3 Rea­sons A Credit Freeze Won’t Pro­tect You


Since Equifax an­nounced a stag­ger­ing data breach that has im­pacted 143 mil­lion Amer­i­cans, it’s been called the worst theft of con­sumer data in Amer­i­can his­tory. Fraud­sters now have ac­cess to 143 mil­lion So­cial Se­cu­rity num­bers, dates of birth and ad­dress in­for­ma­tion.

The big­gest ques­tion fac­ing con­sumers: how can you pro­tect your­self? Putting a credit freeze on your credit bureau has be­come the most com­mon ad­vice. Ac­cord­ing to the FTC, a credit freeze al­lows you to “re­strict ac­cess to your credit re­port, which in turn makes it more dif­fi­cult for iden­tity thieves to open new ac­counts in your name.” The ben­e­fit of a credit freeze is that it be­comes ex­tremely dif­fi­cult (close to im­pos­si­ble) to have new credit ac­counts opened in your name. Un­for­tu­nately, a credit freeze also makes it more dif­fi­cult to ap­ply for credit your­self (although not im­pos­si­ble). But I think the big­gest risk of a credit freeze is a false sense of se­cu­rity. Just be­cause you freeze your file does not mean you are out of risk. If you de­cide to freeze your re­port, re­mem­ber to pay at­ten­tion to th­ese three key risks.

1. Misuse Of Ex­ist­ing Ac­counts Re­mains A Ma­jor Risk

The most com­mon type of fraud relates to misuse of ex­ist­ing (open) ac­counts.

With the amount of in­for­ma­tion stolen from Equifax, you can ex­pect fraud­sters to at­tempt to gain ac­cess to bank ac­counts, credit cards and other fi­nan­cial ac­counts. Old-fash­ioned fraud is still the most ef­fec­tive, and so­phis­ti­cated crim­i­nals can use the stolen data to call you and im­per­son­ate a bank. They will try to send highly so­phis­ti­cated emails that look like they are com­ing from a bank (also called phish­ing).

Fol­low th­ese sim­ple steps to pro­tect your­self:

Set up ac­count alerts on your ex­ist­ing ac­counts. Most banks and credit unions of­fer free alert ser­vices so that you can be no­ti­fied via email or text when­ever there is a large trans­ac­tion, deposit, trans­fer or new payee added. Set up and pay at­ten­tion to the alerts.

Opt in to multi-fac­tor au­then­ti­ca­tion wher­ever pos­si­ble. If your bank al­lows you to sign up for a ser­vice that re­quires you to re­ceive a unique code via text mes­sage - ac­cept it.

Al­ways be wary of emails and phone calls from fi­nan­cial in­sti­tu­tions. As a gen­eral rule, don’t click on an email and then pro­vide your so­cial se­cu­rity num­ber. Go to the bank’s site di­rectly. Call the num­ber on the back of your card. But don’t fall vic­tim to the highly so­phis­ti­cated tac­tics that will likely emerge from this data breach.

2. Med­i­cal And Em­ploy­ment Iden­tity Theft Still A Big Risk

If your So­cial Se­cu­rity num­ber has been stolen from Equifax, it can end up for sale. Some peo­ple want to use a so­cial se­cu­rity num­ber to open new credit ac­counts. A credit freeze is a great tool to pre­vent that. How­ever, a credit freeze will not pre­vent med­i­cal and em­ploy­ment theft.

Med­i­cal iden­tity theft oc­curs when some­one steals your per­sonal in­for­ma­tion (like your name, So­cial Se­cu­rity num­ber, or Medi­care num­ber) to ob­tain med­i­cal care, buy drugs, or sub­mit fake billings to Medi­care in your name. If your So­cial Se­cu­rity num­ber is at­tached to an un­paid med­i­cal bill (for ser­vices that you never re­ceived), the debt can end up with a col­lec­tions agency and hit your credit re­port. Be very care­ful if some­one reaches out and asks for your med­i­cal in­sur­ance num­ber. By comb­ing that with your so­cial se­cu­rity num­ber, the fraud­ster could start ob­tain­ing care un­der your in­sur­ance plan. Look closely at your med­i­cal in­voices. And en­sure you mon­i­tor your credit re­port and take ac­tion im­me­di­ately if you see med­i­cal debt that isn’t yours.

With em­ploy­ment iden­tity theft, some­one uses your so­cial se­cu­rity num­ber to ob­tain work. Some em­ploy­ers re­port to credit bu­reaus, and a reg­u­lar re­view of your credit re­ports could iden­tify the is­sue. But ev­ery year, you should check your So­cial Se­cu­rity earn­ings on the gov­ern­ment web­site to make sure you rec­og­nize the earn­ings in your name.

3. Tax Fraud: Now A Big­ger Risk

Tax iden­tity theft hap­pens

when “some­one uses your stolen So­cial Se­cu­rity num­ber to file a tax re­turn claim­ing a fraud­u­lent re­fund.” This is a painful—and real—risk. The best way to pro­tect your­self from fed­eral tax iden­tity theft is to file early and quickly. The se­cond tax re­turn will be re­jected by

the IRS. If you are a vic­tim of the Equifax breach, the risk of tax fraud is real.

But Should I Freeze My Re­port?

The pur­pose of this ar­ti­cle is not to con­vince you to avoid freez­ing your credit. A credit freeze is a help­ful way to re­duce the risk of hav­ing new credit ac­counts opened in your name. The scale of the Equifax breach is so vast that we are all at sig­nif­i­cant risk even with a credit freeze in place. It is im­por­tant for con­sumers to un­der­stand the risks and put in place mea­sures to de­tect any of th­ese types of fraud as quickly as pos­si­ble. If you do freeze your re­port, you can’t re­lax. There are other very real threats out there.

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