XPN DIFFERENCES BETWEEN FR/ALERT, V/STMT AND SEC/FREEZE

Names, Types, Descriptions, Testimony
David A. Szwak

XPN DIFFERENCES BETWEEN FR/ALERT, V/STMT AND SEC/FREEZE

Postby David A. Szwak » Sun Nov 20, 2005 6:49 pm

http://www.experian.com/ask_max/max050405c.html

Difference between fraud alert, victim statement and security freeze


Dear Max,
I am getting confused with three different things I am reading about. What is the difference between a security alert, a fraud victim statement, and a security freeze? What I want is to be notified before having credit obtained in my name. I thought the security alert would do this, but I learned today as I tried to get a cell phone that it is not so. I have been a victim of identity fraud before so I want steps taken to protect me. But, the security alert has been more inconvenient than I would like. What options are available for people like me?

- ERD

Dear ERD,
A security alert and a victim alert are part of the same fraud victim assistance process. A security freeze, also known as a file freeze, is an extreme measure that essentially blocks anyone from accessing your credit history.


When you are a fraud or identity theft victim, or have good reason to believe you may be, you can request an initial security alert be added to your credit history. The alert tells lenders you are or may be a victim of identity theft and asks that they take additional precautions before granting credit in your name. You can also have a telephone number included with the alert.


The initial security alert is temporary, lasting 90 days on the Experian system. That enables you to review your report and either verify there is fraudulent information being reported, or that no fraud information appears on the report.


If you discover evidence of fraud or know that you are a victim, the next step is to request a victim alert statement. To do so, you first must file a police report or other valid identity theft report and send a copy of the report to us with your request.


A victim statement lasts seven years. You can provide two telephone numbers. It tells lenders you are a fraud victim and asks that they call you before granting credit in your name.


The Fair and Accurate Credit Transactions Act (FACT Act) made these statements much stronger. In fact, I suspect the inconvenience you describe is because of the presence of an alert.


Until the new law was enacted in 2004, lenders had no legal obligation to honor the statements. Any response was voluntary. The FACT Act now requires lenders to respond to the statements, although it doesn't require lenders to call consumers.


Lenders who conduct manual review processes might call, but in many cases, they simply stop the lending process and decline the application. Doing so provides them and you with the most protection. When an application is reviewed using an automated system, it is not possible to call you, so your application cannot be approved.


File freezes are available in only a few states with laws that require them. The concept originated in California. Ironically, California Senator Debra Bowen, who sponsored the first file freezing legislation has said it was not intended as a fraud prevention tool. Instead she intended it to help victims facing extreme fraud and identity theft cases recover from the crime.


Experian agrees with that position.


In theory, when you freeze your credit file, you can provide a PIN number, have your file unfrozen, get the credit you apply for, and then re-freeze the file. In reality, it can be a real nuisance. People don't think about all of the instances in which a credit report is accessed to provide service, like setting up cellular telephone service.


If you lose your PIN, you must provide written documentation verifying your identity so that a new PIN can be issued. Only after you receive the new PIN can you unfreeze your credit file. That could take weeks when you include the time it takes to mail documents back and forth.


If you are traveling and lose your phone, you'll probably have to wait until you get home to get a new one, after getting your PIN and having your credit history unfrozen.


Further complicating matters, removing a credit freeze is not an instant process. Even if you make the request online, it can take up to three days to process the “unfreeze” request. That might be too long if it is an emergency, or the special deal may be over.


Instant applications, to get a purchase discount for example, are impossible with a file freeze, unless you remove it prior to going shopping. Constantly unfreezing your credit file would defeat the purpose of freezing it in the first place. And, there may be a fee each time you request your credit file be unfrozen. That can add up quickly.


Our experience, and that of many consumers, indicates a file freeze simply doesn't make sense. As a preventative tool, it is simply far too inconvenient, not to mention time consuming and costly to remove the file freeze regularly, especially when you consider you must freeze and unfreeze your credit file at each of the three national credit reporting agencies.


