One of the scariest financial prospects that many of us face is the possibility that we will be a victim of identity theft. In a world where almost anyone can have their information stolen from just about anywhere, it’s not much of a surprise that your information could be next.
Identity theft is such an important topic that the Justice Department has an entire information resource devoted to identity theft statistics. When you’re concerned about your identity, and how it might impact your credit, it can make sense to consider paying for a credit monitoring service.
What Does a Credit Monitoring Service Do?
A credit monitoring service basically scans your credit report regularly and makes an attempt to identify red flags that indicate your identity has been stolen. When a new account is opened, or when someone checks your credit, you are notified.
While credit monitoring won’t stop your information from being stolen by hackers or through something like the Heartbleed vulnerability, it can provide you with immediate information that you can act on quickly. When it comes to heading off identity thieves and limiting damage, the faster you act, the better off you’ll be.
There are also more advanced credit monitoring services that go beyond just your credit report. More advanced identity monitoring services actually keep an eye on your public records, and make it a point to even use algorithms to check through black market sites and look for other unusual activity that might indicate your identity has been compromised.
A credit monitoring service can help you keep tabs on your information, providing peace of mind.
Can You Monitor Your Credit Yourself?
Of course, a credit monitoring service isn’t going to do anything for you that you can’t do on your own. It’s possible for you to keep tabs on your situation for less than it costs to pay for credit monitoring.
You can access your credit report for free on a regular basis through AnnualCreditReport.com, as well as use free consumer credit reporting sites to keep tabs on your credit report and use it to watch for identity thieves.
It’s also possible to do your own public records search and watch for suspicious activity on your bank and credit card statements — and even your investment statements.
However, all of this takes time and effort. Yes, you can do it yourself, but you can’t be watching all the time. If you check in once a month with your accounts, and even if you use various tools to protect you against identity theft, you could still miss something. And, if you only check in once a month, you might miss a red flag that pops up a day or two after you last checked. That gives the thief almost a month’s head start on you.
In most cases, though, if you report fraudulent charges on credit cards (the rules are different for debit cards) within 60 days, you won’t be liable for most of the charge. But it can be a real pain to deal with during that time.
The point of a credit monitoring service is that it provides immediacy, while taking the bulk of the legwork off of you. While a service can certainly miss something, it is less likely to miss something than you are. Additionally, there are services that provide an immediate alert when a new account is opened, or when some other action takes place. This can help you get on top of the situation immediately.
Most people who sign up for credit monitoring services do it for the peace of mind, and to get a break from some of the workload. Whether or not a credit monitoring service makes sense for you depends on how concerned you are about identity theft, and how much time you have to complete the due diligence that is required to properly monitor your own credit.
Last week, I was on vacation with my son in San Diego. We had to go to the mall to replace the recharging cord for my phone. While we were on our way back to the hotel, a young activist approached us, looking for a donation to his cause. I agree with his cause, so I was on board with making a one-time donation with my credit card.
Things changed, though, as I started filling out the form he provided. When I got to the payment part, I was expected to enter write out my credit card number and expiration date.
I asked if there was another way to pay. While I don’t doubt the activist’s furor, and I think he would probably do what he could to protect this sensitive financial information, I just didn’t feel comfortable writing out my credit card number on a form at a mall fundraiser. I felt bad that I had started to fill out the form before reading everything through, and I felt bad I wasn’t going to be providing a donation after all.
But providing that information on a random form, with the opportunity for theft at any turn, just didn’t appeal to me. I probably spend too much time writing about money, credit, and identity theft.
However, activists and others don’t have to rely on people being willing to share their credit card details. From small business owners to independent artists to just about anyone else, it’s easy to transfer money without the need for a lot of personal financial details.
Alternatives to Sharing Your Credit Card Number
There are plenty of options when you have a smartphone. Card reading apps like Square and PayAnywhere are increasingly common, and you can get the card reader for free without too much trouble. A customer can swipe the card, choose whether or not to pay a tip, and move on. It’s quick and easy, and your data remains safer than if you write out your credit card number on an unsecure form.
When I mentioned Square to the activist, he said that many of the people working for the cause couldn’t afford smart phones. While that is a setback in terms using a card reader setup, the reality is that Square isn’t the only option.
There are person-to-person payment options these days, like PopMoney. If you accept payment via these types of service providers, you don’t have to ask for personal information; just have the person paying send you the money via text. No smartphone needed.
It’s also possible to facilitate these types of transactions with the help of PayPal, Dwolla, and other similar systems. Once, at an art festival, I bought something from a local artist, and I paid for it with PayPal. It was quick, easy, and there was no need for me to write down my credit card information.
With money increasingly digital, there are a number of ways to protect your credit card number and still pay for just about anything. While I sympathize with the activist’s cause, I wasn’t about to expose my personal financial information in that way. There are plenty of other options that don’t cost much, and that can make things convenient for everyone – and reach customers and donors in a way that allows them to remain comfortable with the transaction.
