Credit Advice
Topics addressed on August 8, 2007:
- Identities stolen to make direct marketing offers
- The difference between PLUS scores and FICO scores
- Accounts are not removed immediately after bankruptcy
- Free credit reports under FCRA and FACT Act
Identities stolen to make direct marketing offers
Dear Max,
A few days ago we received a letter from a company stating that our checking account information – and debit card information, too, I would think – was sold by one of their employees to a data broker who in turn sold a subset of that data to a limited number of direct marketing organizations. Since the company says they have notified all three credit reporting agencies, you may be aware of this instance.
Of the possible actions suggested for us, one is to place a free fraud alert on our credit reports. In this case, is a fraud alert advisable? Will it accomplish anything? Since we may need to obtain a car loan within the next six months, won't this be a problem? Do we need to place a fraud alert or a credit freeze on our credit history? I suppose the least we can do is get free credit reports.
- LLE
Dear LLE,
This situation is very unique. As I understand it, the information was obtained to be used to make direct marketing offers. In an unusual twist, the thief apparently wanted your name and address, not necessarily your account numbers.
Rather than taking over your accounts, the objective was to send offers for products, not for preapproved credit.
Unlike most data theft events, you know exactly what happened to the information and how it was used, so the risk of credit fraud appears to be very low.
Because bank account information, not credit information was sold, it is unlikely that your credit report will be affected. So, a fraud alert probably won’t be of much benefit in this case, if any at all.
Still, adding a temporary security alert couldn’t hurt, if only for peace of mind.
An initial security alert lasts for 90 days. That gives you time to get a copy of your credit report, which you can request free of charge. If nothing indicates fraud, you can simply let the alert expire, or you can request that it be removed.
If there is an indication of fraud, you can file an identity theft report with your local police department and request a victim statement then be added to your report. The victim statement lasts seven years.
A fraud alert should not prevent you from purchasing a car or qualifying for credit to make any other type of purchase. However, it could slow the approval process significantly.
When a fraud alert is present on the report, a manual review process often is needed to conduct further identity verification. That can cause delays in processing your application.
That is inconvenient but acceptable for a person who is a victim. If you are not a victim, and there has been no activity that suggests you are at increased risk, the inconvenience is likely not worthwhile.
Thanks for asking.
