Geico fined $30k for raising premiums for WA customers with frozen credit

April 5, 2018 by meganmertz2289

Geico is facing heat from Washington’s Insurance Commissioner for raising insurance rates for people who froze* their credit.

This investigation began with a single complaint to Insurance Commissioner Mike Kreidler.

“The person very astutely observed that they are charging me more for exactly the same policy,” Kreidler said.  “Why are they doing that?”

The complainant said his insurer, Geico, had raised his rates by close to $300 dollars a year because he had frozen his credit.  In fact, nearly 300 Geico customers had suffered the same fate.

“In this case, they have an obligation by law,” Kreidler explained.  “They can’t, when the credit is frozen, turn around and charge somebody more as a result of having their credit frozen.”

Credit scoring is legal in Washington and companies can raise or lower your rates based on your score.  Thanks to Senate Bill 6018 becoming law, credit freezes will be free for all Washingtonians starting on June 7th. More people than ever are expected to take advantage of opportunity.

So here’s what you need to know:  Under Washington law, insurers have to tell you the reason why they are raising your rates.  It’s called an adverse action notice.

“If you are going to wind up charging someone more so it’s more expensive for your insurance, you’ve got to notify them,” Kriedler said.

Geico did send adverse action notices to customers.  But in a letter to the Insurance Commissioner, the company did not list credit freezes as the reason.  The company said the notices were sent out in error.

Geico said this took place in 2017 and the company adds that it has addressed the issue.

An insurer can ask you to temporarily remove the credit freeze so it can get accurate credit information.   Under state law, insurers can check your credit every three years.