Fighting the Equifax Credit Breach

September 18, 2017

Author: Dave Gardner

While our eyes were trained on a catastrophic hurricane in the Caribbean, a proverbial storm of the Equifax credit breach brought chaos into the lives of most adult Americans regardless of where they live.   If you are an adult reading this, it’s likely you have been affected and your data has been compromised.  By Equifax’s count, 143 million Americans had their vital personal information stolen.

This hack is the terrible one we have been dreading in terms of its scale and the data lost.  Your Social Security number, date of birth, current and previous addresses, driver’s license and credit card numbers may be available for sale to the highest bidder.  With this information, crooks could apply for new credit cards, file a false tax return with the IRS to collect your refund, and could potentially try to take over bank and other accounts of yours.

Equifax’s response to this hack will be in business school casebooks for a generation for its ineptitude.  Its initial offer was a free credit monitoring service for one year.  The implication was that if we wanted this service to last longer than a year, we would have to pay to protect ourselves against Equifax’s own missteps.

When free monitoring was initially offered, there were reports that you were forced to waive your rights to seek damages against Equifax in exchange for the monitoring.  After public outcry, Equifax has revised this stance so you preserve your rights even while accepting the credit monitoring.

My recommendation is that you don’t play Equifax’s game at all.  Don’t use their credit monitoring service or check on their website to see if you have been hacked.  Instead you should assume your personal information has been compromised.   To fight back against the Equifax credit breach, I recommend these steps.

Set up independent credit monitoring.  If you want to stay on top of your credit inquiries and scores, I recommend the free Credit Karma monitoring service.  They keep tabs on your credit in return for the opportunity to suggest credit cards and other products.  This is a fair trade in my book, and so far they have been a good safeguard of personal information.

Set up credit freezes with all three bureaus.  The three credit reporting agencies of Equifax, Experian, and TransUnion all enable you to freeze your credit online by spending about 15 minutes of their websites.  The credit freeze service is free to all Coloradans with all three credit bureaus.

When you freeze your credit, you make it impossible for someone to take out credit in your name in spite of having all of your personal identifying information without having the password or PIN specific to the credit bureau.  When you freeze your credit, you’ll choose or be assigned a password that is needed to thaw your credit.  Don’t lose your passwords as it can take many days to make your credit available without them.

Freezing your credit doesn’t lower your credit score and doesn’t affect your existing credit lines including mortgages, credit cards, and car loans.  If you need to apply for credit because you’re changing mobile phone providers or refinancing your mortgage, you’ll have to temporarily “thaw” your credit freeze at a cost of $10 in Colorado per credit bureau. With the exception of mortgages, most companies just check with one credit bureau so over time it should cost far less than traditional, less effective fraud protection services.

Reduce possibility of tax refund theft.  In recent years there has been an uptick in the number of incidents of tax returns being filed with stolen Social Security numbers.  The IRS has taken steps to prevent fraud through requiring the AGI from the last year’s return or in some cases a special IRS PIN.  Perhaps the best prevention against identify theft is to manage your tax withholding and estimated tax payments to keep your tax refund to a minimum.  After all, if you end up owing the IRS money, then the fraudsters won’t be able to abscond with your refund.

Reach out to your state and federal legislators.  By making 143 million Americans vulnerable to identify theft, Equifax should make credit freezes and thaws available to us for free forever – not just for a year.  The personal data that was compromised will affect us for years to come.  We should have a free remedy to protect ourselves.  My hope is that Colorado legislators when they convene next year will pass legislation mandating that all credit bureaus make credit freezes and thaws free for all of us.  There are hearings in the U.S. Congress to address this issue as well.

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About Dave Gardner

David Gardner is a certified financial planner with a practice in Boulder County and can be reached at dave@confluencefa.com and at twitter.com/Dave_CFP.