Credit freezes help you thwart identity theft by preventing a crook from opening credit in your name. Credit freeze laws, sometimes referred to as "Credit Lock" laws, began in California in 2003. Now, all 50 states in America, in addition to Washington D.C. and Puerto Rico, have laws permitting residents to lock or shut down access to their credit reports with the credit bureaus. With a credit freeze, an identity thief can't apply for credit in your name because you must first provide a PIN (Personal Identification Number) to the credit bureaus in order to "unfreeze" or "thaw" out your credit report and allow access to it.
How to Initiate a Credit Freeze
Surprisingly, relatively few people have actually locked their credit reports. By some estimates, only a few hundred thousand individuals have requested a credit freeze – this despite the millions of people who have been victimized by identity theft.
Still, people victimized by identity theft can and do use credit freezes. Additionally, individuals concerned about privacy and unauthorized access to their credit can also initiate a credit freeze. In fact, many states with credit freeze laws have given residents the right to have a credit freeze free of charge.
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Save Yourself from These Scams
Getting Paid Too Much
This scam is enjoying a resurgence that folks using classified ads like Craigslist have been seeing. Someone answers your ad and offers to pay way too much for a service that is offered. Sometimes they say it is to pay their mover, who won't accept their check from a foreign bank. Often the person on the other end claims to be from another country. They tell you to keep what you're due and then refund them the rest. Just wait ... their check bounces and you're left high and dry.
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Save Yourself from These Scams
Think you couldn't fall for a scam? Well, even when pennies are tight, a new study says 1.3 million people have fallen for check scams and most of them have been taken for $3,000 or more! To protect yourself, peruse this list of the most prominent scams and keep your money safe.
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The New "Oprah" Scam
No, Oprah would not ask you for your credit card information via email, so if you get a message saying you've been selected for some special episode and asked to send along your personal data, don't fall for it. The FBI just issued a warning to consumers about this new scam that uses Oprah's popularity to try to separate you from your money, first by thinking you're buying a plane ticket to her how in Chicago.
Find out how you can complain if you get this email by checking Mitch Lipka's latest Buyer Beware column.
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"Spear Phishing"
This is not your ordinary stab-in-dark phishing scam, but such an extra-dangerous attempt to bilk you from your money that the FBI just issued a warning to consumers.
This is how the scam works: Rather than use a massive email blast, spear phishing attacks choose smaller, selected groups that share something in common. That could be anything from a workplace, to a bank to a website everyone purchased from.
Find out how to protect yourself.
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Mystery Shopper or Processor
Work from home scams have been around for a long, long time, but thanks to a lousy economy they have become a growth market for frauds.
Many people have been duped by mystery shopping offers, some even combining the lure of getting paid for shopping (after paying a hefty fee for training) and the "overpayment" scam (see the next slide...).
Scammers might also sell you on the idea you could make money processing rebates or do billing. To learn how to enter this lucrative field you are sold a kit and most likely will get hit with subsequent monthly charges. The only ones making money on these deal are the crooks.
Save Yourself from These Scams
Getting Paid Too Much
This scam is enjoying a resurgence that folks using classified ads like Craigslist have been seeing. Someone answers your ad and offers to pay way too much for a service that is offered. Sometimes they say it is to pay their mover, who won't accept their check from a foreign bank. Often the person on the other end claims to be from another country. They tell you to keep what you're due and then refund them the rest. Just wait ... their check bounces and you're left high and dry.
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The Check Isn't Real
The check comes in the mail. It's probably for a few thousand dollars. It's supposed to cover the fees you are to receive for a grant you've supposedly just been awarded, the lottery you've won or some other reward you never sought. Cash their check and then send that amount back to them (makes sense, right?) then you'll get a much fatter check. Problem is their check is bad, but you'll not likely find that out for a week or more -- after your money is long gone.
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Your Auto Warranty Is Expiring -- Or Is It?
The automated call comes in on your cell phone or home phone. You're told your auto warranty is about to expire and if you don't act right away to keep it current you could lose coverage. Actually, what's happening is you're being sold an extended warranty. For some, the calls are ludicrous; they don't have cars. But for others they can be scary and, at a minimum, annoying and uses up minutes and battery time on your cell phone. The Better Business Bureau reports a huge spike in the number of complaints against those selling auto warranties.
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The Nigerian Letter
This is one of the classic scams that just keeps coming back for more. It presents itself in new and different forms -- recently using a bogus note from the director of the FBI himself as the come-on. The Nigerian letter, also known as 419 fraud for the section of Nigerian law it violates, involves an e-mail (it really started as a letter) that seeks your help to stash some money for a foreign official in a jam. Your kindness in hanging onto their millions is supposed to be repaid by giving you a percentage. Instead, you end up sending your money to them.
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Stimulus for Crooks
Whether it's letters supposedly from the Small Business Administration, bogus e-mails from the Internal Revenue Service or promises of "free" advice to get government grants, frauds are exploiting the idea that the federal government is distributing economic stimulus money. These phony notes solicit personal information intended to give the bad guys access to your credit or worse -- your cash. Remember, if something that appears to be from the government asks you for all sorts of personal information it's more likely from a crook trying to stimulate his or her own bank account.
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What a Car Deal
It starts out with an ad for a car, most recently featuring people claiming they are about to be deployed with the military. The car is priced way below market value because they have to sell it quickly. You contact the seller and are told that you have to pay to an escrow service that they chose. The price is so good you don't want to lose out, so you agree to place a deposit or even pay the full amount to the "escrow service." It turns out it's not an escrow service and you don't end up with a car.
Save Yourself from These Scams
In order to obtain a credit freeze, you must provide the credit bureaus with the following:
1. A unique PIN or password.
2. Proper identification to verify your identity.
3. Proper information regarding third parties who are authorized to review your credit file.
Getting a Credit Freeze From Equifax
Equifax does not charge a fee for a credit freeze. It does, however, require that you put your request for a security freeze in writing, and send it via certified or overnight mail to:
Equifax Security Freeze
P.O. Box 105788
Atlanta, Georgia 30348
Getting a Credit Freeze From TransUnion
With TransUnion, the agency used to offer security freezes free of charge online. However, as of July 14, 2009, TransUnion started charging for security freezes. The cost ranges from about $3 to $10, depending on where you live. Also, the fees apply only to those who have not been victims of identity theft. Identity theft victims get freezes free of charge with the credit bureaus. To contact TransUnion about a credit freeze, call 888-909-8872 or write to:
TransUnion Security Freeze
P.O. Box 6790
Fullerton, CA 92834
Getting a Credit Freeze From Experian
At Experian, you can request a security freeze online at
www.experian.com/freeze or submit your request in writing. Experian asks you to send your request via certified or overnight mail to:
Experian
P.O. Box 9554
Allen, TX 75013
What You Need to Have When Contacting the Credit Bureaus
Unlike initiating a fraud alert, you must place a security freeze with each individual credit bureau separately. When requesting a security freeze from any credit bureau, be sure to include your full name, complete address (and any previous addresses if you've lived at your current residence less than two years), social security number, date of birth and proof of your identity and address together, such as a copy of your driver's license or a copy of a recent utility bill or credit card statement.
Lynnette Khalfani-Cox, an award-winning financial news journalist and former Wall Street Journal reporter for CNBC, has also been featured in top newspapers including the Washington Post, USA Today, and the New York Times, as well as magazines ranging from Essence and Redbook to Black Enterprise and Smart Money. Check out her New York Times bestseller,
'Zero Debt: The Ultimate Guide to Financial Freedom.'
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