In the last week and a half, we have had news of another North Korean missile launch, protests in St. Louis, President Trump tweeting about anything and a terrorist attack in Britain. The news item that probably affects more Americans directly than any of those is the news of the security breach at Equifax.
I have been contacted by several clients asking Are they effected? What is the threat? and What to do? This hopefully answers some of your questions and gives you a path for the way forward.
Where we are.
Last week Equifax announced that personal data of approximately 143 million Americans as of this writing had been stolen. Equifax has begun some paltry attempts to begin recovering. They early on put up a website to discover if your information had been compromised. The website was not well supported and crashed multiple times. They also offered an 800 number to call in to. Numerous people report calling in and receiving incorrect advice from untrained call center workers, if they were able to get an answer at all. Early on Equifax offered a free year of credit monitoring but part of signing up for it was waiving your right to sue for damages. The stipulation has since been removed but the credit monitoring service is largely a symbolic gesture. Government investigations have been promised, some of Equifax’s corporate leadership has “retired”. Recent reports suggest that some Equifax executives had sold stock in the interim between discovering the leak and announcing that leak to the public. Equifax reports that none of these stock sales were in response to the leak.
The impact.
The information hacked from Equifax opens your whole life to identity theft. Equifax reports that Social Security numbers, account numbers, names, addresses, birth dates and driver’s license information for some states. The bulk of this information is considered “Evergreen” in that this basic information is something that is a part of you and not really something you can just change. Most of the recent hacks, such as the recent Home Depot hack or Target hack involves information which has a very defined life time. Generally, these hacks involved account numbers of credit cards. The crooks had to use this information in a certain amount of time before the account numbers changed. The information hacked can be placed in an electronic vault somewhere and 5, 10 or 15 years down the road pulled out to be used to steal your identity. It can also be used for multiple attacks of your identity since it includes information that is the base of your financial identity.
The Threat.
This hack threatens your financial life far more than any hack before. The loss of your basic data which is evergreen opens you up to identity theft for the rest of your life. The information hacked will allow crooks to open accounts in your name, get different forms of credit in your name and take over your credit making it very hard for you to access your credit and legitimately repair it if needed so that you can access your credit for your own legitimate purposes. Some of the lesser recognized methods this information could be used is to file a false tax return in your name getting your tax refund or filing for Social Security and Medicare benefits in your name. Probably the only light in this whole situation is that children who have no credit file are not affected at this point.
Your roadmap to protect yourself.
Protecting yourself at this point is less about preventing your information from being stolen and more about limiting the usefulness of that information. Equifax has offered a free year of credit monitoring after which you would have to pay to continue that service. That’s nice of them to provide a free year only considering the information leaked leaves you vulnerable to identity theft for the remainder of your life. I personally have skipped the free offer from Equifax. Credit monitoring is an ineffective service provided by the credit bureaus. It would be like having an alarm on your home, which goes off 24hrs after the criminals have left your home with your possessions. At this point I would take 3 steps to prevent the use of your personal information to steal your identity.
Pull your credit report.
At annualcreditreport.com you are legally allowed to receive your credit report for free from the 3 big credit agencies annually. I would pull 1 of your reports now, ignoring all the paid offers by the credit agencies. Review the report and keep it, then set a reminder for 4 months for now. I would pull a report from the 2nd credit agency at that point. Compare the two for changes and any changes that you don’t recognize research and confirm if they are fraudulent or not. Then 4 months later I would pull a credit report from the 3rd agency. In this way every 4 months or so you are pulling 1 credit report to look for potential trouble spots.
Register for free monitoring.
Next, I would register for free credit monitoring at creditkarma.com. This website will allow you free access to your credit score and will monitor your credit report for changes and send you alerts for free. There are other paid services that offer this but credit karma is a free, well reviewed product that meets the need.
Take the most critical step to protect yourself.
After completing the first two steps the third action is the most critical to protect your identity and make it virtually useless for identity thieves. It is called a “Credit Freeze”. You must contact each individual credit agency. Each credit agency will charge a fee to freeze your credit which is different for each state. This credit freeze will prevent the opening of new credit. That is the downside of this protection. When you are legitimately trying to apply for credit you will have to “Unfreeze” your credit. Each credit agency does it a little bit differently but essentially when you freeze your credit you have some sort of PIN number set up that is personal to you. The PIN allows you to quickly unfreeze your credit for your use. Should you lose the pin each credit agency has a process to get access to your credit report.
The aftermath.
Because of incompetence Equifax has left about 1 of every 2 Americans and foreigners with American credit reports vulnerable to identity theft for the remainder of their life. Congressional hearings have been promised. Legal action is likely.
Scott Vance is a fee-only planner and Enrolled Agent at Taxvanta serving the Raleigh, N.C. area. He recently retired from the Army. His background allows him to uniquely understand issues faced by military personnel, but he works with all clients. He is currently a candidate for CFP® certification and seeks to provide objective, commission free advice to clients. Vance was born and raised in Pennsylvania. He is married to Amy. They have a son, Brandon. They enjoy skiing and kayaking. He can be reached by email at scott@taxvanta.com
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