Fraud Alerts and Protection Freezes: Preventing Identity Theft

Credit card lock

An important part of personal security is identity theft protection. Just as you might take certain measures to protect your family, life, home or property, you must also make sure the only person using your identity is indeed, you.

As an expert in identity theft and a security professional, I am still confused by some of the tools and services that claim to protect people from the loss of identity.

There is a lack of transparency in the products out there, but it is important for these to be fully transparent. In other words, you should know what you get, what it does, and how or why it can benefit you.

Most of the services available for identity theft protection are a form of insurance, or a guarantee, in addition to recovery, restoration, and monitoring. However, it is rare that details are available about the monitoring part of the service. It can mean anything from searching the Internet to credit monitoring.

These services often claim to also help people recover from identity theft, but the fine print will explain that the recovery is limited to what they will protect, and it only comes into play if the service fails. That said, some services will go beyond the fine print and assist even when their service can’t protect you. So ask questions.

Other features include informing you when personal info, such as Social Security number, name, debit or credit number, are compromised.

Identity theft protection should keep pace with the ever-growing criminal landscape, and it offers multiple layers of detection, monitoring, alerts and intuitive customer experience.

Some identity theft protection services are just marketing companies that created this concept with no knowledge of true identity security.

They lure customers to their services, which cost $100 - $200 a year, but what they don’t tell you is that they just scan the Internet looking for your information, and if your identity is ultimately stolen, they only offer advice on how to fix it.

Banks, credit card companies, and insurance companies all offer identity protection, too. Many, however, are white label services that are simply rebranded to look as if they come from these organizations.

When you choose to invest in identity theft protection, do not fall for the marketing ploy. Instead, choose a solid company to protect you.

Do You Really Need Identity Protection?

You may have seen some advertisements for identity theft protection, but have made the assumption that your identity would never really be compromised. However, I have news for you…we all need identity protection!

If you can answer “Yes” to any of the questions below, and you do not have identity theft protection, you are putting yourself at risk:

  • Do you or your child have a Social Security number?
  • Do you have bills, such as a loan, utility, credit card or cell phone, that are in your name?
  • Do you go to the dentist or doctor?
  • Do you file income tax?
  • Have you ever been a patient in a hospital?
  • Do you use the Internet?
  • Do you have a driver’s license?
  • Do you have a bank account?
  • Do you have bad credit or no money?
  • Do you ever or never use credit cards?
  • Are you alive?

You get the point here; unless you live in the woods, have never checked into society, are dead, undocumented, provide your own medical care or live without utilities, you are at risk. Even if you are homeless, you still are a potential victim.

Could a Credit Freeze Help?

A credit freeze is a service that will lock down a person’s credit file so that a lender cannot check their credit. This is also a good way to prevent criminals from opening new accounts under the name or Social Security number of someone who has frozen their credit. If a lender or creditor cannot check someone’s credit, they are unlikely to extend credit, which can protect you.

For this to work, you will require a credit freeze from each of the credit bureaus. The process of freezing credit usually involves an affidavit with a person’s name, Social Security number, address and a copy of a bill. The three credit bureaus may also charge a small fee for this service, up to $15, but some are free, depending on the state you live in.

Once the request is complete, your identity is ultimately locked down as far as any new account fraud is concerned. Keep in mind, however, that there are some other steps that you must take in order to ensure your identity and existing accounts are safe.

There are over 10 million new identity theft victims each year in the United States. Many of the victims have discovered that the bad guys have used personal info, such as a Social Security number, to open accounts in their name. With a security freeze, however, this would be unlikely to happen.

With a security freeze in place at all three credit bureaus, a thief will not be able to open a new account since the seller or creditor will not be able to check the credit file. If this is you, and you need to apply for credit, you can temporarily lift the freeze using a PIN, so any legitimate credit application can be processed.

Though a credit freeze is effective and even essential, it can also be cumbersome for certain individuals.

Just keep in mind that though a credit freeze is easy to do, and they do help to protect your identity, it isn’t really enough to totally keep you safe. There are still other things that you should be doing in addition to the freeze. Here are the answers to some common questions that people have about credit freezes:

When is a credit freeze a good idea?

If you are over the age of 18 and have a credit report, or you are under 18 and your state allows it and/or have had your identity stolen, a credit freeze is a good idea.

What should a person think about before obtaining a credit freeze?

Don’t think about anything. Credit should totally be frozen across the board. However, retailers, banks, and lenders have spent several million lobbying to stop it, as it would eliminate the instant credit that these companies may offer, and the companies claim that this “gums up” the lending system.

What are the costs of a credit freeze?

The cost range of a credit freeze is from free to about $15 per bureau. This price is dependent on the deal the Attorney General of your state made with the credit bureaus. There is also possibly a fee associated with thawing the accounts, which ranges from free to $5.00. This is done when you want to apply for new credit.

How convenient is a credit freeze?

The truth is, a credit freeze isn’t totally convenient. However, this is not a big deal, at all. It really only takes a few minutes and a small fee to sign up for them, and only about five minutes to thaw it. That’s a small price to pay for the safety of your identity.

Do credit freezes hurt my credit score?

Never

How does a fraud alert differ from a credit freeze?

 A fraud alert only lasts for 90 days, and they do not freeze your credit. Instead, they just send an alert to lenders that you might have had your identity stolen. This does not, however, stop the lender from extending credit. Fraud alerts, at best, are simply “notifications” that there could be something wrong with your identity, but it only suggests that a lender should contact you before establishing any credit in your name. In other words, it’s a false sense of security.

Where can I freeze my credit?

Freeze your credit by clicking the name of each bureau:

What Is Credit Monitoring?

Credit monitoring is a service that is available as a subscription service through an identity theft protection company.

There are three main bureaus that keep a running account of your personal credit history. Most people don’t check their credit until they need it and then they are turned away. With credit monitoring, at least one, and hopefully all three, of your credit bureau files are monitored for unknown or unusual activity. You are then notified by the bureau/identity protection firm if action is noted.

What Is Fraud Alert?

A fraud alert is a service that is offered through the credit bureaus. It adds one more layer of protection to your identity. If you, or someone else, apply for credit using your name, the creditor or lender will be prompted to verify your identity before giving you a line of credit.

Fraud alerts are only temporary, and they expire after 90 days. Though this is a good tool, it is too temporary to be considered a long-term strategy.

If you are someone who has already had their identity compromised, you may add an Extended Fraud Victim Alert. To do this, submit a copy of the report of identity theft that was filed with law enforcement. This alert will last for seven years.

Additionally, if you are an active military member, you can make a request for an Active Duty Credit Alert. This will remain on your file for a year.