A credit freeze can protect you from identity theft
I wrote an earlier column regarding research the Identity Theft Resource Center (ITRC) and DIG.Works conducted about the actions people take when notified their information has been compromised in a data breach. The punchline – while most people have had their information compromised in a breach, few took any meaningful action to prevent its misuse.
That includes putting a credit freeze on their reports at the credit reporting agencies. The ITRC says “a credit freeze is generally considered to be the most effective means of preventing new accounts from being opened that require a report from a Consumer Reporting Agency.” Opening fraudulent credit card and other accounts is a common form of identity theft.
A few years ago, my son got a letter from a department store saying they needed more information to process his application for a credit card. He hadn’t applied for a card and in response put a freeze on his credit reports. It was a good thing he did, because over the next six months he got several more letters from various creditors telling him they couldn’t approve his application for credit. Without the freeze, it’s likely one or more of them would have been approved. He never found out how his information had been compromised.
In additional research, the ITRC and DIG.Works found that a lack of awareness of the credit freeze process isn’t the reason most people don’t avail themselves of it; more than 75 percent of consumers are familiar with it. But only 29 percent had ever frozen their credit for any reason. Interestingly, 38 percent had frozen the credit of a minor child or dependent to prevent misuse of personal information.
Reasons survey participants cited for not freezing their credit include confusion about the process and cost. The current process does require some effort, particularly if you need to unfreeze your credit temporarily, but there is no cost. Other people mistakenly thought freezing their credit would negatively impact their credit score.
You have to contact each of the three major credit reporting agencies (Equifax, Experian and TransUnion) individually to freeze your credit file. You’ll have to unfreeze and refreeze it if you apply for credit, rent an apartment, buy insurance, or conduct any other transaction that requires checking your credit record.
ITRC says the following should be done to encourage more people to freeze their credit:
Data breach notices should include an explicit recommendation for victims to freeze their credit.
Notices should make it clear that credit monitoring alone can’t prevent a fraudulent account from being opened.
Businesses, victim advocates, and government representatives should collaborate on a comprehensive education program regarding the benefits of a credit freeze, particularly for children.
The credit reporting agencies should make the process easier, including creating a common system so consumers don’t have to contact each of them individually.
I already cited some of the reasons participants in the ITRC/DIG.Works survey gave for not freezing their credit, including misinformation about the cost and impact on their credit score. But the primary reason was they just didn’t think they needed to. My son is certainly glad he did. The hassle of recovering from identity theft involving fraudulent accounts is far greater than what’s involved in implementing a credit freeze.
Randy Hutchinson is the president of the Better Business Bureau of the Mid-South. Reach the BBB at 800-222-8754.
This article originally appeared on Jackson Sun: A credit freeze can protect you from identity theft
