What is a Fraud Alert?
One of the first things to do if identity theft is suspected is to place a fraud alert on any credit files. Fraud alerts, which major credit bureaus attach to credit scores, work by requiring creditors to verify individuals’ identities verbally before making any changes to those individuals’ credit, like opening up new accounts or requesting new loans. Identity theft is greatly reduced by alerting creditors because thieves are then unable to open up new lines of credit fraudulently – the verbal authorization is required to do so.
If creditors are unable to reach individuals by phone, then all credit changes are put off until they can be reached. Keep in mind, even if a fraud alert has been issued, creditors are not required to contact individuals. Also, note that fraud alerts’ primary focus is to prevent identity theft with new credit accounts – they do not place alerts on existing credit accounts.
Different Types of Fraud Alerts
There are three different types of fraud alerts to choose from depending on the situation. These include 90-day fraud alerts, extended fraud alerts, and active military fraud alerts.
1) 90-day fraud alerts, or initial fraud alerts, signal creditors that either identity theft is suspected or that an event has happened to increase the risk of identity left, like losing a wallet, a social security number or an identification card. This type of fraud alert will remain on credit files for 90 days, and it is free to use this type of fraud alert. If a fraud alert is placed with either TransUnion, Equifax or Experian, that credit agency will alert the other two of the fraud alert, and they will also issue fraud alerts within 48 hours.
2) Extended fraud alerts, or 7-year alerts, inform creditors that an individual is an identity theft victim, meaning that they have had their identity already stolen. In order to issue an extended fraud alert, information must be provided beforehand to local, state and federal law enforcement, including proof of identity theft and extensive self-identification. Once an extended fraud alert has been issued, all creditors are required to obtain verbal authorization before modifying an individual’s credit. Individuals who place this type of alert on their credit files will receive two free credit scores from Equifax, TransUnion, and Experian, and their names will also be removed from prescreened credit and insurance offers for five years.
3) Active military alerts notify all creditors that an individual is on active military duty, and they would like extra credit protection while away. Similar to other alerts, creditors must obtain verbal authorization before accepting any requests to modify credit. When an active military alert is issued with either TransUnion, Experian or Equifax, the other two agencies will also place fraud alerts. Individuals are also eligible to have their names removed from prescreened credit and insurance offers for two years. This type of alert lasts for one year and is free to issue.
Setting up, and Activating, Fraud Alerts
In order to set up any of the above fraud alerts, at least one of the three credit bureaus must be contacted directly. Some types of fraud alerts, like the extended fraud alert, will require additional identification and proof of identity theft, while the others only require a phone call to initiate one. Fraud alerts can also be requested online by visiting Equifax or Experian’s websites. To ensure maximum protection, all three credit bureaus should be contacted separately, even though they will alert one another of the fraud alert. Individuals also have the option of placing and managing fraud alerts through identity theft protection companies like LifeLock.
Within 24 hours of issuing a fraud alert, it should be activated at the credit bureau where it was initially issued, and that credit bureau will send out a confirmation letter one to two weeks later. If a confirmation letter is not received, then individuals should contact the initial bureaus to either issue an alert again or to confirm that it has been issued. Fraud alerts will remain on individuals’ credit files for 90 days, and after that, they will need to reactivate the alerts manually.
Fraud Alerts for Minors
Although credit bureaus do not maintain credit files on minors, Experian, Equifax or TransUnion may be contacted directly if child identity theft is suspected of having occurred. The credit bureaus will allow individuals to report any fraudulent use of their children’s information to law enforcement. In order to do this, each credit bureau must obtain the child’s full name, address, date of birth, birth certificate copy, social security card copy, government-issued proof of identity copy, and a current utility bill displaying their address.
Fraud Alert Removal
In order to remove a fraud alert prematurely from a credit file, it must be requested in writing. Each request must contain the individual’s full name, social security number, any current and previous addresses, date of birth and phone number, and it must be sent to each of the credit bureaus’ fraud departments.
Fraud Alert Drawbacks
It is important to keep in mind that fraud alerts do not offer complete identity theft protection, and they can be ignored by creditors. In addition to issuing a fraud alert, individuals should monitor their credit scores closely, and also consider issuing a credit freeze, which can provide greater protection than fraud alerts.
Issuing a fraud alert will also cause problems if individuals want instant financing at stores – they will have to fulfill the authorization steps before doing so. Individuals also have to be available to answer their phones in order to approve new credit accounts, financing or loans.
Identity Theft Protection Companies that Offer Fraud Alerts:
1) LifeLock, one of the leading identity theft protection companies, offers fraud alerts in their standard package for $9.00/month. They will automatically manage and renew any individual’s fraud alerts, so they do not have to do any of the manual work.
2) TrustedID, one of the newer theft protection services, will also monitor and resubmit individuals’ fraud alerts every 90 days. This service is included with their main product, IDFreeze, for $14.99/month.
3) IdentityTruth, a newly established service, also offers free fraud alerts and monitoring with their premium service for $9.99/month.