Last week I reviewed the general differences between fraud alerts and credit or security freezes. That blog is available by clicking here. Both of these options are designed to minimize the incidents of identity theft, and both have to be implemented by the customer. With this said though, it may be good for customer relations to have your CSRs be in a position to help the customer understand the difference and how to implement the protection.
So, which is better—the fraud alert or the credit freeze?
Well let's address fraud alerts today and credit freezes next week, to come up with the answer.
The fraud alert is placed on a consumer's credit file by the consumer with any one of the nationwide credit reporting agencies (“CRAs”). Then, the one CRA notifies the others. The alert serves the purpose of telling a business that it must take reasonable steps to verify identity before extending credit on a loan or sale. This often means that the business will need to call or otherwise check with the applicant to make certain that it is dealing with the correct individual.
The fraud alert lasts for one year except when the consumer has already been a victim of identity theft and filed an identity theft report. In that event, the alert can be extended for seven years. There is no charge to a consumer for implementing a fraud alert or an extended fraud alert on his or her credit file.
A fraud alert is less restrictive than a credit freeze. One advantage of the alert v. the freeze is that for someone planning a credit transaction, it may be best not to block prospective lenders and credit sellers from accessing the credit file. Also, a consumer is still entitled to a free credit report from each of the nationwide CRAs when a fraud alert is placed on the credit file.
To place an extended fraud alert on the file, a consumer must first ask that it be placed as an extended fraud alert. (The nationwide CRA will have a form to be completed.) And, the consumer will need to include a copy of an identity theft report when the request is submitted.
Interestingly, until 2018 changes in the law, a regular fraud alert lasted only 90 days and had to be affirmatively renewed. Now the alert lasts for one year.
Next week I will address the credit freeze option.
Please note: This is the forty-fourth blog in a series of Back to Basics blogs, in which relevant and resourceful information can be easily accessed by clicking here.