Indiana radio station WIBC FM 93.1 is focusing on identity theft this week on their Morning News Program. I was interviewed this morning for the program and had a great time speaking with Terri and Jake about my experiences assisting victims of identity theft. I appreciate them taking the time to highlight this issue. Unfortunately, I did not have an opportunity to express my opinion that the identity theft victims I come into contact with have trouble recovering from this crime primarily because the credit reporting agencies do not take the dispute process seriously. They don’t take it seriously because the dispute process doesn’t make them money. But I guess that’s for another day…
Indiana’s new security freeze law goes into effect September 1, 2007. Here’s what the Indiana Attorney General’s Office says about the new law:
What is a security freeze?
A ‘security freeze’ is a new consumer right provided by Indiana law. Placing a security freeze on your credit reports can block an identity thief from opening a new account or obtaining credit in your name. A security freeze, also known as a credit freeze or a file freeze, keeps new creditors from accessing your credit report without your say so. If you activate a security freeze, an identity thief cannot take out new credit in your name, even if the thief has your Social Security number or other personal information, because creditors cannot access your credit report.
How to Place a Security Freeze
Beginning September 1, 2007, any Indiana resident can request a security freeze free of charge. There is no fee for Indiana residents to place, temporarily lift, remove or request a new password or PIN. To place a freeze, send a letter by certified mail to each of the three credit bureaus:
Equifax Security Freeze P.O. Box 105788 Atlanta, GA 30348
Experian Security Freeze P.O. Box 9554 Allen, TX 75013
Trans Union Security Freeze P.O. Box 6790 Fullerton, CA 92834-6790
For each, you must:
* Provide your full name (including middle initial as well as Jr., Sr., II, III, etc.,) address, Social Security number, and date of birth;
* If you have moved in the past 5 years, supply the addresses where you have lived over the prior 5 years.
* Provide proof of current address such as a current utility bill or phone bill * Provide a photocopy of a government issued identification card (state driver’s license or ID card, military identification, etc.)
*Click here for sample letters to send to all three credit bureaus. After 1/1/09, you may also place the security freeze by a secure electronic mail connection.
FREQUENTLY ASKED QUESTIONS
How long does it take for a security freeze to be in effect?
After five (5) business days from receiving your letter, the credit reporting agencies listed above will place a freeze on the provision of your credit reports to potential creditors. Within ten (10) business days of receiving your freeze request, the credit reporting agencies will send you a confirmation letter containing a unique PIN (personal identification number) or password. Keep this PIN or password in a safe place.
Can I open new credit accounts if my files are frozen?
If you want to take out a loan, get a new credit card or apply for a job or certain services, you can lift the security freeze for a certain period of time or for a specific party by notifying the credit bureau according to its procedures.
Can I remove a security freeze?
Yes. You can have a security freeze lifted for a specific party, temporary period of time, or permanently. There is no fee for Indiana residents. The steps to do so are as follows:
* Contact the credit reporting agencies above.
* Before 1/1/09, you must contact the credit reporting agencies by mail. After that date, you can contact the agencies by mail, telephone or e-mail;
* You must provide proper identification;
* You must provide your unique PIN or password;
* If lifting temporarily, you must include the party that you wish to release a report to and/or during what time period your credit report will be accessible.
How long does it take for a security freeze to be lifted?
Three (3) business days before 1/1/09 when request is made by mail. After 1/1/09, the consumer reporting agencies must lift the freeze within 15 minutes under reasonable circumstances and if requests are made by telephone or e-mail during normal business hours.
What will a creditor who requests my file see if it is frozen?
A creditor will see a message or a code indicating the file is frozen.
Can a creditor get my credit score if my file is frozen?
No. A creditor who requests your file from one of the three credit bureaus will only get a message or a code indicating that the file is frozen.
Can I order my own credit report if my file is frozen?
Can anyone see my credit file if it is frozen?
When you have a security freeze on your credit file, certain entities still have access to it. Your report can still be released to your existing creditors or to collection agencies acting on their own behalf. They can use it to review or collect on your account. Other creditors may also use your information to make offers of credit. Government agencies may also have access in response to a court or administrative order, a subpoena, or a search warrant.
Do I have to freeze my file with all three credit bureaus?
