Identity Theft VS Security Freeze

While reading the August 2007 issue of Consumers Reports, I learned a disturbing fact about identity theft and a new weapon to protect against it.

Everyday nearly 30,000 people become victims of Identity theft. Almost one third of these victims have new accounts opened in their name without their knowledge simply because a thief gained access to their name and Social Security Number.  With this compromised information, an identity thief can open any number of accounts and charge endlessly racking up several thousands of dollars causing the unsuspecting victim severe personal, emotional and financial damage once the theft is finally discovered. 

Usually, the victim doesn’t find out that they are an identity theft victim until they apply for credit. Even though most major credit card companies waive fraudulent charges, or charge a small fee, cleaning up the mess from identity theft can be a major nightmare and take several months to straighten out.

Until now, the only quasi protection against Identity theft was placing a fraud alert on your file and periodically checking your credit report looking for any fraudulent accounts opened in your name without your consent.  Unfortunately, this method is after the fact, and does little for preventing identity theft.

Enter the Security Freeze. Several states and the District of Columbia have a new weapon aimed at preventing identity theft from occurring in the first place. Security Freeze laws have been enacted to allow consumers the ability to protect their credit record.

A security freeze locks the information necessary to process a credit check.   Without a credit check, creditors will not approve new accounts.  The security freeze can however, be lifted either temporarily or permanently by the consumer at any time they wish to apply for credit by way of a personal pin number.

Many of the states that have enacted security freeze laws make this security freeze available to anyone regardless of whether or not they are already a victim of identity theft. Most states that offer this protection make it available for free to identity theft victims and some provide it at no cost to senior citizens.

For consumers who are not victims but want the security freeze, most state security freeze laws allow each of the three major credit reporting bureaus to charge $5 to $10 to begin the protection or to suspend the freeze.

By now you are probably asking yourself why you haven’t heard of this.  Credit bureaus have a large financial interest for making it simple for creditors to obtain credit reports and providing consumers with expensive monthly credit monitoring services which are unnecessary if a security freeze is in place.  Simply put, it is not in their financial interest to promote the security freeze.

The following states offer consumers security freeze laws:

Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Hawaii, Indiana, Illinois, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Vermont, Washington, West Virginia, Wisconsin, Wyoming.

To learn more about your states security freeze laws and how you can place a security freeze on your credit record, log on to  Consumers Union