Data Breach and Identity Theft are fozia shan siddiqi like viruses across our great land financially affecting individuals and organizations. So called Identity Theft Prevention companies have sprung up out of nowhere. Since this is an unregulated industry, companies can say what they choose and it is up to you to decide fact or fiction. Many of them have at the heart of their sales pitch only one concept, ‘place a Fraud Alert’ on your credit file.
Since a fraud is a fraud alert, they must set themselves apart from each other in some marketing pitch. One such firm tries to convince you to spend your money with them by saying if you become a victim while you are with our program don’t worry we have a $1 million guarantee backing you up. Another one says that with our program when a creditor sees the fraud alert on your credit file instead of calling your one phone number of your file when you might not be there, the creditor calls us then we find you via you home, work or cell phone.
Now, let’s take a strong hard look at identity theft, fraud alerts and the newest early ID theft discovery technology available. Only 51% of all identity theft involves a credit card, bank account or loan.
What is the other 49%? Utility fraud, medical fraud, contract fraud (such as apartment leases, cell phone contracts), government benefits fraud, immigration fraud, employment fraud, criminal fraud and we could go on.
None of these types of fraud depend on the granting of credit or a credit inquiry in order to execute the fraudulent transaction. Therefore a fraud alert serves no purpose in preventing these types of identity theft. Source: Federal Trade Commission, Identity Theft Data Clearinghouse Report, February 7, 2007.
A fraud alert is a simply a flag that you can put on your credit file to indicate that you may be at risk of becoming a victim of identity theft. If a financial institution, car dealer or retailer is looking to issue credit to you they will see this notation on your credit file, along with a phone number that you have supplied. The credit grantor is supposed to call this phone number to validate that it is you who is in front of them applying for credit in your name. However, credit grantors are not required by law to observe a fraud alert – and it is against their better interest to do so. They are, after all, in the business of granting credit to make money. Or the criminal may simply convince them that they are you.
A fraud alert stays on your file for 90 days, then must be renewed. For many people who have an event, such as a lost wallet or purse, the 90 period is sufficient. If you are a confirmed victim of identity theft you may request that a longer term alert be placed on your file. The system of fraud alerts depends on the fact that the credit granting financial institutions, retailers and others understand the importance of the alert – and observe it. If everyone has an alert on their file it will become more and more common for credit grantors to ignore the alert.
Credit reports cannot tell you if someone has rented or purchased property using your name, applied for a government-issued license using your name, has acquired a criminal record using your name, and many other potentially adverse kinds of information.
ID Alert is the newest technology in identity theft early discovery. This complex process uses artificial intelligence software that scans thousands of data bases for the use of a person’s name and social security number in combination with other personal data such as address or driver’s license number. The result is an ID Score that will provide valuable information to our ID Recovery Specialist who can alert the individual if the instance of these personal identifiers is used inconsistently or changes suddenly.
What we know about criminals who use identity theft as a way of life is that they will go through certain steps to create a false identity using the consumer’s information, or parts of the information. They will make an attempt to change their mailing address on certain financial accounts to delay notification that something is amiss. The very tactics that the thieves use to set up their victim can now alert us to the potential fraud. In some cases action can be taken to avert the identity theft before it happens.
As identity fraud usually precedes other types of fraud (such as credit card fraud), this type of proactive alert system is critical to mitigating the extensive, and expensive, damage perpetrated after an identity is stolen and manipulated. Given the considerable lag between when an identity is compromised and when that event is discovered, this service is a critical component in the defense against identity fraud.