(Editor’s Note: CVS unexpectedly squashed their Vanilla Reload program this week so the article I was planning on releasing today is now pretty much useless. I still posted it since I worked hard on it but I thought I would give everyone another article to satiate their Friday hunger for personal finance! 2 articles for the price of one today.)
I got an interesting question in my inbox last week from reader BB. It read:
So I have a question. My router got hacked and I had pretty much all my important tax files on a connected drive (idiot!). So I’m pretty sure my SSN is out in the wild now and bank account numbers too. I noticed this when I saw some fraudulent charges on my checking account. So I got new account numbers and passwords, and checked my wife’s and my credit history. So far so good as far as we can tell, and we both put 90 day fraud alerts up.My question is, how can I continue to monitor my credit without paying for a service, or should I just pay for one. Do you know of a good monitoring service? Also is there anything else I should be watching closely now? This is such a mess, but will only happen more in the future I feel as more and more less savvy people will be vulnerable.
This is one of the more interesting questions I’ve received in a while because it’s something that(as the reader alludes too) will be a huge issue going forward. Criminals are turning to online thefts more and more these days and it’s best to take a proactive approach instead of waiting for something to happen. I wrote about the Target data breach a couple months ago and why I thought it was a good thing but it’s still scary to think that someone out there can access your personal information so easily.
I actually didn’t even know that routers could get hacked but that’s going to make me think twice about the network security I’ve set up. Anyways, on to the question.
Discovering a Problem
First off, it’s good that reader BB caught onto these fraudulent charges quickly otherwise it could have been even more of a hassle. The nice thing about paying with credit cards or even debit cards is that you will never be held liable for any unauthorized charges. That’s one of the reasons why I don’t think it’s that big of a hassle if someone steals your credit card information. Honestly, who cares? You call up your bank and let them know what happened and most of the time they’ll even rush out a new card to you if you ask nicely. They wouldn’t want you to have to go more than a day or two without being able to spend money(on their card of course!).
In order to discover a theft as quickly as possible, I use Mint to track and manage all of my financial accounts. I have over 50 accounts with various credit card companies, banks, etc and they all link up perfectly with Mint. Every morning, I open up the app on my phone and spend about 5 minutes reviewing the last few days worth of charges(and to check my budget).
This is a side note but since I have all my accounts set on AutoPay I don’t have to worry about when bills are due or how much money I have in certain accounts. I keep a nice buffer in my checking account that is equal to my monthly bills and credit card charges and never have to worry about that stuff. Keep it simple.
What to Do Now
Reader BB has already done a great job at minimizing the impact of this potential identity theft. Just because a criminal has your information, that doesn’t mean they’ll be able to use it without you knowing. There are a lot of paid services out there like LifeLock and Identity Guard but they aren’t going to do anything that you can’t do yourself for free. I use free monitoring services from Credit Karma, Credit Sesame and AAA in order to stay on top of my credit report. If there is any major activity like opening of a new account, address change, etc then I will know about it within 1-2 days. That part is completely free.
In addition, I like to stagger my three free credit reports throughout the year from AnnualCreditReport.com in order to monitor my reports that way. Again, that service is completely free. In this case, if you know that a theft has occurred, obviously you’re going to contact your bank about the fraudulent charges but you don’t have to waste your time contacting all your other credit card companies.
The reason why I wouldn’t do that personally is because I have over 25 credit cards and it would take a while to cancel all them and who cares if a criminal has your credit card information? As long as they don’t use it, you’re fine. If they do, call your credit card company and tell them the charges were unauthorized and you won’t be held responsible. A lot of criminals will sell credit card numbers in huge batches to third parties on the black market so your card number may never even get used.
Setting up a Fraud Alert
If you know that a deliberate theft has occurred, it’s a good idea to set up a 90 day fraud alert like reader BB has already done. According to their websites, the credit bureaus say that if you notify one of them, they will notify the other two bureaus(there are 3 total bureaus) for you. This fraud alert will only be good for 90 days though. After that, you’ll either have to renew it or monitor your accounts using the methods listed above. A fraud alert is more of a temporary fix when you know someone has your information. Going forward, you’re going to need a solid identity theft protection plan in order to stay secure.
Social Security Number Stolen
In BB’s case, the theft was a little more serious since the criminal may have gotten a hold of his and his wife’s social security number. If they try to open a new line of credit, your fraud alert or monitoring services will stop/notify you but one thing you’ll have to watch out for is your tax return. Criminals love to use stolen social security numbers to file fraudulent tax returns and claim a small return that way. No credit monitoring service will protect you from this so you need to contact the IRS directly if you feel your SS # has been compromised.
Conclusion
Ultimately, taking a proactive approach is best when dealing with identity theft. It’s so easy(and free) to sign up with services like Credit Sesame that if you don’t do it, you’re just asking for trouble. You can also set a calendar reminder for every four months to remind you to get your free annual credit report. And lastly, use an app like Mint to track all of your financial accounts and spend a few minutes every other day or so reviewing all of your charges.
Readers, what do you think about the advice that I gave reader BB? Do you think you need to pay for monitoring services or are the free ones available good enough? Have you ever had your information stolen and if so what did you do about it?
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Hi Harry, Thanks for this post! More people should get the information necessary to fight back against identity theft.
I wrote about my battles with Identity Theft with this post: http://www.thefrugalweds.com/4/post/2014/03/how-to-fight-back-against-identity-theft-a-step-by-step-guide.html
I used to pay for identity theft monitoring right after I discovered I was a victim of identity theft and I kept that service for more than a year. Once I finally felt somewhat safer, I cancelled that service and have used Credit Karma, Credit Sesame, and Quizzle (to round out all the credit bureaus). Whenever I get an alert from any of them, I am on it right away!! You can never be too sure these days!
Thanks for sharing, did you find that the service you paid for provided anything that the free services don’t? I can’t think of one thing that you wouldn’t be able to do on your own.
You know, there wasn’t really anything different from when I was paying for the monitoring service. I have to say, one of the things that turned me off the services was all the negative fear-mongering from the company itself (I would constantly get emails about how I need to increase my level of protection because my information isn’t safe, etc.) It was a cheap sales tactic (ahem, Equifax) and after awhile it got really annoying. I don’t find that kind of messaging with CS or CK. And I still get the alerts that I need when something new pops up. That’s really all I need.
Ok I’ve never actually paid for a service, but I always give the advice not to sign up for them haha. I’m glad you could confirm my suspicions.
I think the way you handled it in your article was pretty much perfect. Notify/contact everyone and set up free alerts. There’s not a whole lot else you can/should do and the only reason I see to pay for a service is if you don’t want to do all those things yourself like you mentioned.
The one thing I’d add that another commenter mentioned was to notify the IRS. I hear that’s the go to identity theft method these days since it’s easy to file a fraudulent return without someone knowing. There’s no monitoring service for that until it’s too late 🙁
Thanks for writing the article! One thing I should add as well is after contacting the IRS (who were actually very nice and I didn’t wait long at all) I was advised to file an identity theft report which is an affidavit with the FTC and a police report. (step three outlined on their site http://www.consumer.ftc.gov/articles/0274-immediate-steps-repair-identity-theft). This is the report you can reference to lenders in the case that someone does try to take a loan out in your name. -BB
No problem Mr. BB. That’s a good reference, thanks for the link. I’m glad you were able to work things out.