LiveWire

A post by Maynard

Today (Monday) Tammy mentioned this news story.

The Federal Trade Commission is cracking down an international micropayment scam that stole almost $10 million from users’ credit and debit cards by lifting sometimes just pennies at a time…

…Altogether, the fraudsters took anywhere from $0.25 to $9 per transaction, which remained undetected by antifraud software as well as by the theft victims who perhaps didn’t feel inclined to dispute a low sum with their credit card companies. The fraudsters usually only made one transaction per card.

Altogether, the thieves charged a total of $9.5 million from a total of 1.35 million compromised cards over a period of four years starting in 2006. However, only about 10 percent of the fraudulent charges were ever reported or contested, according to the FTC…

The lesson here is to pay attention to your credit statements. Don’t let mystery entries slide by unnoticed. Tammy described an incident where she discovered bogus charges on her own credit card.

There’s a big difference between fraudulent credit card charges and identity theft, which is really what I wanted to touch on here. Being the victim of identity theft will be much more troublesome. The nightmare scenario is that you find out, months or years after the fact, that “you” have run up a lot of bills, or maybe sold your property, and now somebody is coming after you to collect the debt or throw you out of your house. This could make a mess that will haunt you for years to come.

So you want to stay on top of what “you” are doing. There are plenty of services promising to monitor your credit profiles for $15 a month and up. You will be immediately notified when a new line of credit is opened in your name. Being a cheapskate (it’s not like I’m Obama and can write checks that your grandkids will pay off), I wonder if that expense is necessary.

I claim no expertise in addressing this situation, but here’s what I’m thinking (and correct me if I’m off base).

An option that invokes no monthly fees is to freeze your credit report. You initiate this by directly contacting the three credit report organizations (Equifax, Experian, TransUnion) and telling them that your report is to be locked down. With your credit report unavailable, credit can no longer be issued in your name. Of course, a legitimate credit check will also bounce, so you’ve got to lift the freeze when you apply for a new line of credit or are otherwise investigated. There may be a charge for freezing the account and another charge for temporarily lifting the freeze. Here are the Consumers’ Union general comments on the freeze. And here is the California law, under which you pay $10 to each agency to start the freeze (so that’s a total of $30), and another $10 per agency for lifting it. It sounds like the freeze is effective protection, but it could have its awkward moments.

The credit monitoring options will, for a monthly fee, tell you that your credit has been checked. So this doesn’t prevent identity theft, but it should inform you immediately if it happens. The cheapest service I’m finding is this Experian Triple Alert plan, at $5 a month. The other monitoring services cost upwards of $15 a month, and promise additional supplementary services that I don’t think are vital.

My inclination is to sign up for this basic $5-a-month notification. If I ever actually become the victim of identity theft, I figure I’ll first stomp out the brush fire and then opt for the freeze. I think the freeze becomes a free service in the wake of identity theft.