Identity thieves can do all sorts of devious things with your personal information — open a new credit card in your name, steal your tax refund, or even get medical care from your health insurance company.
No matter how hard you try, there is nothing you can do to prevent your personal information from being compromised. Nearly 180 million personal records were lost or stolen last year, according to the nonprofit Identity Theft Information Center.
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You can prevent a thief using stolen information to open new financial accounts in your name. To do that, simply place a “security freeze” on your credit file with the three major credit reporting agencies: Equifax, Experian and TransUnion.
Most creditors will not provide credit without checking your credit score. A security freeze prevents them from accessing your file or generating a credit score based on that file.
Therefore American PIRG (Public Interest Research Group) now advises everyone to freeze their accounts, even if their sensitive personal information has not been stolen.
“This is the only way to prevent new account identity theft, where someone opens a new account in your name,” said Mike Litt, advocate for PIRG’s consumer program. “If the bad guys get your Social Security number and try to open a new account, they can’t if the account is frozen.”
A PIRG report notes that credit monitoring and other services commonly offered to victims of data breaches “do nothing to prevent identity theft; they detect certain types of fraud only after they have occurred.” Spear strategy and research, a respected security company that detects identity theft, also recommends a proactive freeze.
Al Pascual, Javelin’s head of fraud and security, told NBC News he was afraid to suggest this in the past, because of “unintended consequences”. But with financial fraud on the rise with new accounts, he now believes the benefits outweigh the problems.
Javelin was recently released Identity Fraud Report 2016 found that criminals, inundated with stolen Social Security numbers, are changing tactics – opening new accounts instead of using existing ones. The Javelin study found that fraud with new accounts increased by 113 percent in the past year. It now accounts for 20 percent of all fraud losses.
“Now is the time for consumers to take advantage of the freeze as their risk of becoming a victim of serious identity theft is increasing by the day,” Pascual said.
Rod Griffin, director of public education at education Experian, is concerned that people using a security freeze will be given a false sense of security.
“It’s presented as a universal solution and everyone should be doing it, when in fact it’s not for everyone,” Griffin told NBC News. “Freezing a credit file does not provide universal protection against identity theft.”
For example, if a scammer steals your credit or debit card number, they can still use it until the fraud is spotted and the account is closed. They can also use your Social Security number to get a driver’s license or file a false tax return in your name — a huge problem this time of year.
Denise Norgle, a vice president at TransUnion, calls the security freeze “a drastic fix,” but agreed in an email to NBC News that it “may prevent a credit report from being released in response to a new credit application.” Norgle noted that a fraud alert is “a good alternative” for many people.
A fraud alert tells potential creditors to contact you before granting credit, but they don’t always. And Adam Levin, CEO of Identity Theft 911 and author of the book “Swiped,” says so many accounts now have fraud alerts that they’ve become like “white noise.”
“A lot of lenders, no matter what they’re supposed to do, don’t take the time to check,” Levin said. “A credit freeze isn’t a panacea, but it’s definitely better than a fraud alert.”
A credit freeze is free for victims of identity theft who have reported it to the police. Otherwise, there is a small fee ($3-$10) at each of the three agencies. It varies by state. Freezes are free in some states, and senior discounts are often available.
You pay that fee again if you need to “thaw” or unblock the account to give a potential creditor access to your file. So if you’re getting ready to do something that requires a credit check — car or home loan, mortgage refinancing, new credit card or bank account, insurance policy, utility, or apartment rental — you probably want to wait until after you’ve applied.
“It can be a bit cumbersome, which is why a freeze isn’t for everyone,” Levin said. “The question is, would you rather be a bit of a nuisance, but have more protection? Sometimes greater security requires a little more effort.”
Remember: a freeze locks everyone out of your credit file — even you. It doesn’t stop those who already have legitimate access to it, such as companies you already do business with.
You can unblock the account online. In most cases, the thaw occurs immediately. But you have to use the PIN you got when you placed the freeze.
“If you lose or forget the PIN, the process is extremely cumbersome,” said Eva Casey Velasquez, president and CEO of the Identity Theft Resource Center. “We’ve had people call us in tears just to thaw their credit because they’re refinancing their house and they froze it five years ago and forgot about it.”
Despite this caution, Velasquez believes that a freeze can make sense for people who understand how it works and what it does and doesn’t do.
“Credit freezes are the most robust credit protection option available,” she said. “This is the most proactive tool out there to thwart new identity theft of financial accounts.”
It’s important to check your financial accounts to look for signs of fraud, even if you’re freezing your credit files.
View your credit score. You can get a free credit score from your bank or credit card company, or from any of the websites that now offer this service. If your score suddenly drops for no apparent reason, check it out.
Get a free copy of your credit reports every 12 months at AnnualCreditReport.com. Look for anything that’s wrong: address changes, new accounts you haven’t opened, or collection notifications you never received.
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