Equifax Data Breach - how to protect yourself

A few people were discussing with me what the "OmarKnows" plan was for dealing with the Equifax breach and so I'm breaking with tradition by not reviewing a product here but rather giving some advice and thoughts on what i'm doing to protect my family's information.

If you haven't heard by now, Equifax, one of the big 3 credit agencies, suffered one of the biggest breaches of personal information in history.

If you are affected (they claim 140 million people were) then you need to re-think a lot of things. You can check if you are affected by visiting this link. The credit agencies maintain some of your most important and confidential information about you such as social security numbers, addresses, former names, your mortgage, car loans, credit card(s), spending history, balances, divorces, marriages, siblings name and information, children names and information and so on.

What is really awful however, is that much of this information is used to verify who are who you are. For example when applying for a loan, or doing a wire transfer your bank may ask you a series of questions. Those questions come from your credit report. Take PayPal and Square Cash - they will often use your credit report to authorize higher transfer limits from your accounts.

This information was stolen and it's never going back. Equifax has literally exposed millions of people to future and ongoing fraud and identity theft that they cannot put the lid back on. This is a good reminder of how broken the system is. Too much information, without the necessary protections and a flawed business model/incentives. To add insult to injury Equifax has fumbled and screwed up their response and only offered people 1 year of identity theft monitoring.

None of that will matter. This information is in the hands of criminals. This information is valuable for the next decade or longer. The exposure you face to fraud has never been more severe or significant.

So with this in mind, I recommend you take the following actions.

Identity Theft Insurance

Assume you are going to be the victim of identity theft and plan for it. I recommend that you check with your homeowner's policy and see if you already have it. This will probably be the most cost effective way to deal with loss.

As an example, my insurance provider Chubb provides me with up to $100,000 in identity theft fraud expenses.

I don't plan to turn to the same companies (the credit agencies) that hold my data at great risk to me to also be the same people to protect me or provide me with insurance. That's insanity.

Identity Theft Prevention

The best prevention is great monitoring and understanding of your liabilities and risks.

Risks

Know what the limits are on all your financial accounts. What is the maximum amount of money that can be moved in or out of your account. How do they verify who you are? Do you have two-factor authentication and strong passwords? Do you have email and mobile alerts for things like adding a new back account to your brokerage account for transfers?

In short, pay attention to where you have your money and how easy it is to move it in and out. Credit cards already have sophisticated systems for fraud. Bank accounts and checking accounts may not. Does your bank have a 24/7 security department or are you using a local mom and pop credit union that's closed on weekends?

Don't use a debit card - that's a one way tool for immediately taking money out of your checking account. Can you live with an empty checking account for a few days while fraud is dealt with? Do you have backup funding sources? 

Come up with a list of all the places that can siphon money out of the places you have cash and harden / protect them. 

Monitoring

There are lots of expensive monitoring options, and I'm not going to review all of them. I use Credit Karma - they have an awesome mobile app and provide me with real time credit information such as inquiries into my report, my credit history and all my report details and information. I love this app.

Credit Karma is free. That means they are going to make money other ways. You can see how they do this here. Basically they advertise credit card offers to you and when you accept they get a referral. You can also read their privacy policy which is written in plain english.

First, we want to be clear about how we do not share information about you (what we call the “No-Nos”):

We do not share your credit reports or scores with unaffiliated third parties (except agents acting on our behalf; we explain that below).
We do not sell or rent Personal Information to unaffiliated third parties for their advertising or marketing lists.

Credit Karma is also enhancing their services in response to the data breach at Equifax.

I will point out I have learned a lot about how to maintain a high credit score as a result of using this app. As a result that has benefited me through lower auto insurance rates and preferable credit card offers. 

note: set up Credit Karma before placing a security freeze on your account.

Credit Freeze / Security Freeze

Each credit agency allows you to "freeze" your credit report. This means that no one except government agencies can collect your report without you un-freezing it or providing them with a temporary PIN to access it. This is something everyone should do as it puts you in control of access. It does mean that that if you apply for a home mortgage or car loan you will need to go through the process of un-freezing. I would personally recommend doing this given the world has changed.

I have done this, but I had to do it the old fashioned way (writing a letter to each agency since their online forms are either broken or failed for me).

I would direct you to the following ways to freeze your credit report. You need to do this for everyone in your family, and consider doing so for your children too.

1. The Identity Theft Center - How to Freeze your credit report

2. You can go online to request a freeze. My friend Trevin listed all the links you need to visit

In some cases you have to pay to place a security freeze and it depends on which state you are in.  I had to pay $10 per agency.

note: TransUnion has a nice service called TrueIdentity that allows you to freeze and unfreeze your credit report via your phone!

3. Block access to your social security information via automated systems

I have no idea why anyone would find this useful. I have a few decades before my social security benefits matters to me and don't want anyone to try and get my benefits or find out my income statement to calculate benefits. So turn this off.

Summary

  1. Lock down your credit reports by putting a freeze on them
  2. Lock down your social security information
  3. Make sure you have a monitoring plan
  4. Secure your cash accounts
  5. Make sure you have identity theft insurance

I do not recommend giving more money to Equifax, Experian or TransUnion. This companies are the single point of failure for our financial lives. Find other tools and take away their power to expose you to ongoing fraud.