and financial well-being. If an inquiry reveals that a foster youth has a credit report – a sign that fraud has occurred – then the CRA must block reporting any of that credit report’s information. Moreover, when the foster youth turns 18, the CRA must automatically lift the security freeze.

The above three interventions – freeze, block, then unfreeze- are intended to reduce the need for local agencies to repeatedly engage in “after-the-fact” credit clean-up and to promote efficiencies. As the sponsor argues, by streamlining these processes, AB 2935 would make it easier to remedy identify theft crimes against foster youth

1. Proposed committee amendments

Among its provisions AB 2935 proposes to streamline security freeze requests by deeming a county welfare department, a county probation department of DSS as otherwise complying with various identification and proof-of-authorization requirements when the public agency requests a security freeze or the removal of a security freeze on behalf of a foster. However, as drafted, the bill remove the requirement that the request include the foster youth’s social security number, which a CRA needs in order to place a freeze.

The committee recommends the following amendment to Section 1785.11.11(a)(2):

If the request for the placement or removal of a security freeze is for a protected consumer who has been placed in a foster care setting, the credit reporting agency shall deem the requirements of clauses (i) to and (iii), inclusive, of subparagraph (A B) of paragraph (1) to have been met if the request is verifiably from a county welfare department, a county probation department, or the State Department of Social Services, as described in subdivision (a) of Section 10618.6 of the Welfare and Institutions Code.

1. Support

The Children’s Advocacy Institute at the University of San Diego School of Law is AB 2935’s sponsor and argues that AB 2935 would save both credit bureaus and counties time by allowing both to interact with each other more efficiently and categorically. CAI argues AB 2935 is needed because:

Current federal and state law requires county child welfare or probation departments after a foster child turns 14 years of age to see if credit reports have been opened in a child’s name to ensure foster children obtain assistance in addressing inaccuracies. Some counties devote scarce social worker time actually trying to clean up the report. Others merely point children to self-help and hope for the best. It isn’t working.

REGISTERED SUPPORT / OPPOSITION:

Support

Childrens Advocacy Institute (Sponsor)

Just in Time for Foster Youth (JIT) (Co-Sponsor)

Advokids

Angels Foster Family Network

California Alliance of Caregivers

California State University San Marcos Department of Social Work

Children Now

East Bay Children's Law Offices

Los Angeles Dependency Lawyers, INC.

Straight From the Heart INC.

The Law Offices of Dale Wilson

Opposition

None on file

Analysis Prepared by: Luke Reidenbach / B. & F. / (916) 319-3081

1. https://www.idtheftcenter.org/identity-theft-aftermath-study/ ↑

2. “Protecting Children in Foster Care From Identity Theft,’ The US Department of Health and Human Services Office of Inspector General, available at: https://oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000730.asp ↑

3. https://www.ncbarblog.com/spring-has-arrived-but-the-national-credit-security-freeze-is-here-to-stay/ ↑