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Money April 2013

Dollar Sense

Stop Credit Thieves Cold with a Credit Freeze

By Teresa Ambord

The worse the economy gets, the bolder and more clever thieves get. Credit monitoring services that alert you when someone messes with your credit can be pretty effective. But a credit freeze is probably the most affordable way to limit the ability of thieves to get at your money.

You've heard the horror stories about unsuspecting citizens who learned too late that someone somewhere had opened credit accounts in their names, purchased expensive vehicles, emptied bank accounts. Consumers Union says that false accounts in your name may be the most costly and hard-to-detect type of identity theft. The difficulty is in the fact that the bills for these fake accounts are sent elsewhere, so by the time you learn of the damage, your credit is ruined.

Sometimes the victims end up with unfairly tarnished reputations and may even lose their jobs based on the actions of criminals. The damage can take years to undo. That's why you may want to consider a simple credit freeze. Consumers Union calls this perhaps the best tool available to protect your financial life.

There is a lot of advice out there about protecting your credit. Yet identity theft continues. The worse the economy gets, the bolder and more clever thieves get. Credit monitoring services that alert you when someone messes with your credit can be pretty effective. But a credit freeze is probably the most affordable way to limit the ability of thieves to get at your money.

Here's how this works.

To place a security freeze, you contact each of the three credit bureaus and request it. It will cost you $15 total if you are 65 ($5 for each bureau), or $30 total if you are under 65. It's free if you have been a victim of identity theft and you filed a police report.

Unless you lift the freeze and need to restart it, there is generally no other charge, and the freeze lasts until you remove it. The freeze will not affect your credit score.

Suppose a thief manages to get hold of your Social Security number and date of birth, and attempts to open a credit card account in your name? The credit card company (or finance company, or any other issuer of credit) will almost always check your credit score. When that happens, the credit bureau sees that you have requested a freeze, and the thief gets frozen out. That means it will be very hard for anyone to open a credit account in your name without your knowledge.

What if you decide to apply for an auto loan or other credit? You may temporarily lift the freeze using a PIN. When you initiate the freeze, the credit agency will issue you a PIN that can be used to "thaw" your credit information, either for a particular entity or a designated period of time.

 

Exceptions to the Freeze

State law requires some exceptions. Anyone with whom you have an existing credit account can still access your information for purposes not related to new accounts. This includes law enforcement and certain other governmental agencies for investigations and other statutory responsibilities.

Because your existing creditors are exempt, a security freeze will not stop misuse of those accounts if a thief manages to get hold of your account information. Therefore if you do rely on a credit freeze, you must still keep close tabs on your existing accounts by checking statements carefully.

 

Who is Most Vulnerable to ID Theft?

The good news for seniors is, according to the Consumers Union, those 65 and older are less likely to be victimized, and more likely to spend time protecting ourselves and resolving credit problems. However, regardless of age, if you have been the victim of an identity theft or if your Social Security number has been compromised, a credit freeze is critical. Even if you have thoroughly resolved your ID theft issues, your information may have been sold or traded among criminals. Months or years after you think you are safe again, a new crop of problems may rise up. Remember, if you have been victimized and you filed a police report, there is no charge to freeze your credit.

You can contact the credit bureaus by mail or online:

Equifax, P. O. Box 740256, Atlanta, GA 30374; http://www.equifax.com

Experian, P. O. Box 2002, Allen, TX 75013, www.Experian.com

TransUnion, LLC, P. O. Box 2000, Chester, PA 19022. http://www.transunion.com/

 

OPTIONAL SIDEBAR: Are you THAT Michelle Brown?

One of the best known true stories of identity theft happened to California resident, Michelle Brown. After Brown filled out a rental application, Heddi Ille, who was an acquaintance of the rental company owner, managed to get hold of Brown's private identification information. She used the information to get a new driver's license in Brown's name. She traveled extensively, bought a condo and a $32,000 luxury vehicle, which she did not pay for. She established a home phone in Brown's name, but did not bother to pay the bills. She also used Michelle's name when police arrested her for smuggling illegal drugs.

As you can imagine, all of this created a long-term nightmare for the real Michelle Brown. Everywhere she went she had to explain that she was not THAT Michelle Brown. It took about a year of twisting in the wind before – with the help of her landlord – Brown figured out who had stolen her identification. By that time, Ille had racked up about $50,000 worth of debt in Michelle Brown's name.

Ille was caught and prosecuted for theft of property, but not for stealing Michelle's identity. Thanks to extensive work by the real Michelle Brown, laws have tightened up, so that now thieves can be prosecuted for identity theft as well as for stolen property. Ille was sentenced to federal prison, and was released in 2004.

More recently in January 2013, a Mexican undocumented worker, real name Benita Cardona-Gonzalez assumed the identity of a Texas teacher by the name of Candida Gutierrez. Guitierrez's identity was hijacked for 12 years before the thief was caught and taken into custody.

 

Teresa Ambord is a former accountant and Enrolled Agent with the IRS. Now she writes full time from her home, mostly for business, and about family when the inspiration strikes.

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