As we learned from the Equifax breach in 2017, we can fall victim to identity theft through no fault of our own. Although it isn’t feasible to master every identity theft scenario, it’s worth your time to learn more about the available identity theft tools and services and how to initiate a recovery plan if you become a victim. Here, we review four remediation resources and services, focusing on the benefits and risks of each. These tools may be used concurrently.
Credit monitoring
This service monitors your credit file for changes or suspicious activity. Credit monitoring can send alerts—typically via e-mails or text messages—if there are hard-credit inquiries about you or when new lines of credit are opened. If anything looks fishy, you can report the activity to the company holding that account and the major credit bureaus. At this stage, some incidents may be remediated.
Benefits
Risks
Fraud alerts
A fraud alert is a cautionary note that you can have placed on your credit report. It tells credit lenders or service providers that you may have been a victim of identity theft, so they must verify with you before making changes to your credit. For example, if you apply for a credit card while you have a fraud alert in place, the credit card company may call you to verify that you were the one who submitted the application. Verification usually happens over the phone, but there is no standard means of verification defined by law.
Fraud alerts come in two flavors: initial fraud alerts, which last one year, and extended fraud alerts, which extend that time to seven years. To implement an extended fraud alert, you’re required to file an identity theft report with the Federal Trade Commission (FTC) first.
Benefits
Risks
Credit freezes
This tool freezes credit files so that no one—including the individual who placed the freeze (i.e., you)—can open a new line of credit. Therefore, before opening a new line of credit, you would need to unfreeze your credit file using a personal identification number (PIN) provided by the credit bureau.
Benefits
Risks
Identity theft protection services
Identity theft protection services provide a suite of helpful tools and resources in one package. The better services offer real-time credit monitoring at all three major bureaus, customized account alerts for more than just credit, and a 24/7 call center.
Benefits
Risks
Other steps
A great starting point for victims of identity theft is identitytheft.gov. By following the site’s simple prompts, you can select your identity theft situation, access guidance and resources specific to you, and file identity theft reports with the FTC.
Preventing a second theft. Maintaining healthy account hygiene can help prevent unauthorized activity in the future. Here are some tips:
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to be sure our information is accurate and useful, we recommend that you consult a tax preparer, professional tax advisor, or lawyer.