Updated on Friday, September 17, 2021
When credit bureau Equifax announced that the Social Security numbers, birth dates, addresses, and in some instances, driverâ€™s license numbers of over 140 million people had been hacked back in 2017, consumers were forced to acknowledge how vulnerable they were to identity theft.
As a result of that breach, a new federal law allowing people to freeze and unfreeze their credit profiles for free at all three major bureaus was passed in September 2018.
To help you protect against identity theft, you should have a plan to:
If someone has stolen your personal information, youâ€™ll want to prevent them from being able to open new credit accounts in your name. You can do that in just a few minutes by freezing your credit profiles at the big three credit bureaus.
A credit freeze prevents any third party from obtaining a copy of your credit report. This means that in the vast majority of cases, new credit accounts cannot be opened. There may be rare exceptions â€” for example, American Express will sometimes approve a new credit card without doing a hard pull of your credit report if the applicant is an existing American Express customer.
If you want to apply for credit after having frozen your credit, youâ€™ll need to unfreeze your credit, which can be done fairly quickly through each bureauâ€™s website or app. You can also set a time frame for how long you want your credit to be unfrozen, like a week or a couple of days, and then the freeze will be reinstituted.
Experian and TransUnion each require a PIN (generated when you freeze your credit) to manage this, while Equifax does not require a PIN. Hereâ€™s where to freeze your credit with each bureau:
Another way to protect your financial information is to set up two-factor authentication on all open accounts (especially your bank accounts and email). That means any time you want to access your account or send money, you would need to receive a text message, email or phone call, or confirm via an app.
Even if you freeze your credit, you should have credit monitoring in place, especially if youâ€™ve already experienced some type of identity theft. And if you havenâ€™t frozen your credit files, all the more reason to sign up for some type of credit monitoring service. With credit monitoring, youâ€™ll be notified as soon as someone tries to open a new account. In addition, youâ€™ll be notified if new negative information hits your credit report. (Even if you have a credit freeze, someone could still use your Social Security number at a hospital. That medical debt could end up with a collection agency â€” and on your credit report.)
You can get single-bureau monitoring for free. You have to pay for tri-bureau monitoring. Here are some recommendations for both free and paid options for monitoring your credit:
MagnifyMoneyâ€™s parent company, LendingTree, offers credit monitoring in partnership with TransUnion. Youâ€™ll get access to your free credit score and will be notified of changes to your credit report such as inquiries and new account applications. You can create a LendingTree account here.
The company also partners with IDX to offer identity monitoring at a special price for LendingTree users. For example, get the enhanced service for $8.46 a month or the premium service for $16.96 a month. The premium subscription includes such services as tri-bureau credit monitoring, a report of all names and aliases associated with your Social Security number, and monitoring for bank account takeovers and change of mailing address.
CreditSesameâ€™s â€śPro Creditâ€ť plan is $15.95 a month and offers tri-bureau monitoring with alerts. If youâ€™re very concerned about identity theft, tri-bureau monitoring could be worth the cost.
You should also take advantage of AnnualCreditReport.com. By law, consumers are entitled to one free credit report from each bureau every year, and thatâ€™s the site where you can get it. Plus, during the coronavirus pandemic, the bureaus have offered free reports on a weekly basis.
Most banks, credit card companies, and credit unions have a feature that allows you to receive an alert (text message or email) to notify you of transactions. Make sure you set these up for all accounts â€” especially accounts you rarely or never use.
If youâ€™re the victim of identity theft, youâ€™ll need a game plan for resolution. The best place to start is IdentityTheft.gov, where you can see a checklist of steps to take to ensure you minimize losses and regain control of your identity. If dealing with the situation on your own is daunting, you might want to have help with the resolution process, which is where credit resolution services come in. In a best-case scenario, you give power of attorney to the company and youâ€™ll have a dedicated caseworker handling everything (which can take years).
