Most people should be aware of this very real danger to our modern world financial well being. One of the biggest risks in cyberspace involves credit accounts. The problems typically start after some scammer gets your info and either starts charging away and or opening new accounts in your name. So my question is this: If you are already using plenty of established credit cards, store cards, loans, etc., why wouldn’t a person go ahead and call the credit bureaus and pay a small fee to instate a credit freeze on themselves?
Because most people don’t find out about the fraud until long after the fact…if ever. By the time you get your credit card bills, if you are the type that carefully go over them to see if any unauthorized purchases have been made, it’s already too late-your cards are overdrawn, your credit is in shreds, and the credit bureaus are your new mortal enemies.
Most people don’t know you can do that. And it doesn’t block all new credit accounts anyway.
If someone opens an account in my name without my signature on any of the paperwork, how is that my problem? The company should be more careful and/or find the person who actually opened the account.
Your money can be taken from your accounts, and your credit can be ruined. That is how it is your problem.
There are so many things people could do more smartly if they recognized the risks. People do all the following non-optimal things: Drive too fast. Eat too much or the wrong stuff. Drink too much. Argue too much. Watch too much angry TV.
The risk of identity theft to any given individual is small. Yes, hundreds of thousands are scammed every year. But out of hundreds of millions of consumers, the risk of it happening to me (any me), this year, is small. So they ignore it.
A better question is why the industry is allowed to charge consumers for something that ought to be the default. As **iljitsch **said, the problem is defective and unsafe industry practices, not defective and unsafe consumer behavior.
A big problem is the part where the scammer use your credit card and pay it off. They will get a few cc’s in different names and use one to pay the other. This can go on for quite a long time, in some cases years, as the credit reports aren’t looked at and there is not delinquency.
Then they let them all go to hell in one shot, over a month or two and suddenly you’re in a mess. Even worse, your creditors can sue you and get judgments. Often you won’t even know you’ve been sued, and once you get a judgment it’s very difficult to get it overturned. Furthermore judgments in some states can be for twenty years and renewed for another twenty years, so they can follow you a lifetime.
Reminds me of a Gracie Allen quote:
A chicken in every pot sounds like a good idea, unless you happen to be a chicken.
The Golden Rule: Them What Has The Gold, Makes The Rules.
It DOES prevent fraudsters from opening new accounts. So why not?
Why should it cost anything to freeze my accounts? Also, it freezes all accounts, not just the ones you are having problems with. New problem: Swiftly contacting all those who you automatically billpay(do you have the right contact numbers for all of them on hand?) and convincing them you are not defaulting on your debts. If it’s the wrong time of the month, that means the rent/mortgage payment, utilities and ghod knows what else.
I can’t speak for everyone, but for me, I just don’t worry about things like that. My credit card companies are pretty vigilant about checking unusual purchases. I look at my bills when they come in. Someone* could *try to open an account with my name, but the odds are against it. I guess most of us minimize the risk in our own minds and just don’t bother protecting ourselves. Like earthquake preparations, or keeping a blanket in the car or emergencies. Plus, most of those companies have a hint of “scam” about them (they advertise on right wing radio, for gods sake), and I don’t want to spend the time and effort to figure out which ones are legit.
No it can’t. My credit card company doesn’t have my money until I send it to them, in payment for the invoiced charges. That is why a credit card is better than a debit card. It’s a question of who is holding the money when a transaction is under dispute.
The OP’s “credit freeze” doesn’t stop payments or disable existing cards. It simply tells would-be credit grantors to not open any *new *accounts without extraordinary proof that the opener is in fact the real person they purport to be.
So why is that not a “good” thing?
What do they charge for this “service”, and why? Why can I not just call them up and say, “I do not authorize any new cards in my name” without having to pay them?
I just called my credit card company, to tell them of overseas travel plans, for security. Interestingly, they already had a notation of the countries I plan to travel to, and the dates, because I bought my ticket using that card. So, apparently, if you travel overseas, your credit card company already knows your travel plans., and can act accordingly with respect to assessing the legitimacy of suspicious-looking overseas transactions.
As **Czarcasm **said. It is a good thing. But …
It is not a cost-effective thing. The price of the insurance exceeds the average expected loss.
And in fact it ought to be a mandatory thing that all credit grantors are strictly liable for any errors they make which aid and abet identity theft. With treble damages to the person whose identity was stolen.
Get to work spreading the word; there’s this grave danger society does not yet notice: Unscrupulous credit reporting agencies charging you extra for properly safeguarding the data they sloppily gathered on you. And sloppy credit grantors perfectly willing to give fraudulent credit to a thief because they know you’re on the hook for their error. Not them.
These menaces to modern society must be stopped. And you’re just the man to warn the world. Hop to it!
Let’s distinguish between credit card theft, where someone gets your credit card number and starts using it; and identity theft, where someone has your name, address, birth date, SSN, and applies for credit in your name. The latter is much more damaging.
In true identity theft, when someone opens a credit card in your name and then doesn’t pay the bill, the credit card issuer is going to send the collection goons after you to collect. It will take months for you to convince them that it’s not really your account and in the meantime the default has been reported to the major credit reporting companies and you will not be able to get a car loan refi your mortgage, etc.
The credit reporting companies are not a public service. The credit issuing companies pay them a fee for credit reporting information. You are not their customer. Why should they do anything free for you? You can get a free credit report once a year, but only because federal law mandates it.