By Susan Grant, CFA Director of Consumer Protection and Privacy

11/4/15

U.S. PIRG recently released a new report that explains how placing security freezes on one’s credit reports is the only way to prevent new account identity theft. It’s a proactive step that’s easy and inexpensive to take.  

Why bother? Based on identity theft complaints to the Federal Trade Commission last year, consumers’ stolen personal information was fraudulently used to open new credit and other financial accounts in their names much more frequently than to take over their existing accounts. And as U.S. PIRG points out, credit monitoring services only alert you to new account fraud after the fact – they don’t prevent it from happening.

Of course, identity theft can cause other problems that can’t be prevented with security freezes or detected by credit monitoring, such as medical identity theft, government benefits fraud, and employment fraud. Consumers have to be vigilant, but there are lots of things that they can do, for free, to avoid becoming identity theft victims.

Still, consumers need more help. They can’t control the security practices of the companies, agencies and organizations that retain their personal information. If there’s a breach, they may be provided with free identity theft services. But how about providing consumers with better tools to use themselves, at no charge, whether they are identity theft victims or not? Here’s my wish list:

·         Give consumers the right to check their credit reports online for free, whenever and as frequently as they’d like. Currently consumers are entitled to one free report annually from each of the credit bureaus and to additional free reports under some circumstances, such as when they have become identity theft victims.

·         Give consumers the right to free security freezes. In some states they have that right now under certain circumstances, but not everywhere.

·         When consumers place fraud alerts on their credit reports, require creditors to contact them before approving applications for new accounts in their names. Creditors must take extra precautions when they see fraud alerts on consumers’ files, but they don’t have to actually contact them.

·         Provide better protection for active duty military personnel. While they have the right to place active duty alerts on their credit reports at no charge, which require creditors to take the same sort of precautions as with fraud alerts, this isn’t enough. That’s why several Senators have sent a letter to the Department of Defense suggesting that service members should have the option to tell credit reporting agencies to alert them if credit is applied for in their names while they are deployed.

CFA also supports the Military Families Credit Reporting Act, because active duty military personnel face special challenges managing their finances. No matter whether negative information in their credit reports is due to identity theft or a missed payment, they should have easy-to-use tools to deal with it.