How to Protect Yourself From Credit Fraud
February 6, 2015
It has now been over a year since the Target credit card information breach. In the aftermath of the largest retailer hacking incident in history, the fear over the safety of our credit card and personal information has surged. This type of event has become increasingly frequent with data breaches occurring at Home Depot, and many other retailers and financial institutions.
What are the ways to protect yourself from these data breaches and the credit card fraud that can result from the wrong people gaining access to your personal financial information? I will discuss two options:
1) Fraud Alert
2) Credit or Security Freeze
FRAUD ALERT
If you believe your data has been compromised, you can have the 3 major credit reporting agencies (TransUnion, Experian, & Equifax) put a fraud alert on your credit files. This alert requires a business to verify identity before issuing credit and alerts lenders to scrutinize any requests under your name. Fraud Alerts are free and do not affect your credit score. The problem is that Fraud Alerts are not 100% effective and can be overlooked. The Fraud Alert is a good option to alert retailers, and others that your identity and personal information has been compromised. In others words this is a reactive action after a data breach.
CREDIT FREEZE
The stronger (proactive) option is a Credit Freeze. A Credit Freeze (security freeze) is achieved by notifying the credit agencies that you wish to put a freeze on your credit. The freeze stops creditors and lenders from viewing your credit information and credit score. Typically a lender, or any other business will not extend credit without checking the score and report, therefore, by implementing the freeze you can deter identity thieves. The fees to freeze your credit vary by state and you will need to unfreeze your credit if you plan to apply for a loan, new job, or anything that would require a check of your credit. There is not only a cost factor but also time since it can take up to five business days for a lift of the freeze. Just as with the Fraud Alert, a Credit Freeze will not affect your credit score. The Credit Freeze is a good option to minimize the chances of a fraudulent credit card or loan being opened in your name. However it does not protect you from someone using your existing credit card information.
Whether you decide to use either of these options, it is wise to regularly monitor your bank accounts and credit card activity so that you can minimize damage if you are a victim of fraud or identity theft.
If you are interested in using the identity theft protection service LifeLock, I recommend you read the Consumer Reports review of this service (internet search Consumer Reports LifeLock review). My follow up blog to this will discuss the process of contacting the credit agencies in order to establish a Credit Freeze. Be safe!
Alexander Overkamp
Lantern Wealth Advisors
Information Technology and Services Professional
9yTwice in the last 10 years I have a victim of credit card fraud. The 1st time was with a Citibank credit card. I got an email notification that was a suspected charge on my credit card and after calling their 800 fraud line I found that here had been a charge of $4000 thru an online credit charge using an online catalog company in the state of Washington, a $200 & $400 charge from stores in Palm Beach & West Palm Beach, Florida. The $4000 charge had exceeded my credit limit anyway so that was an automatic red flag. It appears the perpetrator had gotten my credit card information thru a charge I had made previously at a local restaurant The latest fraud charges has been against my Capital One Visa Signature card. Two charges occurred on December 26, 2014 out of two different woman's high end stores in Malibu, California. We live in Florida and the last two legitimate charges we made were earlier in December but the one we suspect was at a gas station in West Palm Beach and we believe this is where the credit card information was stolen. Of course Capital One through there customer fraud department handled the situation very professionally and with great empathy for our situation. When a dishonest, unscrupulous person wants to steal your credit card information, they will. As the system now exists, there is no 100% way to keep someone from stealing your credit card information. Short of storing finger prints or DNA on the credit card and disallowing internet credit card transactions, todays credit card system is ripe for fraud.