You can’t be too careful with your financial information. Just as you may not be comfortable with providing your Social Security number to others, you may not feel comfortable providing your credit card information. If you are worried about the situation, don’t give up the information.
And, small businesses and activists can help out, too. There are a number of alternatives to asking people to write down their credit card information. If my school’s PTA can get on board with these alternatives, I’d think young, tech-savvy activists could as well.
You might be surprised to learn that your credit report can help you catch identity theft. One of the tools in your arsenal, when it comes to addressing identity fraud, is the frequent checking of your credit report. Your credit report is more than a list of your accounts; it can also be a red flag.
Catch Identity Theft
When your identity is stolen, the fraudster is likely to use your information to open new accounts. These fraudulent accounts will appear in your credit report.
If you want to catch identity theft early on, you need to regularly check your credit report. You can get help in that area by going to AnnualCreditReport.com for the free report you are entitled to each year from each of the major credit reporting agencies.
Go through the information in the report, keeping an eye out for accounts that you know you didn’t open. If you see accounts that aren’t yours, you need to let the credit reporting agencies know. Call them, and then follow up in writing.
It might be necessary to place a credit freeze on your account if you are concerned that it could happen again. With a credit freeze on your account, you will be notified before a new account can be opened using your information. That can prevent another situation in which your identity is stolen and used to open credit in your name.
You might just red-flag your account as well, instead of placing an all-out freeze on the account. With the red flag, lenders are supposed to take extra steps to ensure your identity before opening an account in your name. It doesn’t always work as effectively as a credit freeze, though.
Even if you place a freeze on your account or have it red flagged, it still makes sense to keep tabs on what’s happening with your account. The good news is that there are plenty of web sites where you can keep tabs on your credit for free. While it’s not the same as looking at a full credit report, it can still be helpful, since you can usually see when something new pops up, and identify changes to the situation.
Your credit report is your first line of defense when you want to catch identity theft early on. Regular attempts to keep tabs on your report, and what’s in it, will allow you to identify problems quickly and move to take care of them.
Fraudulent Charges: Check Your Account Statements
While you do want to check your credit report regularly in order to identify fraudulent accounts, you also need to keep up with your account statements to make sure that you can see fraudulent charges.
While your credit report can help you catch identity theft as it relates to new, fraudulent accounts, it won’t provide you with information on fraudulent charges. For that, you need to check your accounts regularly. Go through your bank and credit card account statements on a regular basis so that you can see what’s happening with your purchases.
Sometimes, instead of opening a new account in your name, an identity thief will just take information about your credit cards and make purchases with that information. You will want to catch that type of identity theft early on and dispute the charges. If you catch it early enough, you can get your zero liability fraud protection in full, and avoid being responsible for the charges.
Your credit can be an indicator that your identity is being tampered with. You need to keep track of what is happening with your credit, and be sure that you are on top of the situation. Check your credit report every three or four months to see if there are fraudulent accounts. Check your account statements each month for fraudulent charges. You can even use the Internet to check your account charges more frequently, if it makes sense for you.
There is no way to completely prevent identity fraud; it is only with vigilance that you can expect to catch identity theft.
Data breaches have been big news recently. However, even with some heightened concern about security, it doesn’t appear that many consumers are doing much to change their habits, and they are unlikely to stop using plastic.
According to a poll reported by Daily Finance, it appears that only 37 percent of consumers are increasing their use of cash to protect themselves from the identity theft that can come as the result of a data breach.
More people seem to be worried about purchases made online, or made with a cell phone — in spite of the fact that, initially, the Target data breach was only supposed to have affected in-store shoppers.
Why Consumers Still Use Plastic
The only way to completely protect yourself from these types of data breaches is to stop using your credit cards and debit cards. Many consumers, though, don’t want to deal with the inconvenience that often accompanies using cash.
It’s much easier to just carry a thin piece of plastic, rather than a wad of cash. I know that I wouldn’t want to carry around a thick stack of cash. Swiping the plastic is so much more convenient. It’s faster, it’s easier, and you don’t often have to worry about getting caught without enough.
On top of that, even with the data security breaches, plastic is actually more secure than cash. Think about it: If someone steals your credit card or debit card, you can usually get the money back. Fraudulent transactions come with protection. Even though you might not get quite the same protection with debit cards as you would with a credit card, the reality is that you are still protected. As long as you can prove fraud, that money will be returned to you eventually.
With cash, the money is gone. There is no way to track that. If someone steals your wallet and takes the cash, you’re never getting that back. You’re better off having someone make a fraudulent purchase of $100 with a credit card than you are with someone taking $100 from your purse. When you consider this, it doesn’t make sense to stop using plastic.
Using a credit card instead of a debit card offers another layer of protection, since the money isn’t even taken out of your bank account. With a fraudulent debit transaction, you actually lose the money until the bank returns it. With a credit card, you don’t even have to risk your own money.