One affordable option is Zander Identity Theft Solutions, offered by Zander Insurance. The â€śessential planâ€ť costs $6.75 a month for an individual or $12.90 a month for a family. With Zander, youâ€™re paying for â€śwhite gloveâ€ť service if your identity is stolen, and youâ€™ll also have an insurance policy ($1 million for individuals or $2 million for families) to cover any expenses associated with recovering your identity.
To sum up the above, take the following actions to protect yourself from identity theft:
Next, weâ€™ll go into more detail on what identity theft looks like, how to reduce risk, and a variety of products to consider.
Identity theft is any attempt by another person to use your identity for their own personal or financial benefit. Identity theft victims are protected by law, and they have the right to a full restoration of their identity. But achieving restoration often isnâ€™t easy: It is up to identity theft victims to find and follow the recommendations of the Federal Trade Commission to achieve full restoration of their accounts, identity, and good legal standing. Identity theft manifests in two forms:
The most common form of identity theft is an account takeover, which involves another person using either your credit or debit accounts to make transactions for their benefit.
A less common form of identity theft is called identity takeover. This involves thieves using the name, Social Security number, or other personally identifying information to fraudulently assume their victimâ€™s identity for their own benefit. When it comes to identity takeover, itâ€™s not just your credit and money that is at risk â€” itâ€™s your entire identity. In worst-case scenarios, you may find that your identity has been used to create false medical records, falsework documents, criminal charges, and unpaid taxes, in addition to financial and credit issues to resolve.
Identity theft can take place through physical and cyber channels, and nearly everyone is at risk. Knowing the most common identity theft scams can help you take steps to mitigate risk.
Itâ€™s impossible to eradicate all risks of identity theft, but there are some steps you can take to mitigate risk, as well as secure your identity if identity theft occurs.
Itâ€™s important to note that friends and family members are often the perpetrators of identity theft â€” if youâ€™re unwilling to press charges against someone, prevention is even more important.
Steps to take for prevention include:
When it comes to identity theft, the best defense is the early detection of fraudulent activity. If you detect fraudulent activity early, you can often prevent full account takeovers, quickly get reimbursed for fraudulent charges, and deal with less paperwork as you unravel the effects of identity fraud. Here are some steps you can take to monitor your accounts and credit reports:
If youâ€™ve discovered that youâ€™ve been the victim of identity theft, it is up to you to report the identity theft and restore your good name to all affected areas. This can be a time-consuming task, and some companies are willing to take on the burden for you. Below are steps you should take, depending on the type of theft:
Paying for credit monitoring and/or identity theft resolution might be a worthwhile investment if youâ€™re concerned your information has been compromised. Some options available include:
Although laws exist to limit financial loss for consumers, identity theft resolution tends to have some out-of-pocket costs. These include liability losses (when using a debit card, your losses should be limited to $50 if fraudulent charges are reported within two days or $500 if reported within 60 days, but you could be responsible for the full amount lost if reported after that), legal costs (ranging from $20 for notarized forms to a few thousand if you undergo legal battles) and lost wages if you have to take time off to battle the legal system.
Itâ€™s also worth noting that youâ€™re better protected against fraud when youâ€™ve used a credit card than when youâ€™ve used a debit card. Legally, you shouldnâ€™t be held liable for more than $50 if thereâ€™s fraud on your credit card â€” but credit card issuers typically go beyond that and offer $0 fraud liability, meaning you wonâ€™t be liable for any fraudulent charges on your card.
By taking reasonable precautions such as freezing your credit, setting up alerts on your accounts, regularly checking all your accounts and credit reports, or using a credit monitoring service, you can increase your chances of detecting fraud early and being able to fix the situation swiftly.
And although it costs money, subscribing to a service that offers identity theft resolution can provide support in a worst-case scenario and reduce the amount of work you have to do to get your life back on track. But look carefully at what exactly youâ€™re getting before you sign up â€” some services will handle virtually everything for you, while others might provide resources but leave you to handle the heavy lifting.