Modern Estate Planning Blog

What do you do when when someone whose name is similar to yours opens an account in your name? This was the situation presented to me by a client recently. He was wondering what the implications of this were and how to prevent it in the future. He didn’t want to take any action against his son, but he did want to protect himself from inadvertently being taken advantage of.

Let’s get one thing straight, the son posing as dad is a form of identity theft. The Federal Trade Commission (FTC) estimates that as many as 10 million Americans have their identity stolen every year. So, what can you do to protect yourself from identity theft? The options depend a bit on the circumstances, but you should start by placing a fraud alert on your credit report or doing a credit freeze.

Fraud alerts come in 2 forms: an initial alert, good for 90 days, and an extended alert, good for seven years. You can request an initial fraud alert if you suspect you have been, or are about to be, a victim of identity theft, for example, your wallet has been stolen or you have been taken in by a “phishing” scam. An initial alert requires potential creditors to take reasonable steps to verify your identity before issuing credit in your name. The drawback is that these steps may not be enough to always alert the potential creditor that the applicant is not you.

You can request an extended alert if you’ve been a victim of identity theft and you provide the consumer reporting company with an Identity Theft Report. You can obtain an ID Theft Complaint form from the FTC website at https://www.ftccomplaintassistant.gov/. The extended fraud alert requires potential creditors to actually contact you, or meet with you in person, before they issue you credit.

Placing an initial fraud alert on your credit report entitles to you to one free credit report from each of the three nationwide consumer reporting companies, and, if you ask, only the last four digits of your Social Security number will appear on your credit reports. Placing an extended alert on your credit report, entitles you to two free credit reports within twelve months from each of the three nationwide consumer reporting companies. In addition, the consumer reporting companies will remove your name from marketing lists for prescreened credit offers for five years unless you ask them to put your name back on the list before then.

Be aware that because potential creditors must either contact you or take reasonable steps to verify your identity, this may cause some delays if you’re trying to obtain credit. Also, only people who’ve had their ID stolen – or who suspect it may have been stolen, may place fraud alerts. In California, anyone can place a credit freeze.

What does a fraud alert not do?

While a fraud alert can help keep an identity thief from opening new accounts in your name, it’s not a solution to all types of identity theft. It will not protect you from an identity thief using your existing credit cards or other accounts. It also will not protect you from an identity thief opening new accounts in your name that do not require a credit check – such as a telephone, wireless, or bank account. And, if there’s identity theft already going on when you place the fraud alert, the fraud alert alone won’t stop it. A fraud alert, however, can be extremely useful in stopping identity theft that involves opening a new line of credit.

An alternative to the fraud alert is a credit freeze which allows you to restrict access to your credit. If you place a credit freeze, potential creditors and other third parties will not be able to get access to your credit report unless you temporarily lift the freeze. This means that it’s unlikely that an identity thief would be able to open a new account in your name. Placing a credit freeze does not affect your credit score – nor does it keep you from getting your free annual credit report, or from buying your credit report or score.

Credit freeze laws vary from state to state. In California an identity theft victim can freeze his or her credit file for free. If you are not a victim of ID theft, and are under the age of 65 it will cost you $10 to place a freeze. Those over 65 pay $5. If you want to freeze your credit, it would mean placing the freeze with each of three credit reporting agencies, and paying the fee to each one.

If you want to apply for a loan or credit card, or otherwise need to give someone access to your credit report and that person is not covered by an exception to the credit freeze law, you would need to temporarily lift the credit freeze. In California, the cost for temporarily lifting and removing a credit freeze for a specific time or specific creditor is the same as placing a freeze – free for ID theft victims, $10 for non-victims under 65 and $5 for non-victims over 65. When a freeze is placed you will receive a PIN from each credit bureau and instructions on how to lift the freeze. The credit bureau has 3 days to lift the freeze after a request is placed. You can find out more about California’s credit freeze law by going to the California Office of Information Security and Privacy Protection http://www.oispp.ca.gov/consumer_privacy/.

What does a credit freeze not do?

While a credit freeze can help keep an identity thief from opening most new accounts in your name, it’s not a solution to all types of identity theft. It will not protect you, for example, from an identity thief who uses your existing credit cards or other accounts. There are also new accounts, such as telephone, wireless, and bank accounts, which an ID thief could open without a credit check. In addition, some creditors might open an account without first getting your credit report. And, if there’s identity theft already going on when you place the credit freeze, the freeze itself won’t be able to stop it. While a credit freeze may not protect you in these kinds of cases, it can protect you from the vast majority of identity theft that involves opening a new line of credit.

Getting Your Free Credit Report

The Fair Credit Reporting Act guarantees you access to a free credit report from each of the three nationwide reporting agencies — Experian, Equifax, and TransUnion — every twelve months.AnnualCreditReport.com is the ONLY authorized source to get your free annual credit report under federal law. Many people have been fooled by TV ads, email offers, or online search results and paid hidden fees or agreed to unwanted services when they thought they were ordering their free annual credit report.

Do not contact the three nationwide consumer reporting companies individually; they provide free annual credit reports only through www.annualcreditreport.com, 877-322-8228, and Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

Buyer Beware

There are a variety of commercial services that, for a fee, will monitor your credit reports for activity and alert you to changes to your accounts. Prices and services vary widely. Many of the services only monitor one of the three major consumer reporting companies. If you’re considering signing up for a service, make sure you understand what you’re getting before you buy. Also check out the company with your local Better Business Bureau, consumer protection agency and state Attorney General to see if they have any complaints on file.

Awareness is an effective weapon against many forms of identity theft. Be aware of how information is stolen and what you can do to protect yours, monitor your personal information to uncover any problems quickly, and know what to do when you suspect your identity has been stolen.

Armed with the knowledge of how to protect yourself and take action, you can make identity thieves’ jobs much more difficult.