First what is a Fraud Alert?
An alert places a statement on your credit report so that if a fraudster attempts to obtain credit in your name, the creditor, in checking your credit, will encounter a statement that says something to this effect: “I may be a victim of fraud. Call me at my phone number 312-555-7890 before extending credit.” By calling you, the creditor ensures more security.
There are two types of Fraud Alerts
The first and much more common is a 90-day fraud alert. This is for someone who “suspects” they have been an id theft victim, but doesn’t know for sure.
So, I setup a 90-day alert a few weeks ago and here’s how it impacted me. When I went to switch cell phone carriers, instead of the normal online credit check they usually do — yes, your credit score is checked when you apply for a cell phone plan, did you know this? — they tried to call my contact number to verify it was me, so my old cell phone rang and then I was able to verify over the phone that yes it was me trying to order a new plan. My visit to the cell store was longer, but it was a lot safer.
As I was just suspicious that I was a victim of ID theft, just a few weeks earlier, I got the 90-day alert.
To set this up call any of the 3 bureaus, Equifax’s number is 1-800-685-1111 — select option 4. Or go to www.equifax.com. Again, you can call any of the bureaus, I just liked the Equifax automated system.
The second type is a 7-year alert and this for people who MUST prove to the Credit Bureaus that they were victims of ID theft by providing documentation from their credit card companies or other financial institutions. A good idea, if you’ve been a victim.
Finally, there’s something called a Fraud Freeze or Credit Freeze which is available by law or on a volunteer basis by the bureaus in all 50 states and Puerto Rico.
So what is it?
A security freeze means that your credit file cannot be shared with potential creditors or insurance companies; It can help prevent identity theft since most businesses will not open credit accounts without checking a consumer’s credit history first; Once your account is frozen, credit cannot be granted until you unfreeze it – So remember my cell phone story a moment ago? If I had a fraud freeze in place, I would not receive a call and credit would have simply been denied. So, it’s more protective than a Fraud Alert.
ID theft victims can list for free in most states but ‘non-victim’ consumers will pay $10/bureau set it up and $10 each time they need to unfreeze it. In most cases you have to send your requests by certified mail. Click the link under resources to find out more specifics with your state.
If you are past the credit needing age, and not likely to need credit for anything, you may want to do a credit freeze. Okay this isn’t right for most of us, but it might be for your parents, or your aunt or uncle. The elderly are common targets of ID theft as they often have great credit scores and aren’t checking accts as frequently.
Fraud alerts and fraud freezes are not 100 percent fail-safe as some creditors can and will issue credit without pulling a credit report. But they are effective as most financial institutions use credit checking to protect themselves and that, in the end, protects you better.
Okay let’s recap. There are three types of protective measures: the 90-day alert, the 7-year alert, and the Fraud Freeze. The Fraud Alerts are Free and provide an extra layer of security. The 7-yr fraud alert will only be placed with Proof that you were a victim whereas the 90-day alert can be placed by anyone merely suspicious of fraud. The Fraud Freeze is more protective and costs $10 to setup and $10 to unfreeze for each bureau. A good idea if you don’t need a loan, credit card or new cell phone plan in the near future.
In this lesson we are going to discuss ID theft treatment or what to do if you become a victim with ID theft.
Identity Theft Treatment
We talked to someone the other day that thought he was victimized and he gave us his story
First off, he saw something on his credit file he simply couldn’t recognize and he had a credit report from his lender he was having trouble deciphering it. I know you want to save money, but the reports at myFICO, Equifax, TrueCredit and the other consumer websites are just easier to read.
He appeared to have a credit line or card that he didn’t recognize and he couldn’t easily tell. In his case the line item was an $18K credit line with $4K used. He really had no idea where he should start.
So here’s a good checklist of what to do
- Place a 90-day fraud alert on your credit file, by contacting any of the 3 bureaus. It’s free and it’s easy. Again, you don’t need to contact all 3 bureaus. Once, 1 knows they tell the other 2. To set this up call any of the 3 bureaus, Equifax’s is the one I recommend contacting. You can do this online at fraudalerts.equifax.com.
- Ok, now you need an Identity Theft Report, which you can get by contacting the local authorities. What is this? An Identity theft Report is simply a police report that contains details of the ID theft. You need this report to dispute any fraudulent account behavior on your report.
- Contact your financial institutions by phone AND by certified mail to file an existing account dispute and/or a new account dispute. The FTC has nice forms for this, and you can get them from our website as well under credit resources. Include your Identity Theft Report with your dispute letters.
As an alternative, instead of using the FTC forms you can ask the representative to send you the company’s fraud dispute forms.
Send copies of these letters to the credit bureaus as well.
The companies have 15 days to ask for more info, and then 15 more days to ensure your Identity Theft Report contains everything they need.
- Send follow up letters to the credit bureaus detailing status with Credit/Financial Institution companies. While the bureaus should get an update anyway from the Credit Card Company, it’s a good idea to follow up on your own.
- Consider a 7-year alert or a Freeze on your account. More on this in Lesson 9 on Credit Freezes.
- Report the crime to the FTC
Ok, those are the major steps. Expect some back and forth on this. While the average ID theft resolution time is on the decline – it’s still a hefty chunk of time at 28 hours, so dig in and attack it.
If you are in the military…
When you are away from your usual duty station, you can place an active duty alert on your three credit reports as an extra protection against identity theft. The alert remains on your credit reports for 12 months. Contact the fraud departments for the three credit bureaus.
Wow, this is still a lot of work. Why bother? Well most people don’t report their fraud and that’s risky. For one, the Credit Bureaus are likely to think a new credit line is YOURS not FRAUD. So, your score will be on the hook.
Join us for Lesson 9 Where we will Discuss 90 day Fraud Alerts, 7-yr fraud alerts and Credit Freezes.