A federal law that took effect on September 21, 2018, eliminated fees for credit freezes across all three major consumer reporting agencies, giving every American a free tool to block identity thieves from opening new accounts. The Federal Trade Commission and the Consumer Financial Protection Bureau both confirm that when a freeze is active, lenders cannot pull a credit file, which means fraudulent applications are typically denied on the spot. Nearly eight years later, the protection remains available at no cost, yet many households still rely on weaker alternatives or take no preventive action at all.
Why free credit freezes changed the fraud equation in 2018
Before the law changed, many states charged fees of up to $10 or more per bureau to place or lift a freeze, creating a financial barrier that discouraged widespread adoption. The federal statute codified at 15 U.S.C. Section 1681c-1 removed that barrier by requiring consumer reporting agencies to place, temporarily lift, and remove security freezes free of charge. The same law extended fraud alerts from 90 days to one full year, giving consumers a second, lighter-weight option.
The two tools work differently. A fraud alert asks lenders to take extra steps to verify identity before extending credit but does not block file access. A credit freeze goes further: it restricts access to the credit file entirely. Because creditors typically will not approve a new account when they cannot review the applicant’s credit history, a freeze effectively stops both legitimate and fraudulent applications until the consumer lifts it. That distinction matters for anyone weighing which protection to use. The hypothesis that households placing freezes experience lower rates of new-account fraud than those relying only on fraud alerts is logical, but no publicly available FTC or CFPB dataset currently isolates freeze adoption rates against complaint volumes in a way that would confirm or reject that comparison with statistical rigor.
How the freeze blocks new-account fraud under federal law
The mechanism is straightforward. When a consumer contacts each of the three nationwide bureaus and requests a freeze, the bureau locks the credit file. Any lender, retailer, or other entity that tries to pull that file for a new credit decision is denied access. The FTC explains that this restriction makes it harder for identity thieves to open accounts in a consumer’s name, because the thief cannot satisfy the lender’s underwriting requirement for a credit check.
Lifting the freeze is equally free. The CFPB notes that consumers can remove or temporarily lift a freeze within specified timeframes at no charge, which means applying for a mortgage, car loan, or new credit card requires only a brief pause in the freeze rather than a permanent removal. Consumers who placed freezes before September 21, 2018, also benefit: FTC guidance confirms those older freezes became subject to the same free rules once the law took effect.
A freeze does not affect existing accounts, credit scores, or the ability to request a free annual credit report. It also does not stop all types of misuse. For example, a criminal who already has access to an open credit card could still run up charges, and a freeze will not block certain non-credit checks, such as some employment or insurance inquiries that use alternative data sources. However, for the specific risk of new accounts being opened in a victim’s name, locking the file remains one of the most direct defenses available under federal law.
Fraud alerts versus freezes: choosing the right tool
Because both tools are now free, the decision often comes down to convenience and risk tolerance. A one-year fraud alert may suit people who believe their information was exposed but still want creditors to access their files quickly. Creditors are expected to take reasonable steps to verify identity when they see an alert, which can deter some opportunistic fraud. Yet the underlying file remains available, and determined thieves may still succeed if verification procedures are weak.
By contrast, a full freeze is better suited to consumers who do not anticipate frequent credit applications and want a stronger barrier. Parents sometimes use freezes for teenagers who should have no credit activity at all, and retirees who rarely open new accounts may also favor a long-term lock. According to an FTC overview, both freezes and alerts can be combined with regular monitoring of account statements and credit reports to catch problems that slip through.
Practical steps for using a freeze effectively
Putting the law’s protections to work still requires a few practical steps. Consumers must contact each nationwide bureau separately to place a freeze, keep track of any personal identification numbers or passwords the bureaus issue, and remember to lift the freeze before applying for new credit. Many lenders can work with a time-limited thaw, such as lifting the freeze for a week or for a specific creditor, which minimizes the window of vulnerability.
Ultimately, the 2018 changes turned what was once a paid, niche product into a standard, no-cost safeguard. Whether households take advantage of that safeguard may determine how exposed they are to one of the most damaging forms of identity theft: fraudulent new accounts that appear out of nowhere, but in the victim’s name.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