More Troubling: Few Consumers Checking Their Credit Reports
It’s not all that troubling (and not very surprising) that consumers aren’t making huge strides stop using plastic in the wake of these data security breaches.
What’s worse is the fact that many consumers aren’t taking any steps to protect themselves at all. Only 41 percent have checked their credit reports, according to the Daily Finance article. In spite of the fact that Target is offering credit monitoring services, and it’s fairly easy to use AnnualCreditReport.com and other credit monitoring tools to stay on top of the situation, most Americans are changing anything.
Also problematic is that Daily Finance reports even fewer consumers have changed their passwords at compromised retailer sites, and that they haven’t requested new debit or credit card numbers. Years ago, when the PlayStation Network data breach compromised my credit card information, I called my issuer and immediate got a new number and a new card. It took no more than 10 minutes and was free.
Change Your Behaviors
No, you don’t have to convert to cash in order to protect yourself from identity fraud. However, you do need to make some changes to your behaviors in light of the recent data breaches. For the most part, these changes amount to paying better attention. Here are some things to do:
- Carefully review transactions on your statements, looking for fraudulent charges.
- Check your credit report regularly.
- Notify card issuers and credit bureaus immediately if your information is compromised.
- Use different username/password combinations for different sites.
- Change your passwords on occasion.
Just paying attention to what’s happening can help you combat identity theft. It doesn’t have to take a lot of your time. If you are truly concerned about the time investment, you can consider signing up for credit monitoring so that you don’t always have to be on your toes.
Whatever you decide to do, though, it’s important to be aware, and to take steps to do what you can to protect yourself.
Back in 2008, Jacob Leibenluft of Slate did a story about how credit card numbers were for sale in “data supermarkets” online. You might find it surprising but credit card numbers aren’t worth very much. Symantec reported in 2008 that the cost ranges from 40 cents to $20, with the higher values going to European or smaller card companies because they’re harder to find. Bank account numbers go for a little more, $10 to as much as $1,000.
It’s amazing how little stolen credit card information is worth but it’s a sign that fraud protections in the United States are very strong. Kaspersky Lab analysts found a price listing, back in 2009, which listed US Visa cards were worth only $2, whereas German credit cards were valued at $6. (link)
I’ve never heard of ProtectMyID before, however after some quick research online, they seem to be an up and comer in the Identity Theft Protection world. I decided to give them a once over and sign-up for their 30-day ID Protection free trial but I also had to sign-up for a $1 credit report in the process. An inconvenience but a small price to pay for a full 30-day free trial.
Signing up is as simple as the rest I suppose. You enter your personal information, credit card information, then answer a couple of questions about your identity. As long as everything checks out, you’re through to the dashboard however if you’ve mistyped anything, you may be asked to call in and answer a few more questions.
You can call up the credit bureaus and put a fraud alert on your account. Once you call one, it will notify the other two and the fraud alert will be active at those bureaus as well. The fraud alert warns a potential creditor to do additional due diligence before extending credit. The idea is that credit reports with a fraud alert have already been compromised so the creditor should do extra work to ensure they are giving credit to the right person. They aren’t required to but they probably will because ultimately they lose money if they give money to a thief.
There are two types of fraud alerts, initial fraud alert and extended fraud alerts. The initial fraud alert stays on file for 90 days while the extended version lasts for 7 years. You will need to confirm your identity to place either but an extended report requires an actual identity theft report (initial 90-day fraud alert doesn’t require this). This will make it more of a hassle to obtain credit (you’ll have to provide more information) but this is one of the things many identity theft services do on your behalf.
Continue reading How to Place a Fraud Alert
Zendough, a new and fresh idea to the identity theft and credit score space, is offering a 7-day free trial for those in need of protecting their credit and making sure their score is where it needs to be. Unlike other free trial offers, zendough not only provides you the credit information you’re looking for but they also provide you a zen score, which rates your overall financial well-being.
Zendough is part of TransUnion, one of the three main credit bureaus. While you will have access to all credit score and report information during your 7-day free trial, you will only have it from TransUnion. If you decide to continue your service beyond the free trial, you will be granted access to reports and scores from all bureaus.
I decided to give them a try and signed up for the 7-day free trial myself. The sign-up process is just as simple as many other services, as you’re required to submit your personal information, payment information (should you decide to keep the services beyond the trial period) and answer a few questions about your identity. The submission process takes a few minutes and the form is easy to fill out.
If you’ve been the victim of identity theft, a credit freeze is one of the best ways to stop additional fraud in its tracks.
A credit freeze effectively “seals” your credit reports with a personal identification number (PIN) so that only you, and those you give that PIN to, can access your reports. With a fraud alert, whether it’s the shorter 90-day version or the much longer 7-year variety, creditors are simply warned that they should be doing a little more diligence before extending you credit. It results in a little more work on your part, asking for information that, hopefully, an identity thief doesn’t have.
Continue reading What is a Credit Freeze or Security Freeze?