Ban urged on insurers’ use of credit scores

Miami Herald–March 1, 2009

Credit scores and credit reports should not be used to set car and home insurance rates, some Florida lawmakers say.

State Rep. Priscilla Taylor, a West Palm Beach Democrat, said especially now, credit history shouldn’t affect the price of Floridians’ insurance premiums.

She and state Sen. Ronda Storms, a Valrico Republican, have filed bills that would forbid insurers from considering credit scores, credit reports, level of education or occupation when setting rates — unless the job involves using a vehicle.

The bills are HB 683 and SB 1524.

An insurance agent, Taylor said people with no history of driving trouble are having trouble getting insurance because of their credit scores — which may have taken a turn for the worse in recent months.

In February, the state Office of Insurance Regulation subpoenaed five insurance companies — Allstate, GEICO, Nationwide, Progressive and State Farm — to ask them how they use credit scores and credit history in setting premium rates.

— NIRVI SHAH

WIDER SECURITIES-FRAUD POWERS SOUGHT

The state could have much wider powers to prosecute securities fraud under proposed legislation filed in the Florida House and Senate.

Some lawmakers say that while Florida’s securities laws are strong, it’s time for the state to be able to bring charges against unscrupulous brokers and agents.

That power now resides only with individual state attorneys, said state Rep. Tom Grady, a securities lawyer and Naples Republican. He is sponsoring a bill that would allow the Office of Statewide Prosecution to enforce Florida’s securities laws.

Grady said he wanted to expand the state’s powers anyway, but his drive to enact the legislation has been fueled by revelations about Bernard Madoff’s $50 billion Ponzi scheme. That’s a type of fraud in which early investors are paid off with money from those who invest later, until the scheme collapses because no more money can be raised.

Grady said clients citing $1 billion in losses have turned to his law firm for help.

”I think over time, these things have gotten more complex and sophisticated with the Internet and computers,” Grady said. “Once upon a time, it was probably enough for a state attorney in Dade County to handle a crime like this.”

Of Madoff’s 11,374 customers, nearly one in five — or 2,070 — are from Florida. It appears Madoff had not bought any securities on behalf of clients for at least the past 13 years.

Florida isn’t completely powerless to prosecute in fraud cases, Grady said, but currently it can’t cite violations of state securities laws.

”They might be able to file and prove common law fraud or money laundering,” he said.

His proposal, HB 483, and a similar one by state Sen. Garrett Richter, a fellow Naples Republican, has the backing of state Attorney General Bill McCollum.

”It’s very important because we have a lot of securities fraud now, and it’s imperative that the attorney general and the statewide prosecutor have the power to go after those who are violating securities laws and ripping off the public — powers we don’t have now,” McCullom said.

Securities dealers and firms must register with the state to do business in Florida. While the bill doesn’t change the state’s existing securities laws, it does increase penalties for lawbreakers, including suspending or revoking agents’ licenses.

The proposal says registration could be suspended if a dealer doesn’t hand over records requested by the state. And dealers and agents could be barred from registration for up to 15 years if they are convicted of crimes.

The attorney general’s office can seek restitution and injunctive relief when there are criminal violations of consumer-protection laws. This legislation would give the attorney general similar authority when it comes to protecting investors.

— NIRVI SHAH

Miami Herald staff writer Patrick Danner contributed to this report.

CREDIT-CARD USERS MAY GET NEW PROTECTION

Some Florida lawmakers are trying to create new protection for credit-card users and thwart identity theft.

Bills in the House and Senate say that credit-card companies couldn’t hike users’ interest rates just because they paid another bill late or because they also have a home equity loan or line of credit.

Companies that issue credit cards or make loans would have to verify the identity of the person applying for credit, according to other bills in the House and Senate. If someone’s identity is stolen and used to get credit, the victim would have no responsibility for any of the debt.

And possession of a stolen credit card would become a felony in Florida, if state lawmakers have their way. The crime would become a third-degree felony, which can yield a five-year prison term and a $5,000 fine.

— NIRVI SHAH