Chances are you just finished dropping a boatload of money on holiday gifts. You probably paid for the bulk of your purchases with a debit or credit card, particularly if you did any of your shopping online. But what did you do to protect yourself against identity theft?
Probably not much — most people rarely, if ever, look over their shoulder before handing over their credit card. Some don’t even bother to double-check that a Web site is secure before typing in the digits. But with an estimated 10 million cases of identity theft each year, paying close attention to your personal information is one of the only ways of keeping your personal information, and your money, safe.
The others? Well, there are micro shredders, which I’ve touted in this space before. There are credit-monitoring services, which may cost more than you feel like spending with the holiday bills rolling in. Also, critics argue that they may not be all that effective either, since they’re somewhat akin to a fire alarm — it can alert you to a bad situation, but often just a bit too late.
The best solution we have is probably the security freeze, recently made available nationwide by all three credit bureaus. It’s basically a padlock for your credit report and perhaps the best way to keep from becoming a victim.
“A credit freeze is an order to the three credit bureaus — TransUnion, Experian and Equifax — that you do not want them selling your personal information to any third party. What this does is make your credit report unavailable to banks, credit card companies, utility and cell phone companies — anyone who might want to look at your credit report before issuing credit,” explains Scott Mitic, CEO and co-founder of TrustedID, an identity-theft protection service. If lenders can’t see your credit report, they can’t issue a thief credit in your name.
The downside, of course, is that unless you lift the freeze, you can’t get credit either. So is it worth the hassle? Here, a primer on security freezes and other ways to keep your identity to yourself.
Weigh the cost
The fee for a security freeze is going to vary by state, but $10 per bureau seems to be the norm. (Unless you’ve already been a victim of ID theft — then it’s free.)
You’ll want to put a freeze on your file at each of the three credit bureaus, because contacting just one is akin to locking the front door of your house, then leaving the back and side doors wide open. So now we’re at about $30. If you have to lift the freeze because you need a new car or want to apply for a mortgage, it’s another $10 a pop. Deciding whether it’s worth the $60 bucks (more if you have to repeat the process) is really a matter of looking to the future. If you’re happy with your house and car, and don’t foresee a need for any additional credit cards or loans in the next several years, it may be worth it to place the freeze.
(Note: If you don’t want to deal with it yourself, or see yourself freezing and unfreezing multiple times, a service like Mitic’s, which is $109.95 for a year, may be cost effective.) But if your situation is at all in limbo — say you’ve just graduated from college, for example, and may be shopping for a home soon — you’re probably better off fighting the identity-theft battle another way.
I have to admit, I kind of like credit freezes for another reason: They force you to stop and think before spending money you don’t have. It can take a few days for the freeze on your credit report to lift, which is long enough for you to decide you don’t really need that department store credit card after all. But if you’re not the kind of person who plans in advance, you may find yourself in a sticky situation if you forget to lift the freeze and need access to credit immediately.
Consider a fraud flag instead
It’s basically a note, attached to your credit report by all three bureaus, requesting that lenders contact you by phone before issuing credit in your name. One plus to a fraud flag over a freeze is that it’s free. It’s also a lot easier to manage than a freeze, but it may not be quite as effective.
“It’s not foolproof,” says Mitic. “It’s not as safe or as guaranteed as a freeze because you’re counting on tens of thousands of different lenders to correctly see this note, correctly call you and correctly verify your identity.” Still, lenders are by law required to read and respond to a fraud flag, so it’s definitely worth a try.
Arm your computer
Updated anti-spyware and anti-virus software is always worth the investment. For about $30, you’ll protect yourself against programs that can worm into your computer, scan the hard drive for your personal information, and then send the findings into the waiting hands of thieves.
If you can’t stop an identity theft — and all the protections in the world may not be enough, frankly — you can at least catch it early on. The crime generally comes with one or two red flags.
“If you start to get bills from people or companies you’ve never heard of, it’s a strong sign that someone is impersonating you,” says Gail Hillebrand, a senior attorney with Consumer’s Union. She also advises going over your credit card and bank statements with a fine-tooth comb for any suspicious charges, something that is particularly important at this time of year, when we’ve spent more money than usual at places we may not normally shop. Any charges you don’t recognize, no matter how small, should be disputed with the bank or credit card company.