Expert: Why you need to freeze your credit

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To prevent identify theft, William Lund, superintendent of the Maine Bureau of Consumer Credit Protection, recommends consumers freeze their credit with the big three credit monitoring agencies: TransUnion, Experian and Equifax.

AUGUSTA — Have you frozen your credit?

In the wake of the Equifax hack, you should consider it, says Maine’s top consumer protector, William Lund, superintendent of the Maine Bureau of Consumer Credit Protection.

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The breach of credit monitoring company Equifax means that personal information of 143 million United States consumers – and 524,517 in Maine – has been stolen. The number of victims represents the majority of Maine adults, Lund said.

Let that sink in: The majority of adults have had their personal information stolen through a security breach at Equifax.

If you’re in the majority, your name, your Social Security numbers, your date of birth, your address and in some cases your driver’s license numbers are in the hands of crooks. The breach could be among the most harmful to consumers, experts say, because crooks can sit on the information making victims vulnerable to identity theft for years.

The breach could become worse.

“Equifax has acknowledged that more than half of all Mainers was exposed,” Lund said. “It would not surprise me if we get another announcement in a week or two that the numbers are higher.”

You know how it could go from here.

Claiming to be you, the crooks apply for credit, benefits, you name it, using your name and Social Security number. At tax time they could claim a refund with the IRS, likely higher than the refund you’d file for.

Lund says the best way to protect yourself, excluding the IRS scam, is to freeze your credit with the big three credit reporting agencies: TransUnion, Experian and Equifax.

Unlike fraud alerts which tell consumers after someone’s stolen your identity, the freeze prevents identity theft.

“It is a brick wall,” said David Leach, the principal credit examiner with the Consumer Credit Protection Bureau.

A freeze “prevents someone from assuming your identify and applying for loans, credit or a benefit,” Lund said. “The way it does it is by preventing a creditor with whom you don’t have an existing relationship from accessing your credit reports.”

A credit freeze does not block current creditors from access to your credit report. “That’s a good thing. It allows commerce to  proceed,” Lund said.

When your credit is frozen with TransUnion, Experian and Equifax, if you or someone using your name goes to an auto dealership and applies for a new car loan, “when the dealer attempts to look at your credit history, they’re going to get a blue screen,” Leach said. “They’re going to say, ‘This file is frozen. It needs to be unlocked.'”

The only way to unlock the freeze is with the pin number given to the consumer by Experia, TransUnion or Equifax.

Unless the imposter has the pin number, “the creditors aren’t going to be able to access your report and won’t grant credit to the person pretending to be you,” Lund said.

Maine law provides free freezes

In most states, Equifax, Experian and TransUnion charge consumers fees of $10 or $15 to freeze or unfreeze their credit. Equifax is offering free freezes until Nov. 21.

That’s not good enough, consumer advocates are saying. After asking why consumers should pay credit agencies when there’s been security failures, U.S. Sen. Don Wyden, D-Ore., recently introduced the Wyden Free Credit Freeze Act. It would guarantee consumers could use PIN numbers to freeze and unfreeze their credit, at no charge, to stop fraudsters from opening unauthorized accounts, according to Wyden’s webpage.

Maine has had a similar law on the books for two years.

The law took effect in 2015, Lund said, adding Maine was among the first states to prohibit agencies from charging freeze fees. Other states that have similar laws are Indiana, New Mexico, North Carolina and South Carolina.

Before Maine’s free credit freeze became law, “it was a two-part process,” Lund said. First the state law was amended to allow a freeze at all. The idea of a credit freeze used to be a foreign concept, Lund said.

“Then we had major breaches,” including Target, Yahoo, Home Depot, the federal Office of Personnel Management, Anthem, the IRS, JP Morgan Chase, eBay and more.

“Lawmakers here in Maine went through the same debate going on in Congress: ‘Why should a company be able to profit from a mistake they made or a system they’re part of?'” Lund said.

Other ways Maine has protected consumers: Maine was the first state to require free credit reports be provided once a year, a change later adopted by the federal government.

“We remain the only state to require registration of credit reporting agencies with our office,” Lund said.

That means Lund and Leach know who to call when Maine consumers report problems. As Hurricane Irma raged, they were talking to Equifax’s compliance officer “even though Atlanta didn’t have any power” asking for up-to-date numbers or telling them that Maine consumers “aren’t getting through.”

Maine legislators are progressive thinkers when it comes to consumer protection, Lund said. The state has had consumer protection laws for 40 years, he noted.

“If someone gets a credit card or loan in your name, it’ll be a process to clear it up, but you’re not responsible, so long as you take basic steps to protect to let folks know something is going on.”

David Leach, the principal consumer credit examiner of the Maine Bureau of Consumer Credit Protection, shows a new booklet to help consumers learn how to protect themselves after the Equifax data breach. Maine residents can get a free copy by calling 1-800-332-8529. 

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