Data breaches and identity theft are becoming more common and widespread.
This month 111 suspects were indicted in New York’s Operation Swiper to take down a $13 million identity theft ring — possibly the biggest in U.S. history — that used a network of skimmers posing as restaurant workers, bank tellers and other store employees to steal customers’ IDs. The thieves had ties to global crime rings and created forged credit cards with stolen account numbers, using them for vacations and shopping sprees to buy high-end luxury items to be resold on the internet. Meanwhile, the victims are still trying to repair their ruined credit ratings.
There is no way to predict where and when this could happen next, but you can take steps to protect yourself to avoid many of the consequences of identity theft.Here are some of the protections available:
A credit freeze is the best way to protect your credit score and to prevent someone else from opening an account in your name. Only you can place a credit freeze or remove it. Before an event occurs, you can put a freeze on your account at the three major credit bureaus — TransUnion, Equifax(EFX_) and Experian.
The credit freeze is free for identity theft victims and, in some states, senior citizens. The cost for non-victims varies by state, ranging from $3 to $20. The same fee applies for removal.
The only downside is that a freeze may interfere with applying for anything that requires a credit report, such as an application for a credit card, mortgage, insurance, apartment rental or job. If your account is frozen, only companies you already do business with can look at your report; you will have to temporarily remove the freeze to apply for new credit.
A credit freeze is a good protection for older adults against scams and friends or relatives who could open an account in their name.
Credit cards offer the strongest protections against fraud. As soon as you discover fraud, contact your card issuer — then you’ll have no further responsibility for unauthorised charges. Your maximum liability under the Fair Credit Billing Act federal law is $50 per card. If the loss involves your credit card number, but not the card itself, you have no liability for unauthorised use. Contact your bank or credit card issuer as soon as you learn about the fraudulent charges made to your account.
Under federal law, if you report an ATM or debit card missing before it’s used without your permission, the card issuer cannot hold you responsible for any unauthorised transfers. If unauthorised use occurs before you report it, your liability under federal law depends on how quickly you report the loss. Some banks, such as Bank of America(BAC_) and Capital One(COF_), reimburse you for any unauthorised debit card transactions up to the amount of the loss when reported within 60 days from statement date.
Prepaid cards are not regulated and consumer protections offered by prepaid debit cards are voluntary. They can be revoked or revised by the issuer at any time and for any reason.
Credit card fraud/loss protection insurance
You do not need fraud protection insurance for your credit card. It can cost hundreds of dollars, while federal law already gives you free protection. The law limits your fraud liability on credit cards to $50 per card before you report the credit card missing; many cards have zero-liability policies and you don’t owe anything if your card is stolen.
Credit monitoring services
Credit monitoring services track your credit report at one or more credit bureaus and will notify you if there is an inquiry or activity made in your name. Some monitor Web sites, databases and public records, which can be helpful for someone who has already been an identity theft victim.
Before signing up for a credit monitoring service, make sure it looks at all three credit reporting agencies. Check with the Better Business Bureau and your state attorney general to see if complaints have been filed against the credit monitoring service.
Credit monitoring services charge $10 to $15 per month — and credit agencies also provide their own daily credit monitoring services for the three bureaus for $14.95 per month (or $16.95 through Equifax) — but you can do a great deal of the work yourself for free, starting by getting free annual credit reports from the three major bureaus at AnnualCreditReport.com.
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