Oct 01, 2017
By Cathy Johnson, CPA, CGMA Chief Administrative Officer/CFO at Terry Lockridge & Dunn and World Trend Financial
Unfortunately, cybercrime and identity fraud have become a growing problem as the digital world expands. While the recent breach at Equifax should not cause panic, here are some common-sense steps that you can take to minimize the effects on your personal situation. Retirees have a few more precautions to take as well.
Check your credit reports from Equifax, Experian, and TransUnion - for free - by visiting annualcreditreport.com. Keep in mind that these reports are a snapshot in time. Stagger your request throughout the year, such as every 4 months to a different credit rating agency. Doing this allows you to inventory all accounts that are on your credit report, even those that are not actively used. Accounts or activity that you do not recognize could indicate identity theft. Visit IdentityTheft.gov to find out what to do.
Monitor your existing credit card, bank accounts and other bills closely for charges you do not recognize. If you spot anything strange, contact the respective company immediately to flag the irregularity. Monitoring credit will not allow an individual to stop unlawful purchases. However, the sooner they are identified, the easier the process of correcting the unauthorized purchases.
Commercial Credit Monitoring Services, Fraud Alert or Credit Freeze each do something different. A commercial credit monitoring service will keep you informed of any changes to your credit report. There are many companies that offer these services, for a monthly fee, and the breadth of services offered differs by company. A fraud alert allows creditors to get a copy of your credit report as long as they take steps to verify your identity. To place a fraud alert, contact one of the nationwide credit reporting companies (named above). A fraud alert is free. The company you call must tell the other credit reporting companies; they, in turn, will place an alert on their versions of your report. One word of caution regarding a fraud alert: the fraud alert is often ignored by companies issuing credit, without any kind of penalty. A credit freeze restricts access to your credit report, which, in turn, makes it more difficult for identity thieves to open new accounts in your name. A credit freeze does not keep you from opening a new account, applying for a job, renting an apartment, or buying insurance. But if you are doing any of these, you will need to lift the freeze temporarily, either for a specific time or for a specific party such as a potential landlord or employer. The cost and lead times to lift a freeze vary, so it is best to check with the credit reporting company in advance. Also, a credit freeze does not prevent a thief from making charges to your existing accounts. You still need to monitor all bank, credit card and insurance statements for fraudulent transactions. Information about how to place a credit freeze can be found at the following link: https://www.consumer.ftc.gov/articles/0497-credit-freeze-faqs. Best practice, if you are going to use both credit monitoring and a credit freeze, is to sign up for the credit monitoring first. Initiating the credit freeze first will likely mean the credit rating agency will not permit the credit monitoring service to deploy.
File your taxes early - as soon as you have the tax information you need, before a scammer can. Tax identity theft happens when someone uses your Social Security number to get a tax refund or a job. Respond right away to letters from the IRS.
A few more precautions for retirees:
- Do not give your Social Security number to a medical provider. If asked, always inquire if you can provide another form of identification.
- Guard your Medicare card number. Today your Medicare card number includes your Social Security number. Medicare will start replacing the Social Security number as the identifying number on the new Medicare cards, but not until sometime in 2018. Retirees should carefully monitor their Explanation of Benefits when they get them for indications of identity theft. Too many people merely look at the bottom right hand corner of the Explanation of Benefits and, if they are not required to pay anything, fail to check the rest of the document.
- Monitor your Social Security benefits. Pay close attention to your monthly benefit payments. Identity thieves, with enough information about you, can contact the Social Security Administration and change the address to which checks or communications are sent to, or even change the bank account your benefit payments are deposited into.
- If you have not done so already, create your online account with the Social Security at www.socialsecurity.gov/myaccount. This can prevent identity thieves who have your pertinent information from doing so under your name, and making future changes as noted above without your knowledge.