Mark Zaifman's thoughts on Money, Global Economic Trends and Politics

Before the Holidays, Freeze Your Credit to Protect Your Identity

Posted by Mark Zaifman on Fri, Nov 16, 2012 @ 09:35 AM

place a freeze on your credit reportAs the holidays approach and your credit cards get ready for their annual workout, please, make a promise to yourself that before the end of this month you’ll take action and place a credit freeze on your credit reports for all three major credit bureaus.

Although I’ve recommended this step previously and will continue to recommend it, this time, urgency is needed. That’s mainly because the network of international hackers and cyber-criminals has exploded. Their ability to hack into databases once thought impenetrable is increasing at an alarming rate.

These are not your run of the mill bandits anymore. These are well financed criminal syndicates that have the knowledge and powerful computing equipment to penetrate even the most secure databases.

And what confidential information are they seeking when they hack into these databases? Your social security number, your driver’s license number, images of your birth certificate, school transcripts, passport, etc. Anything vital that will allow them to steal your identity.

And stealing your identity is the grand prize. Once they’ve stolen enough of your personal and confidential data, they literally take on your identity and go to town. They apply for new credit cards and since they’ve already captured much of your secret info, they can easily change your address of record and have the new credit cards sent to your ‘new fake address’ and they’re off. Making fraudulent charges, withdrawing money from your accounts, wiring money to their accounts, it’s a nightmare.

If you think this will never happen to you, please think again. And if you have known anyone that has had their identity stolen, they’ll tell you first hand the archaic, time consuming, beyond frustrating, numerous court appearances, numerous lawyers you need to work with and almost full-time job it is to prove that you’re the ‘real’ Jenny Smith’, not the imposter that stole your identity. It could feel like mission impossible when it comes to reclaiming what’s rightfully and legally yours-your identity and it could take a year or more to unwind this mess.

Fraud Alerts Are Not Enough

Many of you reading this post are probably saying to yourself, ok, that sounds like a smart idea, but I already have a fraud alert on my credit report so thanks but no-thanks. Think again.

Fraud alerts are valuable, although I think way overpriced - that said, I believe they are doing more of a disservice to consumers than a service. That’s because fraud alerts, in my humble opinion, provide a false sense of protection and security to consumers.

Say you’ve purchased one of the many fraud alert products available now. You receive a call or email that there is suspicious activity on one of your credit cards. You soon discover your card was compromised, notify the credit card company and based on current consumer law you’re covered for any fraudulent activity losses.

But think about this service for a second. Fraud alerts are reactive, only tripping an alarm if something suspicious has or might have already occurred. It’s the burglar alarm that goes off AFTER your home has been broken into, if you will.

Fraud alerts offer very little if any protection when it comes to someone attempting to steal your identity. There is no option right now for putting fraud alerts on your social security number, your birth certificate, your passport, etc. and that’s what these cyber-crooks are really after, that’s their holy grail. Being able to steal your identity.

Credit Freeze-A Proactive Action Step

A credit freeze on the other hand is a proactive strategy. You’re placing a fortress around your credit report and preventing a thief from stealing your identity. Below is the Consumers Union’s Guide to Security Freeze Protection:

“There are more than eight million new victims of identity theft each year in the U.S. Many of these victims find that crooks have used stolen personal information like Social Security numbers to open new accounts in their victim’s name. A security freeze gives consumers the choice to “freeze” or lock access to their credit file against anyone trying to open up a new account or to get new credit in their name.”

“When a security freeze is in place at all three major credit bureaus, an identity thief cannot open a new account because the potential creditor or seller of services will not be able to check the credit file. When the consumer is applying for credit, he or she can lift the freeze temporarily using a PIN so legitimate applications for credit or services can be processed. “

States That Have Adopted Security Freeze Laws:

“Forty-seven states and the District of Columbia have enacted laws requiring the credit bureaus to enable consumers to protect their credit files with a security freeze. “

Now it’s up to you. Protect your identity by placing a credit freeze at all three major credit bureaus. No need to be a victim of this crime. Being financially empowered means being proactive. Make it happen and feel peace of mind.

Please take the time to check out the Consumers Union’s Guide to Security Freeze Protection  and then forward this email to family and friends.

 

 

Photo credit http://www.flickr.com/photos/jbmac/

Tags: credit reporting, risk management