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David Baxter PhD

Late Founder
Now, a way to stop ID theft
Tuesday, November 6
by Bob Sullivan

For the first time, everyone in America can now do something to prevent identity theft. Read on and I?ll show you how.

On Nov. 1, the nation's three credit bureaus gave all U.S. consumers the ability to shut down access to their credit reports, making it almost impossible for a stranger to get the data needed to commit financial identity theft. The process is called a security freeze.

The change was not really voluntary. The credit bureaus battled with state legislators for nearly four years to avoid making the freezes available to consumers. But after 39 states passed security freeze laws of one kind or another, the industry decided earlier this year to make the option available to everyone. But there's a catch.

Using security freezes can be costly, and they can be a hassle. But that's just the bad news. I'll save the good news for later.

Here's the main ?gotcha.? For most of you, it will cost $10 to establish a security freeze. And once a freeze is in place, you won't be able to apply for new loans without "thawing" the report so a lender can assess your credit information. That costs money too -- $10 each time you need a car loan or a home loan. That doesn?t sound too bad until you realize that there are three credit bureaus, and many households have two adults. That means it could cost a couple $60 each time they set up or lift a freeze.

Then there's the hassle. Setting up a freeze requires irritating paperwork like sending certified letters. And it means keeping track of freezing and thawing. It does no good to freeze one or two reports. If you want real identity theft protection, you'll have to freeze all three. If you want to get a new credit card, you?ll have to thaw at least one report. To buy a new house, you?ll probably have to thaw all three, then make sure they are frozen again.

Here's the good news. All those state laws about security freezes are still in effect, and some forward-thinking legislatures imposed price caps on the process. So a freeze might be cheaper, depending on where you live. In Maryland, for example, consumers pay a maximum of $5 for freezes. In New York, the initial freeze request is free.

Advice for ID theft victims
There's more good news: ID theft victims everywhere can now get and maintain security freezes for free ? free to set, free to thaw and free to permanently remove.

The advice for ID theft victims is easy: Follow the links below and freeze your credit reports immediately. A security freeze is the best way to restore your peace of mind. The freeze won't stand in your way when you need a new credit card or loan; there will just be a small speed bump. You will have to give the bureaus a password -- a PIN code similar to a debit card password ? to let you unlock your report so a creditor can peek at it. You might have to think a bit more before you obtain new credit, but that's not such a bad thing.

To get a free freeze, you will need a police report or similar government document to prove you are a victim.

One note about the process of recovering from a bout with an identity imposter: The police or your financial firm might suggest that you set up a "fraud alert" or ?security alert? on your account. The proper term is ?fraud alert,? which is very different from a security freeze.

Fraud alerts are easy to set up (a simple phone call will do) and free. Unfortunately, they often don't work. The alert is simply a note in your credit file that advises businesses that you might be a victim of ID theft. Lenders can still pull your credit report and dole out loans or credit cards in your name. Fraud alerts also expire in 90 days, unless you follow up with paperwork, so you might as well get a freeze.

Security freezes provide much stronger protection. No one can access your credit report without your permission, period.

The credit bureaus encourage consumers to get only a fraud alert because their agenda is to keep you an active participant in the credit market (i.e., they want to keep pushing credit cards at you). You are better off with a security freeze, and don't let anyone tell you otherwise.

Advice for everyone else
The decision to freeze or not is a bit more nuanced for those who haven?t been victimized by identity theft. It's hard to tell someone to pay $60 and fill out of bunch of paperwork as a purely preventative measure. In states where security freezes have been available for years, very few consumers have signed up.

Consumers Union is very high on freezes. Gail Hillebrand, the group's credit bureau expert, compares freeze fees to paying for insurance.

"If you are the person in the household who will have to unravel the identity theft after it happens, then you probably think $10 a pop is a good deal," she said. Consumers who are already paying for $10-per-month credit monitoring services should cancel and pay for security freezes instead, she said.

