Types of Identity Theft Protection

Take Control of Your Credit and Identity by Making Informed Decisions

Do you know which (if any) identity theft protection service is worthy of your money or trust? When institutions or industries grow "too big to fail" all too often they've become too big to trust and too big to manage your finances or personal and sensitive data. Consumer Reports Money Adviser reminds us that things aren't always as they seem. You don't have to buy identity theft protection to protect your identity. But if you are interested in paying for a protective or restorative service, it's important to fully research your options in order to make informed decisions based on accurate information. Don't rely on slick advertising campaigns or strategic marketing mantras. They're good at talking the talk, but not-so-good at walking it.    

To reduce or minimize the risk of becoming a victim of credit card fraud, identity theft or cyber relate crimes there are some basic steps you can take.

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Here are a few options that may help you decide which (if any) of today's anti-fraud alternatives can best fit your needs;

Fraud Alerts

There are two types of fraud alerts: an initial alert, and an extended alert.

    * An initial fraud alert stays on your credit report for at least 90 days. You may ask that an initial fraud alert be placed on your credit report if you suspect you have been, or are about to be, a victim of identity theft. An initial alert is appropriate if your wallet has been stolen or if you've been taken in by a "phishing" scam. With an initial fraud alert, potential creditors must use what the law refers to as "reasonable policies and procedures" to verify your identity before issuing credit in your name.  However, the steps potential creditors take to verify your identity may not always alert them that the applicant is not you.  When you place an initial fraud alert on your credit report, you're entitled to order one free credit report from each of the three nationwide consumer reporting companies, and, if you ask, only the last four digits of your Social Security number will appear on your credit reports.

    * An extended fraud alert stays on your credit report for seven years. You can have an extended alert placed on your credit report if you've been a victim of identity theft and you provide the consumer reporting company with an Identity Theft Report. An automated Identity Theft Report, such as the printed ID Theft Complaint available from this Web site, should be sufficient to obtain an extended fraud alert. With an extended fraud alert, potential creditors must actually contact you, or meet with you in person, before they issue you credit.  When you place an extended alert on your credit report, you're entitled to two free credit reports within twelve months from each of the three nationwide consumer reporting companies. In addition, the consumer reporting companies will remove your name from marketing lists for pre-screened credit offers for five years unless you ask them to put your name back on the list before then.

To place either of these alerts on your credit report, or to have them removed, you will be required to provide appropriate proof of your identity: that may include your Social Security number, name, address and other personal information requested by the consumer reporting company.

As mentioned, depending on the type of fraud alert you place, potential creditors must either contact you or take reasonable steps to verify your identity.  This may cause some delays if you're trying to obtain credit. To compensate for possible delays, you may wish to include a cell phone number, where you can be reached easily, in your alert. Remember to keep all contact information in your alert current.

What does a fraud alert not do?

While a fraud alert can help keep an identity thief from opening new accounts in your name, it's not a solution to all types of identity theft.  It will not protect you from an identity thief using your existing credit cards or other accounts.  It also will not protect you from an identity thief opening new accounts in your name that do not require a credit check - such as a telephone, wireless, or bank account.  And, if there's identity theft already going on when you place the fraud alert, the fraud alert alone won't stop it.  A fraud alert, however, can be extremely useful in stopping identity theft that involves opening a new line of credit.

A credit freeze is different from a fraud alert in a number of ways. A freeze generally stops all access to your credit report, while a fraud alert permits creditors to get your report as long as they take steps to verify your identity.

A credit freeze is free to identity theft victims who have a police report proving they have been victims of identity theft. For individuals who are not victims of an identity theft, the cost is $10 per credit bureau, or $30 for all three bureaus to freeze your credit. To place a freeze on your credit file, you must write to each of the three credit bureaus, provide your identifying information and include your payment to each bureau. Freezing will prevent you from opening a new account yourself, applying for a job, renting an apartment, or buying insurance, if your credit report needs to be accessed by a creditor. Once your file is frozen, if you want to open a new credit account, refinance, or get a new loan, you must "thaw" your credit file. That costs money too. Credit freezes can't block thieves from accessing your current credit cards or bank accounts.