A better alternative for people concerned about fraud but who are not victims, or people like you who have been victims but have resolved the problem, is a credit monitoring service.


A credit monitoring service alerts you to any activity on your credit report almost immediately. That enables you to take action quickly to stop any further fraud. Experian offers Credit Manager, which notifies you when new information is added to your credit report, provides unlimited access to your credit report and Experian Plus Scores and includes other credit management tools.


What you don't hear about in the media is all of the things Experian and the other national credit reporting agencies are doing to help lenders protect you and themselves from fraud so you don't have to do anything.


For instance, Experian provides a service to businesses called Fraud Shield that alerts them when information in an application doesn't match the information in a credit report, telling the lender to take precautions because there is a higher risk of fraud. Several years ago Experian introduced the National Fraud Database. In a cooperative effort, businesses share information about known fraud cases. Lenders are alerted when there is a match to the National Fraud Database so they can stop the fraud. We also provide online identity authentication tools to fight Internet fraud.


Our goal is to help lenders prevent fraud from occurring in the first place, so we don't have to help victims recover from identity theft.


Thanks for asking.

[[ASK MAXINE SWEET]]

David A. Szwak

Postby David A. Szwak » Mon Nov 28, 2005 5:27 am

1
1 IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
2 MARSHALL DIVISION
3 DIANA A. POULSON, *
Plaintiff, *
4 *
vs. * CASE NO. 2:05CV75
5 *
TRANS UNION, LLC, CSC CREDIT *
6 SERVICES, INC., EQUIFAX *
INFORMATION SERVICES, LLC, *
7 EXPERIAN INFORMATION *
SOLUTIONS, INC., DISCOVER *
8 FINANCIAL SERVICES, INC., *
USAA CREDIT CARD BANK, SEARS *
9 ROEBUCK & CO., INC. AND *
CITIBANK [USA], N.A., *
10 * JURY DEMAND
Defendants. * JUDGE DAVIS
11
12 ORAL AND VIDEOTAPED DEPOSITION OF
13 KIMBERLY KAY HUGHES
14 NOVEMBER 18, 2005
15
16 ORAL AND VIDEOTAPED DEPOSITION OF KIMBERLY
17 KAY HUGHES, produced as a witness at the instance of
18 the Plaintiff, taken in the above-styled and numbered
19 cause on the 18th day of November, 2005, from
20 10:23 a.m. to 4:28 p.m., before Frances M. Blacha, a
21 Certified Shorthand Reporter in and for the State of
22 Texas, reported by machine shorthand, in the offices of
23 Jones Day, 2727 N. Harwood Street, Dallas, Texas 75201,
24 in the City of Dallas, County of Dallas and State of
25

2
1 Texas, in accordance with the Federal Rules of Civil
2 Procedure.


53
16 Let's talk next if we could, please,
17 about Exhibit 16. And I believe it's the next account
18 -- I'm sorry. Before we go to Exhibit 16.
19 As a result of Discover's response to
20 Experian, would Experian have left that account in the
21 credit report of Ms. Poulson or the credit file of
22 Ms. Poulson?
23 A Yes, sir.
24 Q And it would have continued to report about
25 her; is that true?

54
1 A Yes. We would have conveyed to her that the
2 item was -- would remain on her report and then also
3 provided her some additional steps she could do, offer
4 the addition of a dispute statement, suggest to her
5 that she may want to contact the reporting source, and
6 those things are contained on our CDS.
7 Q Right. The consumer dispute statement would
8 be a statement that would be placed in her credit file
9 or displayed to third persons that would indicate her
10 side of the story in a summary form?
11 A Yes, sir.
12 Q That does not negate the reporting of the
13 Discover account. Is that true?
14 A That's correct. Discover account would still
15 display with its reported status, but would display in
16 conjunction with her statement.
17 Q To your knowledge, it wouldn't have any
18 impact on her credit score; correct?
19 MS. ANDREW: Objection, form.
20 A It's my understanding that it doesn't impact
21 the credit score, but that's a little out of my area of
22 knowledge.
23 Q Okay. Thank you.


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