After Target and Neiman Marcus told tens of millions of shoppers that their credit and debit card information had been stolen, the retailers offered them a year of free credit monitoring, Consumer Reports notes. But that service does little more than give consumers a false sense of security because it does nothing to protect them from fraudulent charges on their credit and debit card accounts.
More than 85 percent of identity theft cases involve existing account fraud, according to the Department of Justice. Credit monitoring, security freezes and fraud alerts are designed to thwart much less common -- but much more serious — new-account fraud.
In that type of identity theft, a crook uses your Social Security number and other personal information to open credit accounts in your name. If it happens to you, it’s worth considering credit monitoring, along with a security freeze or fraud alert. Consumer Reports explains what each does:
n A security freeze prevents most credit card issuers and lenders from reviewing your credit history. Without that, lenders probably won’t issue new credit, so criminals can’t set up fraudulent accounts in your name. But it also shuts out most of those people who have a legitimate need to access your file, such as lenders you’ve asked for credit, telecom companies and insurers. To give them access, you have to lift the freeze.
A freeze might be free, depending on your state and circumstances (for example, if you’re an identity theft victim). Otherwise, expect to pay $2 to $12 to initiate or lift a freeze at each credit bureau: Equifax (equifax.com), Experian (experian.com) and TransUnion (transunion.com). To review your state’s law, go to defendyourdollars.org/document/guide-to-security-freeze-protection.
When to use it. Freeze your credit files if you’re a victim of ID theft or if you think your Social Security number has been stolen. Consumer Reports also recommends that you place a freeze if you think you might become the victim of new account ID theft (say, because your wallet was lost or stolen) and you don’t mind the hassle and cost.