Fraud Alert

What Is A Fraud Alert?

There are two types of fraud alerts: an initial fraud alert and an extended fraud alert:

1. Initial Fraud Alert
   An Initial Fraud Alert will stay on your credit report for at least 90 days. You can have an initial fraud alert put on your credit report if you think you have been a victim of identity theft (or are about to be).
   An initial alert would be the thing to do if your wallet is stolen or if you have been fooled by a "phishing" scam.
   
   This very short time period makes it a poor tool for ID theft prevention.
   
   If you have placed an initial fraud alert, then potential creditors must use (what the law refers to as) “reasonable policies and procedures” to verify your identity before they can issue credit in your name. But you need to be aware that the steps that potential creditors take to verify your identity will not always alert them to an identity thief who is filing a false application.
   
   When you place an initial fraud alert on your credit report, you can then obtain one free credit report from each of the three major consumer reporting companies.  Also, you can ask them to only allow the last four digits of your Social Security number to appear on your credit reports.
    
2. Extended Fraud Alert
   An Extended Fraud Alert will stay on your credit report for seven years.
   You can have an extended fraud alert put on your credit report if you have been a victim of identity theft but first you must send an Identity Theft Report to the consumer reporting companies.
   
   If you have an extended fraud alert, then potential creditors must contact you or meet with you in person before they can issue you credit.
   
   Once an extended alert has been placed on your credit report, you are then entitled to two free credit reports from each of the three major consumer reporting companies, within twelve months . Also, the consumer reporting companies will have your name removed (for five years) from marketing lists for pre-screened credit offers.  You can ask them to have your name added back on the lists before the end of the five years.
    

To place (or remove) either alert on your credit report you will have to provide proof of your identity to the consumer reporting companies..  This may include your name, SSN, address and other personal information.

What Will A Fraud Alert Not Do?

A fraud alert is not not a solution to all forms of identity theft.  It will help prevent an identity thief from opening a new account in your name, but it will not stop an identity thief from using your existing credit cards or financial accounts.

Basically, any transaction that can take place without the need for a credit check, can still happen.  Things like setting up a new bank account or a telephone account could still be done, as long as a credit check is not made.

If an identity theft has already occurred when you place a fraud alert, the fraud alert won't stop the thief from using an account he already has access to, but it will prevent identity theft that involves opening a new line of credit.

What’s The Difference Between A Fraud Alert And A Credit Freeze?

A fraud alert is another tool that can be used by someone who has had their identity stolen (or suspects it might have been stolen).  They are the only ones who can take this action.  Whereas in some states, anyone can place a credit freeze.

When a fraud alert is put into effect, a business can still check your credit report, but under the federal Fair Credit Reporting Act, before a potential creditor can issue credit in your name, they must contact your or follow "reasonable policies and procedures" to verify your identity. 

You need to be aware that the steps that potential creditors take to verify your identity will not always alert them to an identity thief who is filing a false application.

Whereas, a credit freeze is a means to prevent identity theft on new accounts.  A credit freeze allows the consumer to limit access to their consumer reporting file.

A credit freeze will stop potential new creditors and third parties from even accessing your credit report. (Unless you lift the freeze).  Some consumers feel credit freezes give them more protection.

Fraud alerts are mainly effective against new credit accounts being opened in your name.  But they generally will not stop thieves from using your existing accounts or opening a new account where credit is not checked.

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