A credit report freeze is an effective tool in preventing one of the most costly and difficult-to-detect forms of identity theft – false new accounts opened in your name. New account fraud occurs when a thief uses your personal information to open up one or more new accounts for credit or services in your name. You’ll never see the bills, since they’re probably being sent elsewhere – so you’ll only learn of the new account when you find out that you have a bad credit score, or when you begin receiving calls or letters from debt collectors.
Before opening a new account, most reputable companies evaluate your creditworthiness by checking your credit report or credit score. A security freeze stops potential creditors from seeing your credit report and credit score unless you decide to unlock the credit reporting file with a PIN. The freeze stops the new account in the name of a thief because the creditor who is considering the thief’s application can’t check your credit report or credit score.
BUNK ALERT: A security freeze does NOT stop misuse by a thief of your existing bank account or credit accounts, which is called existing account fraud. You still have to check the monthly statements on your existing accounts for any erroneous charges or debits.
The procedures you must follow to place a Security Freeze on your credit records vary by state. Click here for a list of instructions by state.
Related Article
OOPS! Your information is (not) safe with us
Related News Link
Paying for ID Theft Protection Is Not Necessary
1. Victims rarely (if ever) know what hit them.
It takes an average of 14 months before victims discover that their identity has been stolen to commit a crime.
• Victims are not liable for fraudulent charges/debts accumulated by identity thieves, due to Federal law. Still, banks and credit card companies regularly turn bad accounts over to collection agencies, and continue to report erroneous information on credit reports – even though they know the accounts are fraudulent and all collection and reporting activity should stop.
• Because fraudulent accounts make up such a large “overhead” expense, banks and credit card companies often hope that victims will eventually collapse under the onslaught of bills and collection agencies and eventually pay for items they never purchased in the first place – simply to restore/protect their good names. (Identity Theft Resource Center)
• The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian and TransUnion— to provide you with a free copy of your credit report, at your request, once every 12 months. The Federal Trade Commission, the nation’s consumer protection agency, enforces the FCRA with respect to consumer reporting companies. (FTC.gov)
2. Once the thief has your information, they have lots of options.
Over half of identity theft victims who call the FTC Identity Theft Hotline report that their identity has been used illegally in multiple ways:
- Credit card fraud – a card is opened in the victim’s name, or unauthorized charges are made on an existing card. (Represents over 50% of victims who file reports with the FTC)
- Unauthorized phone or utility services – victim has a fraudulent new utility account (cell phones included), or perpetrator has accessed an existing account.
- Bank fraud – bank account is opened in the victim’s name, or withdrawals are made from their existing account.
- Fraudulent loans – obtained in the victim’s name (personal, business, auto, real estate, etc.).
- Government documents or benefits – obtained or forged in the victim’s name for driver’s licenses, tax returns, or government benefits.
- Miscellaneous fraud – including employment data, medical treatment or services/drugs, evading legal sanctions, criminal records, tax refunds, Internet accounts, bankruptcy, leases, purchases of securities and investments.
3. Because they (probably) won’t get caught.
Let’s face it: Most identity thieves are never caught. Of the thousands of cases, precious few are ever brought to prosecution. Most financial institutions consider ID theft an unavoidable cost of doing business.
Even the Attorney General of the Commonwealth of Massachusetts, herself a recent identity theft victim, says, “the chances of [identity thieves] ever being prosecuted are ‘slim to none’.”
Related Article
Prescreened Offers and Opting Out
Related News Link
LifeLock CEO Becomes Identity-Theft Victim
AnnualCreditReport.com is the official site to help consumers to obtain their free credit reports. This central site allows you to request a free credit file disclosure, commonly called a credit report, once every 12 months from each of the nationwide consumer credit reporting companies: Equifax, Experian and TransUnion.
You may request your free credit report online, by phone or through the mail. Free credit reports requested online are viewable immediately upon authentication of your identity. Free credit reports requested by phone or mail will be processed within 15 days of receiving your request.
Related Article
The Truth About Fraud Alerts
Related News Link
4 Reasons to Forgo Credit Monitoring Services