How to Use Fraud Alerts and Credit Freezes

Protecting Your Financial Accounts

National news in recent weeks has swirled around a lawsuit alleging a giant leak onto the dark web – including Social Security numbers and other sensitive details – potentially impacting more than two billion people. 

Cybercrime is on the Rise

And more consumers than ever are having financial information swiped by cybercriminals looking for a quick payday. More than 350 million people were impacted by data breaches in 2023, according to the Identity Theft Resource Center. There’s likely never been a better time to shore up your financial accounts by freezing your credit and/or requesting a fraud alert if you fear you have already been the victim of fraud. 

Here’s a quick guide on fraud alerts, credit freezes, and protecting your (and your family’s) sensitive information from hackers. 

What is a Fraud Alert?

A fraud alert is a notice you place on your credit report with one of the three main credit reporting agencies – Equifax, Experian, or TransUnion – that signals to creditors they need to take extra steps to verify your identity before extending a new line of credit. A fraud alert essentially makes it harder for someone to open a new account in your name.

Different Kinds of Alerts
Three distinct types of fraud alerts can be requested, depending on your situation, according to the Federal Trade Commission.

1. One-Year Alert: Anyone who suspects fraud can place a free one-year alert on their credit report. It’s renewable after the first year. 
2. Extended Fraud Alert: This alert, also free of charge, is only available to those who have been a victim of identity theft and completed an FTC identity theft report at identitytheft.gov or to those who filed an official police report. This free alert lasts for seven years.
3. Active Duty Alert: Those on active military duty can place this free, one-year alert on their credit reports. After 12 months, the alert can be renewed for the length of someone’s deployment.

How to Set Up Fraud Alerts

Setting up a fraud alert is pretty straightforward. Simply contact one of the three main credit reporting agencies and tell them what you want to do. The agency you contact is required to tell the other two to place a fraud alert on your credit reports. You can find contact information for all three at annualcreditreport.com.

What are Credit Freezes?

A credit freeze, notes the FTC, restricts access to your credit report, meaning you or anyone else can’t open a new line of credit while the freeze is in place. If you want to apply for a new card or a loan, you can temporarily lift the freeze at no cost. This free tool lasts as long as you want it to and must be removed by you. 

Who Should Freeze Their Credit?

The better question might be who shouldn’t freeze their credit. Megan Kopka, a financial advisor with Apprise Wealth Management, says freezing your credit is an absolute must: “I recommend credit freezes for everyone at all times to be lifted only when opening a line of credit.”

Other finance experts agree. 

Dana J. Menard, a certified financial planner and founder of Twin Cities Wealth Strategies, Inc., says he has been the victim of multiple security breaches. That’s why he recommends his clients cover their bases by setting up fraud alerts, using a credit monitoring service, requesting an IRS PIN and freezing their credit with all three main credit bureaus.

 “This is the only way,” Menard says, “to mostly ensure you will not have any fraudulent accounts opened or taxes getting filed in your name.”

Don’t Forget Your Kids

Parents are allowed by law to freeze credit for their children under the age of 16. Why? Adults aren’t the only ones with stolen identities. Millions of children have been victims of identity theft, often when a minor’s stolen Social Security number and birthdate is swiped. Unfortunately, this type of fraud can go undetected for years. 

With Reporting By Casandra Andrews