*Editorial Note: This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.
This article was last updated Oct 09, 2017, but some terms and conditions may have changed or are no longer available. For the most accurate and up to date information please consult the terms and conditions found on the issuer website.
As a result of the Equifax data breach, the identities of 143 million Americans are severely at risk. Now, more than ever, consumers need to presume that their Social Security numbers, dates of birth, residential addresses and driver’s license numbers will be available for sale on the darknet.
The response of Equifax – one year of free credit monitoring – is inadequate. Social Security numbers, for instance, don’t expire. So, people need to create a strategy that lasts a lifetime.
To understand how prepared people are for the attacks that will inevitably come from the Equifax breach, CompareCards.com by LendingTree conducted a national fraud prevention and detection survey of 1,000 American adults who report having a credit or debit card. The survey was conducted Sept. 22 – 25, after the breach was made public.
The focus was on the most effective fraud self-defense measures, and the survey results show a nation woefully unprepared for the heightened fraud risk that is now facing us all:
- Credit alerts (on existing accounts): Just 25 percent of consumers have alerts set up on all of their credit or debit cards
- Credit freezes: 78 percent of consumers have never put a freeze on their account
- Credit monitoring: Only 22 percent of consumers pay for a credit monitoring service
- Protecting PIN codes: 60 percent of people have not changed their PIN code in the last year, and 30 percent have never changed it.
Protecting your existing accounts
With account takeovers, a fraudster finds a way to take control of an open and existing account. For example, the fraudster could gain access to your online bank login and issue a bill payment, draining your account. A bartender could skim your credit card information and attempt to make online purchases using your card details.
Account takeover is common. Indeed, 42 percent of people surveyed reported having fraudulent charges in the last two years on a credit card, debit card or bank account. Sadly, many of them ended up with some financial loss or liability as a result of fraudulent charges during that period.
Identifying and stopping fraud early is critical. One of the best ways to identity account takeover quickly is to sign up for account alerts. Most banks and credit unions offer text and email alerts with settings that can be customized.
For example, you can ensure that any transaction above $100 on your debit card results in a text message.
With Visa’s zero liability policy, it promises to return funds to a victim’s checking account (if you are using a Visa debit card) within five business days of notification. But if your checking account has been cleaned out and rent is due in three days, that promise is not very helpful. With fraud alerts, you can find out as soon as a fraudulent transaction takes place, helping reduce the severity of an attack.
Sadly, very few consumers are taking advantage of account alerts. The survey demonstrated that:
- Just 25 percent of Americans have alerts on all of their credit or debit cards. Remember: ignoring credit or debit cards that you don’t use often is a high-risk strategy, as fraudsters can target dormant accounts.
- Baby boomers are unlikely to use alerts, with 46 percent having no alerts at all. Baby Boomers, given their position in life, will have higher bank balances and higher credit limits – making them lucrative fraud targets.
- Millennials are much more likely to take advantage of alerts, with 74 percent using some form of alert.
Why don’t more people take advantage of free alerts offered by their bank or credit union? Of those surveyed, 41 percent did not take advantage of alerts because they were not aware that they were available, demonstrating the importance of education.
Protecting against new accounts being opened
With the information stolen from Equifax, it has become a lot easier for a fraudster to open a new account in someone else’s name.
The best way to prevent the opening of a new account is a credit freeze, which makes new account opening virtually impossible. Despite extensive news coverage – and Equifax’s offer of a free credit freeze (on its own reports) – very few people have taken the company up on the offer.
In all, 78 percent of people surveyed report having never put a freeze on their credit report.
Why don’t people freeze their credit?
- 47 percent of respondents just aren’t concerned about identity theft.
- 22 percent aren’t aware it’s possible, which demonstrates the importance of education.
- 15 percent don’t know how to put a freeze on their account
Given the severity of the Equifax breach, 24 percent of people surveyed say that they are planning to put a freeze on their account or have done so.
For people who have decided not to freeze their credit reports, credit monitoring becomes critical. With credit monitoring, a consumer is informed as soon as there is a new credit inquiry, a new account or a new negative item (like a public record) on their credit report.
Free credit monitoring services typically offer single-bureau monitoring. In order to monitor all three bureaus, you typically need to subscribe to a service (that also offers resolution services). Very few people pay for these services.
However, of those that do subscribe, millennials are leading the way:
- Only 22 percent of the population pays for credit monitoring services
- 28 percent of millennials pay for the service, compared to just 15 percent of those 55 and up.
Common sense, and a change of PIN
People should regularly change the PIN code of their debit card to reduce fraud risk. People who change their codes are clearly thinking about fraud. Those who don’t probably aren’t.
Surprisingly, 60 percent of people have not changed their PIN codes in the last year. And, also surprisingly, 37 percent of millennials report having never changed their PIN code.
CompareCards.com believes that the risk of fraud has increased in light of the Equifax data breach. Consumers need to have a strategy to prevent, detect and resolve fraud. Alas, a majority of consumers are not taking advantage of free or paid services to help deal with identity theft. This survey demonstrates the need for increased education.
CompareCards.com commissioned Qualtrics to conduct an online survey of a representative sample of 1,000 Americans with a credit or debit card Sept. 22-25, 2017. The margin of error is +/- 3 percent.