As we learned from the Equifax breach in 2017, we can fall victim to identity theft through no fault of our own. Although it isn’t feasible to master every potential identity theft scenario, it’s worth your time to learn more about the identity theft tools and services available to you. As well as how to best initiate a recovery plan if you become a victim.

Below, we will review four different remediation resources and services available to the public. Including the most lightweight to the most robust, focusing on the benefits and risks of each. Keep in mind that these tools may be used concurrently.

Credit Monitoring

This service monitors your credit file for changes or suspicious activity, so you don’t have to manually check on it yourself. Credit monitoring can send alerts when there are hard credit inquiries or when new lines of credit are opened.  The alerts are most often sent via e-mail or text message. If anything looks fishy, you can report the unauthorized activity to the company holding that account, as well as the major credit bureaus. At this stage, some incidents may be remediated.

Benefits
  • Often, this service is free of charge after major breaches (e.g., Equifax, Anthem) when social security numbers (SSNs) have been exposed.
  • Credit monitoring doesn’t restrict your access to your credit file.
Risks
  • Credit monitoring is reactive. You’re notified only after unauthorized activity has occurred.
  • You must entrust another company with your SSN.
  • Only credit is monitored; other accounts are not.

Fraud Alerts

A fraud alert is a cautionary note that you can place on your credit report. It tells credit lenders or service providers that you may have been a victim of identity theft. The lenders must verify with you before making any changes to your credit. For example, if you apply for a credit card while you have a fraud alert in place, the credit card company may call you to verify that you, not an identity thief, were the one who submitted the application. Verification usually happens over the phone, but there is no standard means of verification currently defined by law.

Fraud alerts come in two flavors: initial fraud alerts (which last one year) and extended fraud alerts (which extend that time to seven years). To implement an extended fraud alert, you’re required to first file an identity theft report with the Federal Trade Commission (FTC).

Benefits
  • Fraud alerts are completely free.
  • They are easy to set up. You can submit a request to one major credit bureau, and that bureau will notify the other two bureaus.
  • Fraud alerts don’t restrict your access to your credit file.
Risks
  • The verification process isn’t clearly defined by law.
  • Verification could cause delays in credit changes.
  • Accounts that are already open aren’t protected by this measure.

Credit freezes

As the name indicates, this tool freezes credit files so that no one, including the individual who placed the freeze, can open a new line of credit. Before opening a new line of credit, you would first have to unfreeze your credit file with a personal identification number (PIN) provided to you by the credit bureau. This is the most heavy-duty tool you can administer on your own, but it has some consequences.

Benefits
  • A security freeze is the most effective preventive measure because, without the PIN, no changes can be made to a credit file.
  • As of September 2018, credit freezes are free in all 50 states.
Risks
  • The application process requires a separate submission to each of the three credit bureaus.
  • A freeze restricts access to your own credit. You must unfreeze it to allow changes. (Changes may be permitted for specific companies at specific times.)
  • It doesn’t restrict access to your existing accounts; fraudulent activity can still occur in those.

Identity Theft Protection Services

Identity theft protection services provide a suite of helpful tools and resources all in one package. The better services offer real-time credit monitoring at all three major bureaus, customized account alerts (for more than just credit), and a 24/7 call center.

Benefits
  • These services combine the benefits of other tools (e.g., credit monitoring and alerts) in one place.
  • When 24/7 support is available, it can help guide you through the appropriate steps to mitigate the situation at any time.
  • Some services can monitor accounts outside of credit files.
Risks
  • You must entrust another company with your SSN.
  • These services can be costly, depending on the vendor’s pricing tier.
  • Quality may vary, so before subscribing to any service, be sure to perform due diligence.
  • Most vendors won’t help with identity theft that took place before you subscribed to their services.

Other steps

A great starting point for victims of identity theft is identitytheft.gov. By following the site’s simple prompts, you can select your identity theft situation, access guidance and resources specific to you, and file identity theft reports with the FTC.

Preventing a Part Two

After remediation, maintaining healthy account hygiene can help prevent unauthorized activity in the future. Here are some tips:

Woman Using a Computer at a Cafe
  • Change account passwords for all accounts that may have been compromised.
  • Ensure that your passwords are unique for each account. That way, if one account is compromised, the attackers potentially can’t access your other accounts.
  • Wherever possible, enable multifactor authentication. It asks users to provide more than one form of identification to log into their accounts. For example, in addition to entering a password or PIN, you would be prompted to access something you have, such as a smartphone or a hardware token.
  • If you suspect that your e-mail accounts have been hacked, review the mail-forwarding rules and delete any that you don’t recognize. Attackers often add forwarding rules so that, when accounts send or receive certain e-mails, the e-mails are forwarded—even after you’ve regained access and changed your passwords.

Questions?

If you have any questions about the information provided here on identity theft protection, please feel free to reach out to us.

Reference herein to any specific commercial products, process, or service by trade name, trademark, manufacturer, or otherwise, does not necessarily constitute or imply its endorsement, recommendation, or favoring by Commonwealth Financial Network®.