As of Aug. 1, Georgia consumers will be able to "freeze" their credit files, essentially preventing peeks at their credit history without their permission.

The purpose is to keep would-be identity thieves from obtaining credit cards, mortgages and other types of loans in other people's names.

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The law, signed by Gov. Sonny Perdue last week, was hotly debated for three years. Credit bureaus and business argued it would provide minimal protection while increasing red tape. Consumer activists pushed for even stronger reforms.

But after Georgians on both sides of the debate had time to assess the impact of other states' similar laws, attitudes changed. Businesses in other states did not see a hit to their profits. Consumers did not rush to freeze their credit reports. And some experts say the option is neither problem-plagued nor ideal for everyone.

The Georgia law comes after the big three credit bureaus — Experian, TransUnion and Atlanta-based Equifax — voluntarily began allowing consumers to freeze their credit files late last year.

It was an about-face for the companies, which had lobbied against such measures. They argued implementation was too expensive, usage rates were low and that the credit freeze plan wouldn't eliminate ID theft altogether.

With more than half of the states having some freeze laws on the books, the credit bureaus — and Georgia lawmakers — may have been delaying the inevitable.

Waiting had its advantages for consumers, though. The Georgia law, which caps the fee credit bureaus charge at $3 — one of the lowest in the nation — is arguably more consumer friendly than previous attempts.

In previous versions, credit bureaus would have been able to charge $10 each time a consumer wanted to freeze or unfreeze his or her file. (Right now, under the voluntary system, the fee is $10.)

The new law also eliminates a major objection of retailers and other grantors of instant credit: that freezing a file was too much of a hassle for someone applying for an in-store credit card or car loan on the spot. Under the law, consumers will be able to "thaw" their files temporarily, and credit bureaus are required to comply within 15 minutes of the request — a first in the country.

Business pain and gain

The credit bureaus — all of which offer their own for-a-fee credit monitoring services — say that existing laws in other states have not damaged sales of those products.

"The adoption of file freeze has been pretty insignificant," said Steve Ely, who heads Equifax's North American personal solutions unit. "The kinds of people who are doing it are the people who are intensely concerned about protecting their identity."

While he wouldn't say just how many people have signed up for the freeze service since Equifax started its voluntary offering Oct. 15, he said it hasn't hurt the sales of Equifax's credit monitoring offerings, which start at $6.95 per month. In fact, he said, sales of those products have met expectations.

Experian says it expects a spike in freeze requests in Georgia once the new law takes effect, but that its own credit monitoring service, called Triple-Advantage, won't suffer any long-term impact.

"The volumes of file freeze are relatively small compared to the credit reports that we give away for free," said Maxine Sweet, vice president of public education at Experian.

"There will be a blip in the file freezes," she said. "But it's not a high enough demand. A lot of the consumers who can get it for free don't even want it."

Not for everybody?

The process is not necessarily easy. It takes several clicks on the credit bureaus' Web sites to find the information on how to freeze files. And even then, TransUnion and Equifax require consumers to mail in their requests. Experian allows them to freeze their files online.

Consumer rights advocates argue adoption rates may be low, but that is a function of poor consumer understanding of file freeze, as well as its cost. They also argue that while file freezes don't completely eliminate identity theft — a crook could still use your credit card number to order goods and services, for example — any tool that consumers have to prevent new accounts from being opened in their name is worthwhile.

"It is accurate to say that it's virtually impossible to prevent identity theft. However, it is no small feat to eliminate new account fraud," said Allie Wall, executive director of Georgia Watch, an Atlanta consumer group. "New account fraud is extremely expensive across the nation and here in Georgia."

The group plans to conduct outreach programs to raise consumer awareness, she said.

Alan Baia, managing partner of Cogent Road, a San Diego-based software maker whose products are used in generating 80,000 credit reports a month for about 4,000 customers nationwide, agreed that consumers lack awareness. He said credit freeze laws in other states have not hampered businesses such as car dealerships and retailers, as some opponents originally feared.

Plus, he said file freezes may not work for all consumers, and that credit monitoring might be better in some cases.

For someone who doesn't conduct many significant financial exchanges during the year — such as applying for mortgages, buying a car or obtaining student loans — a file freeze might make sense, Baia said.

"But if you were a self-employed businessman that's having his credit accessed constantly, then the monitoring becomes useful," he said. "It depends on the consumer's need."