Yes. Different credit issuers may use different credit bureaus. If you want to stop your credit file from being viewed, you must freeze it with Equifax, Experian, and Trans Union.
Will a freeze lower my credit score?
Can an employer do a background check on my credit file?
No. You would have to lift the freeze to allow a background check, just as you would to apply for credit. The process for lifting the freeze is described above.
Does freezing my file mean that I won’t receive pre-approved credit offers?
No. You can stop the pre-approved credit offers by calling 888-5OPTOUT (888-567-8688). Or you can do this online at www.optoutprescreen.com. This will stop most of the offers, the ones that go through the credit bureaus. It’s good for five years or you can make it permanent.
What law requires security freezes?
The Indiana security freeze bill passed as Senate Bill 403. It is effective September 1, 2007.
Can I still get a copy of my credit report?
You will still be able to get a free copy of your credit report annually from each credit bureau by visiting www.annualcreditreport.com.
I am glad Indiana has taken this step. It will help some people. If you know your personal information has been compromised in some way, a freeze should be a good way to prevent identity theft. Unfortunately, I don’t think most people are aware of the theft of their personal information prior to the thief using it to obtain credit. The average consumer is therefore left with the dilemma of choosing to leave his credit file vulnerable to identity theft or to freeze it and have to go through the trouble of lifting the freeze every time he wants to apply for credit.
Much more needs to be done…
I received a mailer recently from Equifax. The mailer was selling Equifax’s credit monitoring tool called Credit Watch Gold. It had a couple of “Identifact(s)” listed which contained a few statements that made me go “Hmmmm?”:
* identity theft is now surpassing drug trafficking as the nations’s #1 crime * there are over 10 million victims of identity theft annually * the average victim of identity theft spends 28 hours and $5,686 to resolve the case
The mailer cites the U.S. Department of Justice Statistics and the Federal Trade Commission for this information.
While these “facts” are presented as indisputable truth, a little internet research and a little common sense show that they are anything but. LESSON: NOT EVERYTHING PRESENTED AS A FACT IS ACTUALLY TRUTH.
Identity theft is now surpassing drug trafficking as the nations number one crime? Really? Knowing how widespread drug use is in this country, I find that hard to believe. And what about drunk driving? You’re telling me that there are more instances of identity theft than all the drunk driving that occurs in this country, even including all the drunk driving that never comes to the attention of police? I couldn’t believe it.
I did some research and found nothing to support this statement in terms of number of crimes committed. What I did find was some ephemeral evidence suggesting that for the first time, in 2004, the proceeds from “cybercrime” exceeded the proceeds from drug trafficking. I have no idea if this is true or not, but I do know that “cybercrime” is not equivalent to identity theft. Cybercrime involves a whole host of crimes in addition to identity theft, like corporate espionage, child porn, stock manipulation, and song piracy to name a few.
I don’t think it can be called accurate in any sense of the word to say that identity theft is the nation’s number one crime.
There are over 10 million victims of identity theft annually? If by “victim” Equifax means consumers, which I think would be the common use of the word and certainly what they are implying, then I’m not buying it. I know identity theft is pervasive, but 10 million is a lot of people. There are just over 300 million persons in this country, so exclude all kids and incompetent adults and you’re down to maybe 225 million. Then, subtract from that all the adults who don’t have any established credit history and those who don’t have credit worth stealing and I think you’d be down to somewhere between 100 and 150 million. So one out of every 10 to 15 people in this country is a victim of identity theft, every year? I just can’t buy that.
But maybe I’m wrong. Surprisingly, there is some support out there for this figure. In January 2006, Javelin Strategy and Research co-released its 2006 Identity Fraud Survey Report with the Better Business Bureau. This study found that the number of identity theft victims in the United States was actually decreasing, from 10.1 million in 2003 to 9.3 million in 2005 to 8.9 million in 2006. Well, I might be wrong, but I’m still not buying it. I think they must be including defrauded creditors into this figure as well. But even if this study’s finding is accepted as true, Equifax’s statement is still wrong.
The average victim of identity theft spends 28 hours and $5,686 to resolve the case? Actually, I can’t really quibble with the time but $5,686????? NO WAY. No way, no way, no way. The clear implication of this statement is that the average consumer victim of identity theft spends $5,686 of their own money in order to stop all the collections and to get their own credit report back. Can I say it again? No way.