For consumers who pay their bills on time every month and stay on top of their paperwork, a freeze is a good choice. But many consumers will have a difficult time keeping track which reports have been frozen and which have been thawed, and how much they?re paying in fees. If that's you, I can't recommend setting up and paying for freezes. Instead, take the time to write one letter to your state legislator asking why consumers in New York get freezes for free and you don't.

There is a class of consumers who are great candidates for a freeze: Those whom Hillebrand describes as "mature in the credit market." Many older consumers have as many credit cards as they'll ever need and have no plans to buy a car or a house in the near future ? or perhaps ever again. For them, a security freeze is great insurance against becoming a victim of elder fraud, and obviously won?t be a hassle to maintain, as thaws are unlikely. If you or your parents fit that bill, the $30 or $60 that it costs to sign up for freezes would be money well spent.

In a few states, seniors get to freeze their reports for free. Check the links below for specifics.

How to do it
Setting up a freeze isn't rocket science, but it will take you about as much time as it takes to make a loaf of bread. So here's the recipe.

Instructions for residents of each state are slightly different. Fortunately, the three credit bureaus have fairly simple grids on their Web sites explaining what the costs are and the process is. Remember, you'll have to get a freeze at all three bureaus.

General info:
The Equifax Voluntary Security Freeze Program
State-by-state information
State Security Freeze Requirements and Fees
To get a freeze, Equifax wants you to send a certified letter with seven specific elements to Equifax Security Freeze/P.O. Box 105788/ Atlanta, Georgia 30348. The elements are spelled out clearly on the general information page, but they are, basically -- name, address, date of birth, SSN, utility bill for proof of address, payment and a police report if you are a victim.

General info and state-by state information
Experian | Consumer Credit Fraud | Security freeze
To get state-specific information, scroll to the bottom of the page and pick your state from the drop-down menu.
Before giving you the information you need, Experian will warn you that a security freeze may make your credit life very difficult. Take that with a grain of salt, and then pick your state. You'll send the request by certified or overnight mail to Experian/ P.O. Box 9554/ Allen, TX 75013. Again, the recipe is listed on the firm's Web site, but it will call for a name, SSN, date of birth, current and past addresses dating back two years, a copy of your driver's license, and one utility bill.

General info and state-by-state information
TransUnion Personal: Security Freeze Freezing Your Credit
Send your freeze requests to Trans Union/Fraud Victim Assistance Department/ P.O. Box 6790/ Fullerton, CA 92834. A few state residents can call instead of write -- check the link above. Trans Union wants the following on the letter: name, address, Social Security Number, a copy of your driver's license and payment.

I know you are busy, and I know this is a hassle. But if you throw a loaf of bread in the oven, you'll be able to fill out the necessary paperwork by the time it?s done. And you'll have twice the sense of accomplishment.

There are a couple of asterisks I need to tell you about. While the freeze provides solid identity theft protection, it's hardly foolproof. It can't stop non-credit-related forms of ID theft, such as the creation of a duplicate driver's license or criminal identity theft (when a suspect gives your name to police when booked for a crime). It also won't stop an undocumented worker from using your Social Security Number to obtain employment.

And sadly, it won't stop every company from accessing your credit report. New creditors are largely frozen out, but existing lenders -- your current credit card company, for example -- can still view your report and offer you new credit cards. It also won't stop those pre-approved credit card offers. The bureaus can still give your name and address to credit card companies. Of course, you can stop those mailings by calling 1-888-5OPTOUT or visiting

Finally, a freeze may lead to minor inaccuracies in your credit report. Companies that provide data to the bureaus might not be able to update your address information or other vital statistics if you move or change your name. So if you get a freeze, you should check your credit report at least once a year at and make sure the information is accurate.

Despite these imperfections, a credit freeze is the best thing you can do ? and in fact, the only thing you can -- to stop identity theft before it starts. Think of it like The Club you place on car steering wheels. Yes, the car can still be stolen, but many car thieves see a Club and move on to another target. ID thieves who face security-freeze speed bumps when trying to get credit cards or loans in your name are just as likely to move on to the next Social Security number.
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