Freeze!

It’s a good thing I practice what I preach. In late May, my husband, Tom, received a call from Nordstrom saying someone was trying to use his credit card number at their Chicago store. Thankfully, they require a password if you do not have your card in your possession and declined the charges because the imposter did not. The scary thing was that he did have Tom’s social security number. Chase Bank soon called to say a suspicious-looking charge was being attempted on our Visa. I called American Express to make sure there was no suspicious activity on that card. There wasn’t.

I immediately logged onto each of the three credit bureau’s web sites and put a credit freeze on Tom’s credit report as well as my own. I also went to Annualcreditreport.com and ran a credit report from one of the three credit agencies. I noticed Macy’s had just made an inquiry into his report and when Tom called them, a new card had been opened in his name to the tune of $2,000 in charges. Next, Sears was calling to verify whether Tom had recently reactivated an account we closed several years ago.

Over the next few days we received mailings from Target and Victoria’s Secret that accounts had been applied for in Tom’s name, but were rejected because his credit had been frozen. Victory!

While it was definitely an inconvenience to deal with this, it could have been much worse. We each check our credit reports every four months using Annualcreditreport’s free site. Because we use our Visa and American Express to pay all of our monthly expenses, I download our transactions into Quicken daily. While both helped contain a situation that could have quickly gotten out of control, the fraud departments at Nordstrom, Chase and Sears are to be commended for not allowing any unauthorized activity. We were not liable for any charges at Macy’s.

In the past, I did not think it was necessary to have a freeze on our credit. Although the cost is minimal ($5 with each of the three credit bureaus to lock and subsequently unlock your account), it does add an extra step when you apply for credit, change jobs, insurance or anything else that requires a credit check. You must contact each credit bureau and thaw your account for a specific time period or for a specific lender. If you find out which bureau the lender uses, you can request the thaw at just that agency.

I now realize this is a small price to pay for peace of mind. While I’m not advocating a credit freeze if you do monitor your accounts and credit report regularly, you should definitely consider it if it you do not. Another option is the free version of Identity Theft services that are now becoming available. A recent blog in the New York Times described a few of them.

The worst part of this whole fiasco is that we do not know how Tom’s social security number and two of our account numbers were acquired by someone else. We shred all sensitive documents and mail the few bills we pay by Pony Express directly through the post office or our office drop box. With all of the recent data breaches in the headlines, I’m not really surprised. This has only reinforced what I have learned from our Identity Theft Lunch and Learns, which Chip blogged about last year. It’s not a matter of if, but when, your identity will be stolen. Do your best to be prepared.

Christine L. Carleton, CFP®
clcarleton@taaginc.com
http://www.taaginc.com/