Personal data breaches have become a part of our daily lives. It’s likely in the last few years that your personal information has been stolen via one. If you think you’re immune to identity theft or just lucky, let’s review some of the most prominent identity hacks of the past few years.
More than 70 million customers of Target Corp. had their identity compromised in 2013 through a card skimming fraud. The Home Depot Inc., in 2015, had more than 56 million of its customers’ credit and debit card numbers compromised. If you’re one of the many Boulder County (Colo.) residents who have applied for a government security clearance, you may be one of the of 21.5 million victims of data theft impacted by the recent breach of the Office of Personnel Management.
If you have had your personal information compromised, usually you are offered free identity theft protection for a few years. Beyond those free programs, there are countless identity protection services available for purchase whether it’s through your homeowners insurance policy or a standalone product such as LifeLock Inc. For about $10 to $30 a month, these services purport to put in place a secure web of protection around your identity. (For more, see: Identity Theft: How to Avoid It.)
How to Really Protect Yourself
Not only are these services expensive, but they may be giving you a false sense of security. LifeLock is well known for plastering the Social Security number of its CEO all over its ads. It turns out that the CEO’s identity was compromised many times, and LifeLock had to pay $12 million to the Federal Trade Commission and other authorities in a settlement surrounding false claims about its services. The FTC has more recently charged LifeLock with violating the agreement.
Fortunately, there is one low cost and effective step you can take to protect your identity on your own. Contact all three credit bureaus—TransUnion Corp., Experian, and Equifax Inc.—and put a credit freeze on your account. A credit freeze restricts access to your credit report and effectively prevents anyone from applying for credit in your name. It will not lower your credit score and will not affect the credit you already have in place. (For related reading, see: How to Build a Credit Report for Your Adult Child.)
Once you set up a credit freeze, each credit bureau will give you a PIN that will, along with other personal information, allow you to temporarily or permanently remove a credit freeze. Don’t lose that PIN as it’s your ticket to “thaw” your credit freeze quickly, which will allow you apply for new credit. As long as you have that PIN, you can call the credit bureau used by the company issuing the new loan or credit line. If everything is in order, you can thaw your credit in a matter of minutes over the phone. If you lose the PIN, it could take two weeks to make your credit available. (For related reading, see:How to Budget and Spend to Maximize Your Happiness.)
If you have been a victim of identity theft and have filed a local law enforcement report, then there generally is no charge for thawing your credit freeze. That’s why you want to make a police report as soon as you have been notified that you’re an identity theft victim. If you’re not a victim, it will generally cost you—the price is determined by state laws—to temporarily thaw your credit with each agency. This is where your identity theft prevention dollars should go rather than on private services that may be less effective.
It’s also good practice to check your credit report regularly for signs of fraud, which can be accessed once a year with each credit bureau for free at annualcreditreport.com. Another good, free service funded by advertising is creditkarma.com. And more information on identity theft protection can be found at identitytheft.gov and clarkhoward.com. (For related reading, see: America's Epidemic of Financial Avoidance.)
CR: https://www.investopedia.com/advisor-network/articles/081716/best-identity-theft-protection-may-be-free/
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