It’s been hard to miss the security breach of Equifax that happened a few weeks ago. We are here to help explain what it means and what you can do to protect yourself.
While this incident captured headlines due to the size, with over 143 million American’s impacted, the fact is identity theft has been on the rise in recent years due to our increasing digital economy. According to the Bureau of Justice Statistics an estimated 17.6 million persons or about 7% of US residents age 16 or older were the victim of at least one incident of identity theft in 2014.
First, if you haven’t already, find out If your information was comprised at www.equifaxsecurity2017.com. If you are on the list it doesn’t mean you will become the victim of identity theft, but it has increased the chances of an occurrence.
A lot of the talk has been focused on thieves opening new accounts in your name, however, the most common type of identity fraud occurs with someone using your existing accounts and using your information to steal your identity. According to the Bureau of Justice Statistics, 86% of identity-theft victims experience fraudulent or the attempted misuse of a current account.
You’ve probably heard many of the experts agree that freezing your credit is the solution. While it may be part of the answer, a freeze only protects against new accounts being opened in your name — a fraud that only affects about 4% of victims according to the BJS report.
So what can you do?
There are a several options and they should be used in combination with one another.
A credit freeze restricts access to your credit report making it more difficult for accounts to be opened in your name. Freezing your credit typically costs $5- $10 each time you do it and requires contacting all three credit bureaus for it to be effective. It involves setting up and establishing a pin to toggle access, and lifting a freeze can take up to 3 days. Should you do it? If you are on the impacted list it’s a good idea. The downside - if you are looking to make a major purchase such as a home or automobile it can be cumbersome and you’ll need to plan in advance.
You can find how to freeze your credit with the following contact information:
- Equifax https://www.freeze.equifax.com/Freeze/jsp/SFF_PersonalIDInfo.jsp - 800 685 1111
- Experian https://www.experian.com/ncaconline/freeze - 888 397 3742
- TransUnion https://freeze.transunion.com/sf/securityFreeze/landingPage.jsp - 888 909 8872
A credit lock works the same way as a credit freeze but it is not subject to state regulation. Once the lock is set up with all three bureaus no new creditor can see your credit report. This service is being offered for free by Equifax and Transunion and there is a nominal fee to do so with Experian at this time. A credit lock is a bit easier to turn on and off than a freeze, as no pin is required and it may be able to be removed relatively quickly, making convenience the angle here. Does this make it less secure? Perhaps a bit, always make sure to keep secure passwords.
Credit Monitoring & Alerts
Establishing a credit monitoring system is essential. This is the process of periodically reviewing all of your credit activity for potential fraud. Use an automated service to track activity continuously and set alerts for anything that may be suspicious or out of the ordinary. An added benefit - keeping a closer eye on your activity will help you understand your spending.
Equifax is offering free credit monitoring to all Americans, whether impacted by the breach or not. CreditSesame is also offering free alerts and identity theft protection and several companies offer similar services for a fee. Please note that credit monitoring does not prevent ID theft; it simply alerts you when events occur that may impact your credit.
Check your Credit Reports
It is essential to review your credit reports regularly. You get 1 free report from each agency every 12 months @ annualcreditreport.com. Stagger the reports to access one from a different agency every four months so that you can keep up with any changes throughout the year. Put a reminder on your calendar, for example Equifax in October, Experian in February, Transunion in June, etc.
File your taxes early
Believe it or not the IRS doesn’t verify who is filing a tax return. A common method of fraud is for thieves to go after individuals that are due a tax refund filing a fraudulent return in order to collect the refund. Filing your return as soon as you are able can help to mitigate this risk.
Monitor your accounts at least weekly.
Keep track of all of your accounts - bank, credit, investment, retirement, etc. While this can be overwhelming we offer a free personal website with account aggregation to track all of your accounts from one place. Following transaction activity and recognizing anything out of the ordinary can prevent thieves from completing major activity at your expense. Not to mention tracking your accounts and net worth is motivating. Try this - at the end of each month write down your net worth and compare the results over time.
Use secure passwords and set up two-step verification.
Changing your passwords regularly is a major pain. I can’t remember half of mine and I typically have to reset them for that reason, however it is very important. You’ll want to set reminders to update your passwords quarterly or every six months and make sure you use something that is difficult to guess. Two-step verification is essential and will soon become the norm for all account access - this involves receiving a text or email message with a verifying access code.
Set up alerts for credit & account activity
This should be one of the easier items on the list, most major financial institutions allow the ability to set up alerts for any activity on your account. Do this for all of our accounts: bank, credit, investment, and retirement accounts. Alerts and tracking go a long way toward keeping ahead and recognizing potential fraudulent activity right away.
Choose verification questions carefully
It's not that hard to guess where you were born or find your mother’s maiden name. Take care to pick verifying questions that only you know the answer.
Don’t fall for phishing attempts and impersonators
Be on high alert for impersonators or phishing attempts by fraudsters. Be on the lookout for emails telling you that you’ve been impacted, or otherwise creating a sense of urgency, and to “click here” for more information. When in doubt, do not click the link. Any legitimate company will have another way for you to contact them to be sure the email is safe.
Next Steps - Putting it all together
We know this stuff is a pain, but it’s important. A recent report from CreditSesame shows that fewer than 1% of consumer have put a credit freeze in effect and only 7% had fraud alerts in place.
Unfortunately there is no one-size answer to this issue. As digital access continues to play a central role in our daily lives, the risk of your information being misused will persist. Putting a credit freeze or a credit lock in place is a good idea, but it has to be used in combination with the other methods we described in order to protect against not only new accounts being opened, but also the misuse of your existing accounts and assets. To sum it up: use credit freezes or locks, monitoring services & the best practices (ideally all of them) together.
I’m happy to help you put a plan in place. We will assess your risk level, establish monitoring services and walk you through the freeze or lock process.