If you place a credit freeze, you will continue to have access to your free annual credit report.  You'll also be able to buy your credit report and credit score even after placing a credit freeze.  Companies that you do business with will still have access to your credit report - for example, your mortgage, credit card, or cell phone company - as would collection agencies that are working for one of those companies.  Companies will also still be able to offer you pre-screened credit.  Those are the credit offers you receive in the mail that you have not applied for.  Additionally, in some states, potential employers, insurance companies, landlords, and other non-creditors can still get access to your credit report with a credit freeze in place. 

If you want to apply for a loan or credit card, or otherwise need to give someone access to your credit report and that person is not covered by an exception to the credit freeze law, you would need to temporarily lift the credit freeze.  You would do that by using a PIN that each credit reporting agency would send once you placed the credit freeze.  In most states, you'd have to pay a fee to lift the credit freeze.  Most states currently give the credit reporting agencies three days to lift the credit freeze.  This might keep you from getting "instant" credit, which may be something to weigh when considering a credit freeze. 

While a credit freeze can help keep an identity thief from opening most new accounts in your name, it's not a solution to all types of identity theft.  It will not protect you, for example, from an identity thief who uses your existing credit cards or other accounts.   There are also new accounts, such as telephone, wireless, and bank accounts, which an ID thief could open without a credit check.  In addition, some creditors might open an account without first getting your credit report.  And, if there's identity theft already going on when you place the credit freeze, the freeze itself won't be able to stop it.  While a credit freeze may not protect you in these kinds of cases, it can protect you from the vast majority of identity theft that involves opening a new line of credit.

Identity Theft Protection & Restoration Services

Recent headlines about data breaches and losses of personal information have prompted many companies to advertise products or services to help consumers prevent or minimize their risk of identity theft.

The Federal Trade Commission (FTC), the nation's consumer protection agency, says before you pay for an identity theft prevention product or service, make sure you understand exactly what you're paying for. Many people find value and convenience in paying an outside party to help them exercise their rights and protect and recovery their name and date.

Knowing and understanding your rights can help you determine whether--or which--commercial product or service on the market today may be appropriate for you.

Neither a fraud alert nor a credit freeze can stop a criminal from using your name to commit other non-credit related crimes. Remember, your identity is much more than just your credit report. There's no protection that's one hundred percent fool-proof against identity theft. None.

Make an informed decision as to which, if any, services are worthy of your trust and your money.  

Whether you freeze your credit, flag it with fraud alerts, purchase credit monitoring or identity protection services, it is still impossible to be certain that you will never become a victim of credit card fraud, identity theft, scams, predatory practice or cyber related crimes. 

Credit Monitoring

Credit monitoring services are heavily advertised, and many people have the impression that these services alone will provide a high level of protection against identity theft. This is a serious and potentially harmful misconception.

Credit monitoring is offered by most banks and all three credit bureaus. Sometimes the service only includes monitoring one bureau's report, which is a problem, since many creditors don't report to all three bureaus. The credit report you are monitoring may not be the one a fraudulent account is reported to.

Another problem with credit monitoring services is that they're designed to inform you of any changes to your credit report; this sounds good, but what many consumers don't realize is that the data in credit reports may not be recorded in "real time." If you purchase something on credit today-do you know when the creditor will report your activity to the credit bureaus? Or when the credit bureaus will update you file? Credit monitoring services are reactive in nature-not proactive. The services are designed to let you know about a problem only after it occurs. If you are considering credit monitoring, find out if it they monitor all three bureaus, if the monitoring is done in real time and whether or not they offer identity and financial recovery services, should an ID theft occur.

For more tips and information about today's type of identity theft crimes and fraud prevention awareness see:Identity theft Protection Blog Posts.