After the uproar about the Equifax hack, Congress did do something. And credit freezes are now a lot easier to place and lift.
Starting September 21, 2018, placing or lifting a “credit freeze” – aka “security freeze” – will be free for all Americans in all states. In response to the Equifax-hack uproar and the grassroots movement it triggered, after the personal data of nearly half of all adult Americans had been stolen, Congress passed a bill in May that contained a provision about credit freezes.
It requires that all three major consumer credit bureaus – Equifax, Experian, and TransUnion – make credit freezes and unfreezes available for free in all states. Under most existing state laws, credit bureaus were able to charge a fee for placing and lifting a credit freeze. This could add up: for an effective credit freeze, you need to freeze your accounts at all three major credit bureaus, and pay each of them – and then pay each of them again to unfreeze those accounts if you want to apply for a credit card or loan.
The new law also requires credit bureaus to fulfill consumer requests for a credit freeze within one business day if made online or by phone, and within three business days if made by snail-mail.
Why is this important?
Credit bureaus collect personal and financial data on just about all adult Americans, whether they know it or not. These dossiers are extensive. They include the Social Security number, date of birth, address history, credit-card history, loan history, bank relationships, payments history, etc.
These dossiers are used to build a “credit report.” This is an extensive file (not just a credit score) that shows in detail your entire credit history – such as mortgages, other loans, credit cards, late payments, etc. These reports are sold – you’re the product – to third parties, such as lenders, credit-card promoters, and others.
Credit bureaus hate credit freezes because they cut into their revenues. But years ago, state laws forced them to make credit freezes available, though credit bureaus could make the process of freezing and unfreezing the account cumbersome, time-consuming, and costly. Now, under the new federal law, it’s easier and free.
When you put a credit freeze on your account with the three credit bureaus, they can no longer release this report to third parties, and it becomes impossible to open a credit-card account or bank account in your name – impossible for you as well as identity thieves.
After you place credit freezes on your accounts and then want to open a new loan account or open an account with the Social Security administration (yes!), you need to first lift the credit freezes.
All this has now become a lot easier, faster, and as of September 21, free.
Identity theft is hitting Equifax-hack victims
During the Equifax hack that was first disclosed a year ago, the personal data, including birth dates and Social Security numbers, of over 148 million Americans (according to the latest Equifax estimates) were stolen. These were the crown jewels for identity thieves.
Since then, 21% of the victims have seen “unusual” activity on their accounts, according to a survey by the Identity Theft Resource Center. Of these victims:
- 24% had a new credit-card account opened in their name
- 34% experienced changes to an existing credit card
- 23% had other accounts opened in their name, including loans, debit cards, bank accounts, and cable, internet, or utility accounts.
- 10% had some sort of medical identity issue, including receiving a medical bill or collection notice for services they never received, learning that medical records were compromised, or discovering another person’s information on their medical records.
- 4% had either state or federal taxes filed fraudulently in their name to collect a refund.
- Other issues included email flagged as being on the dark web.
A credit freeze at the three major credit bureaus cannot prevent all forms of identity theft and fraud, but it’s the single biggest and most effective defense mechanism consumers in the US can deploy.
Since I first started reporting on the Equifax hack last September, I included the links to the credit-freeze pages at the credit bureaus. The credit bureaus have changed those links several times, perhaps to make it more confusing. Here are the updated and functional new links to the pages of the three major credit bureaus where you can request or lift a credit freeze (aka security freeze):
Wolf Richter initiated a security freeze with the major credit bureaus in 2010 after the University of Texas at Austin, where he’d gotten his MBA years earlier, notified him that all his data, including Social Security number, had been stolen. It was the Wild West of credit freezes. It was cumbersome, took weeks, and had to be done by a combination of fax, mail, and phone that involved a lot of road blocks they put in his way. But it was a great decision.
As a positive side-effect, it stopped most of the “pre-approved” cash-advance and credit-card promos that showed up in the mail – an identity theft risk if they fall into the wrong hands – since credit bureaus could no longer sell my data to promoters.
Making credit freezes & unfreezes available to all Americans for free in a quick and convenient manner is one of the best little things Congress has done for US consumers, and was long overdue.