Now don’t get me wrong. I KNOW there are some consumers who spend way more money that that. But as far as the AVERAGE goes, those figures have to be way too high. Remember, consumers rarely lose significant sums of money out-of-pocket as a result of the fraud (most of these losses are borne by the creditors).
Based on the figures I was able to find, it appears that Equifax was confused. The Javelin study I referred to above found that the mean amount per fraud victim (the creditors) rose from $5,249 in 2003 to $6,383 in 2006. Another study found in 2003 that the average loss to businesses from identity theft was $4,800 while the average loss to consumers was $500. That still sounds high to me, but, anyway, it seems pretty clear that the average consumer victim did not spend $5,686 “to resolve the case” as Equifax would have us believe.
Frankly, I can’t believe Equifax would make such an obviously false assertion. I should point out that along with credit monitoring, the mailer also indicates that “up to $20,000 identity fraud expense coverage” is included with your membership in Equifax Credit Watch Gold. The false assertion about how much the average identity theft victim spends was obviously made with the intent to sell Equifax Credit Watch Gold. It might very well be a violation of Indiana Code 27-4-1-4, which prohibits the making of an untrue statement in a pamphlet by someone in the business of insurance.
1. Equifax Credit Watch Gold is probably unnecessary for most consumers, but for some who can afford the $13 a month, the peace of mind might not be a bad deal.
2. Identity theft is a serious problem in the United States.
3. Don’t trust everything you read.
4. If you believe you may be a victim of identity theft, click here to find out what to do.
I recently came across a survey conducted by the California Public Interest Research Group and the Privacy Rights Clearinghouse. The survey was conducted in the spring of 2000 and included 66 identity fraud victims who were selected because they had contacted these agencies. Since millions of people have been victims of identity theft, the survey can in no way be considered representative. In fact, it is probably representative of victims who were most adversely impacted. Even so, and even though the survey is several years old, I think it is some great anecdotal evidence of the devastation that identity theft can sometimes cause.
Here is a summary of the survey’s findings:
§ Forty-five (45%) of the victims consider their cases to be solved; and it took them an average of nearly two years, or 23 months, to resolve them. Victims (55%) in the survey whose cases were open, or unsolved, reported that their cases have already been open an average of 44 months, or almost 4 years.
§ Three-fourths, or 76%, of respondents were victims of “true name fraud.” Victims reported that thieves opened an average of six new fraudulent accounts; the number ranged from 1 to 30 new accounts.
§ The average total fraudulent charges made on the new and existing accounts of those surveyed was $18,000, with reported charges ranging from $250 up to $200,000. The most common amount of fraudulent charges reported was $6,000.
Many people don’t realize that the biggest problem with identity theft is not usually liability for the fraudulently incurred debt. Victims of identity theft seldom are saddled with any significant debt as a result of the fraud. The credit card companies and other businesses who deal with the perpetrators usually eat most or all of these losses.
In the meantime, however, the victim’s credit report often ends up in shambles. This can be very difficult to clean up. If you want to see for yourself just how difficult, here are some tips:
1. Don’t shred or tear up your financial documents – just throw them in the trash.
2. Fail to get your mail regularly and promptly – instead, let your mail build up and sit in your mailbox for days.
3. Don’t keep track of expected mail, like checks, credit cards and even bills, and don’t do anything if they haven’t arrived in a reasonable time.
4. Don’t regularly monitor your credit report; in fact, don’t check it at all.
5. Give out your personal information to anyone who asks for it, especially if they initiate the contact with you.
6. Leave personal information out in your home for your relatives, roommates, or service people to see.
7. Choose easy to remember passwords, PINS and codes, utilizing such things as 1234, your birth date, phone number, address, or the last four digits of your social security number — or better yet, keep them in your wallet or taped to your cards for easy reference.
If you DON’T do these things, there’s still no guarantee that you won’t be a victim of identity theft. Sometimes you can do everything right and still get burned just because you were unlucky or someone else wasn’t careful with your information. But by not doing these things, you can at least significantly reduce your risk of being an identity theft victim. If you think you are a victim of identity theft, click here for more information on what to do about it.