What to Do After the Equifax Breach


As was widely reported in mid-September, a data breach at Equifax this summer resulted in the theft of four vital pieces of credit information on more than half of all U.S. adults. Those four vital pieces are name, address, Social Security number, and date of birth. In some cases, the thieves also made off with driver’s license and credit card numbers. Identity thieves can use this information to open credit accounts in the names of victims. We have heard horror stories of hours spent on the phone and providing documentation in order to clear one’s name. Let me editorialize for a moment and condemn Equifax for lax data security. I have been an Equifax customer for many years and am deeply disappointed in the company.

Equifax is one of the three main credit bureaus; Experian and Transunion being the other two. There is also a fourth bureau called Innovis, but it is considerably smaller and not well-known. These companies keep track of consumer credit accounts, balances, and delinquencies, and calculate credit scores. Lenders use reports from the credit bureaus to help decide whether or not to grant credit to a potential borrower. Our comments will focus on the three main credit bureaus.

Like most of America, our clients want to know what to do. The first step is to determine whether your personal data may have been stolen. Visit www.equifaxsecurity2017.com. Enter your name and last six digits of your Social Security number, and this site will tell you if your data was compromised.

Equifax is offering its TrustedID service free for a year to all consumers even if their data was not stolen. At first there was some controversy over wording in the agreement that would have prevented users from suing or participating in a class-action lawsuit against Equifax. That wording has been removed.

TrustedID is one of many services available to monitor consumer credit. Let me run through some of the basic features of these services. Keep in mind that no company will 100% guarantee that they can stop all identity theft.

The strongest form of protection is a credit lock or freeze. The credit bureaus will refuse to provide your credit report or score when a potential lender asks for it. In the past, the bureaus have charged a fee for this service, but it appears to be free for now.

Pros:
• Is believed to prevent the opening of credit accounts in your name.
• Significantly reduces the number of credit solicitations you receive in the mail because these solicitations are typically pre-screened based on credit.

Cons:
• Hassle. You will need to contact all three credit bureaus to unlock and re-lock your credit each time you seek a loan or lease.
• A poor choice for someone shopping around for a mortgage or car loan.
• The bureaus will likely resume charging for these, and you must subscribe to each of the three credit bureaus separately.

The greatest shortcoming of the free TrustedID program offered by Equifax is that it only locks your credit report from Equifax. You will still need to contact the other two credit bureaus to lock and unlock your credit.

The middle ground is having a fraud alert placed on your credit file. Like the name implies, potential grantors of credit are put on alert that you may have been a victim of identity theft.

Pros:

• Requires grantors of credit to give your application extra scrutiny.
• Does not inhibit the ability to apply for credit.                                                                                                                                                      • May be done for free by notifying each of the credit bureaus every 90 days.

Cons:
• May not be as thorough as a credit freeze.
• Doesn’t stop junk mail like the credit freeze.
• Must be manually renewed with each bureau every 90 days (unless renewed automatically through a subscription service or renewed in perpetuity with police evidence of ID theft).

The least protection is a credit-monitoring service, which is also included with the first two services when you subscribe to them. Credit monitoring generates alerts to suspicious activity such as a new account opened in your name, an address change, a large increase or decrease in an account balance, or if an old account suddenly becomes active.

The three credit bureaus and LifeLock, a provider of credit-monitoring services, have a range of products available for purchase that bundle a range of protective services. All four companies are generally trustworthy, although Equifax’s reputation has certainly suffered a severe blow from this breach. LifeLock also settled a lawsuit several years ago for misrepresenting the comprehensiveness of its service.

For 14 years, I have subscribed to a service called Equifax Credit Watch Gold (currently $14.95 a month). I pay $130 a year, so ask for this one. It provides credit monitoring, but also alerts me if my personal information is found to be trading on illicit websites known to traffic in stolen identities. The most important feature is that it creates and automatically renews fraud alerts every 90 days with each of the credit bureaus. The bureaus have many other products, but this one appears to be the cheapest one that offers some level of protection across all three bureaus. It is not easily accessible on the Equifax website and might need to be ordered by phone.

I know this works because I applied for a credit card one night and was called the next day by the card issuer verifying I was the one who applied. The caller took me through a series of security questions to verify me. While it might not be foolproof, I feel that it would be enough to ward off crooks who would move on to a far easier target.

It is advisable to take some sort of defensive action as these data breaches are now a regular occurrence. Equifax’s TrustedID is not enough because it will not stop credit reports from being issued by the other bureaus. You should strongly consider adding protection across all three bureaus, whether through a combination of the free TrustedID and freeze protection at the other two, or a middle ground fraud alert through Equifax Credit Watch Gold. Do your own research and find what works for you. Be aware that telephone hold times are very long due to the widespread concern resulting from the Equifax breach. Here are the product websites and general customer service numbers for all three credit bureaus listed below.

Equifax – www.equifax.com/personal/identity-theft-protection                                                                                                                             1-800-4-Equifax

Experian – www.experian.com/consumer-products/identity-theft-and-credit-protection.html                                                                              1-866-541-6913

Transunion – www.transunion.com/product/transunion-credit-protection
1-800-888-4213

Scott D. Horsburgh, CFA