Prevent Credit Fraud Using A Security Alert

Even the most cautious consumers are vulnerable to credit fraud. Learn why and how you can prevent it.

Identity theft and credit card fraud have become one of the most common non-violent crimes committed againt law-abiding citizens today. Why? Because it's low risk, difficult to prosecute, and easy. Too easy, say many consumer protection agencies.

Keeping your credit cards under lock and key won't protect you from fraud. A thief needs only a few easily obtainable pieces of personal information, such as your birthdate or social security number to establish fraudulent accounts in your name. Pre-approved credit applications found in your mailbox or discarded in your trash present another great opportunity for the would-be identity thief. The thief will submit an incomplete or inaccurate credit application in anticipation of receiving a rejection letter from the credit company. Why? Because receipt of this letter entitles the holder to a free copy of your credit file from any one of the three credit reporting agencies. Assuming you've never examined your credit report before, you will be surprised to find the depth of personal information it contains about you - social security number, birth date, previous names, previous addresses, previous employers, bank account numbers, credit card numbers, and every loan or credit account you may have held for the last ten years. Imagine the havoc a con artist can wreak upon your life if he or she was to obtain that much of your personal information.

Credit fraud prevention tips promulgated by credit reporting agencies do contain some helpful information. Always shred pre-approved credit offers before discarding them. Carry only the essential pieces of identification on your person. Don't keep Personal Indentification Numbers (PIN) with your ATM or credit cards.

We should all follow this advice, but you can still become a victim. How? Your mailbox! Bills and personal account statements often have more than enough personal information, including your bank account numbers, credit card numbers, and social security numbers; even your utility account numbers can aid in establishing false identities. Use a locking mailbox that allows the postal carrier to deposit mail, but prevents anyone without a key from retrieving the mail. And always put your outgoing mail into a U.S. Post Office box. Nothing makes the thief's job easier than placing mail into your own box and flipping up the red flag.

Unfortunately, even this isn't enough to prevent fraud. Every time you present your credit card or driver's license to a waiter, hotel clerk, cashier, or customer service representative, you are taking a leap of faith that this person will not use your information in any unauthorized manner. And while the overwhelming majority of service personnel who have access to this information are honest, there are always a few waiting to take advantage of an unsuspecting customer. In addition, computerized databases storing consumer's credit information have become a favorite target of hackers, who find it much more profitable to steal thousands of account numbers at one time.

In response to consumer's complaints that their credit information is much too vulnerable, the three credit reporting agencies (Equifax, Trans Union, and Experian) recommend that consumers should review their credit reports on a regular basis to ensure they haven't become victims of fraud. In fact, their websites will even allow you to register to have an email alert sent to you when there has been activity on your report. However, finding out after the fact that you have been a victim of fraud isn't exactly "prevention". And victims of identity theft will be the first to tell you that discovering someone has stolen your identity doesn't begin to eliminate your problem.

By now, you must be asking yourself if there is anything you can do that wil effectively prevent credit fraud. The answer is yes - there is in fact a very simple step you cant take to protect yourself. Call or write any of the three credit reporting agnecies and have a security alert, or fraud alert (same thing), placed on your account. A security alert will do two things: (1) prevent any creditor from opening an account in your name without explicitly contacting you first, and (2) remove your name from mailing lists sold by the credit reporting agencies to credit card companies who bombard you with pre-approved applications. According to the Fair Credit Act, if any credit agency disregards the security alert measures, and as a result you become a victim of credit fraud, you are entitled to sue that credit agency for damages.

So why isn't the security alert automatically placed on everyone's account? Because the credit rating companies make a hefty profit selling mailing lists of financially sound prospects to direct marketers. In other words, offering a greater degree of security to the consumer will cut into their profit margin.

Be aware that the security alert remains on your account for only six months. Until our politicians take action to protect consumers, you will have to go through this process twice a year. The Fair Credit Act does allow you to request that credit rating agencies permanently remove your name from all mailing lists sold to direct marketers. Just remember that without an active security alert on your account, creditors will again be permitted to open new accounts in your name without first contacting you, which is the key to protecting your credit.

Also know that placing an alert on your credit file does not protect your spouse's file. Each individual must make a separate request. And finally, you must contact each of the three credit reporting agencies. For example, placing an alert with Equifax will not protect your files with Experian or Trans Union. Don't become a victim - visit the web sites for each of the three credit reporting agencies and place a security alert on your file today!

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