Consumers appear more vulnerable than ever to security breaches that expose personal information to culprits looking for new ways to exploit that data for personal gain.
When news broke about the massive theft of data from Equifax, one of three credit bureaus that collect massive amounts of information about consumers, a sense of panic spread through the nation. The data hack reportedly compromised the personal information of about 143 million Americans, half of the nation’s adult population.
The Equifax breach exposed names, social security numbers, birthdates, email addresses and other personal information, increasing the likelihood of identity theft for those who were affected. Consumers compromised by the Equifax hack or similar breaches reported by other companies can take steps to safeguard themselves after such exposure.
Federal Trade Commission officials said identity theft victims — and those whose personal information was compromised by a data breach — have a couple options available. A consumer can place a fraud alert on his or her credit reports or place a credit freeze on those reports — both make it more difficult for an identity thief to open new accounts in a consumer’s name, but there are important differences to consider.
A freeze generally stops all access to a consumer’s credit report — availability is subject to state law and credit reporting agency policies. A fraud alert permits creditors to access reports, but steps must be taken to verify a consumer’s identity before credit is extended to an applicant.
Kathy Hewitt, a certified public accountant, said credit freezes can be a good option for those whose personal information has been compromised. But she said placing a credit freeze on credit reports can be a “double-edged sword — there’s a good side and a bad side.”
“They will notify you when the bad guys are trying to find out some information about you,” Hewitt said about the credit reporting agencies that hold the keys to those reports. “At the same time, if you go to buy a new car and your credit is frozen, you’re going to have to stop what you’re doing, get in touch with the credit company, and have them unfreeze it so they can get your credit reports.”
Hewitt said consumers who are planning to buy a home, a car or make any other large purchase that requires access to a credit report should think twice before using a credit freeze. She said that option likely would “cause more hassles” and “throw up barriers” that can be avoided by taking other precautionary steps.
“I think it’s critical that you check your credit reports regularly, and I mean regularly,” Hewitt said. “We used to check our credit maybe once every three, four or five years, but with cyber-security the way it is right now — with all these hackers — I think checking it once a month is not a bad thing to do.”
While consumers may access each of the three national credit reports annually at no cost — those are available every 12 months at AnnualCreditReport.com — Hewitt said it is worth the extra cost to review them more often. She said an identity thief can take a toll on a victim’s finances in a matter of weeks, and that fraudulent activity will show up on credit reports.
For those who have no special purchases planned for a year or more, Hewitt said a credit freeze may be a good option. If that choice is made, she said credit reporting bureaus will provide the information needed to lift the freeze either temporarily of permanently when the need arises.
Hewitt said another option for some consumes is a credit monitoring service. Those companies monitor bank and credit card accounts, requests for credit reports and in some cases the use of personal information in fraudulent activities. There typically are fees associated with that service, but Hewitt said it can provide some peace of mind for those who can afford it.