Last year, national credit bureau provider Equifax managed to lose information for 146 million Americans (and some 500,000 Canadians) in one of the largest data breaches to date. Many were left wondering how to prevent hackers from maliciously using that information to open credit accounts – and the options weren’t exactly encouraging.
• Credit bureaus, including Equifax, were quick to encourage people to “freeze” their reports through their own paid services. But is it ethical to sell a solution to a problem created by your company in the first place? Congress doesn’t think so; that’s why they recently introduced legislation to make all freezes completely free.
• First, let’s talk about what a freeze is and what it does. When you “freeze” your credit report, it essentially makes the entire report visible to only you and the credit bureau. If a creditor requests the information, they are told it is inaccessible.
• From the credit bureau’s end, making your profile “frozen” is so incredibly simple it seems almost ludicrous to charge for it. Like making a social media profile or telephone line private, it’s akin to changing one or two settings and hitting “okay.”
• Credit bureaus believe they are justified to charge for these services because they spend time servicing you when they do it. While this is a legitimate claim, many have pointed out that charging for freezes is essentially charging people for potential identity theft due to poor security. That’s a problem.
• To encourage more transparency, Congress has officially signed free freezes into federal law. The legislation took effect the third week of May, but won’t activate completely for approximately two months.
• Once the laws are fully active, they will apply to all credit bureaus, all Americans, and all states. You will have the right to request a freeze for free, and the right to have that demand serviced within no more than one business day.
• Fast access to freezes is by far the best way to prevent identity thieves from using your info maliciously to open accounts after thefts, lost wallets, and hacking intrusions. But many scammers are picking up on this; they immediately action use after they gain information. Or, they sit on it for a few months and wait for you to assume everything is okay – then they strike.
• Freezes don’t just impair scammers; they also prevent YOU from requesting credit. The only way to request credit period is to call and have the freeze removed, a process that makes buying a house, opening a bank account, or even registering utilities a huge pain.
• Still, credit freezes remain the best tool we have after a critical loss or breach. Until technology allows for more robust detection measures, you should keep this tool in your fraud prevention toolbox.