The recent disclosure of the email hack into Equifax that affected 143 million Americans has frightened and angered the public. Along with the other major credit bureaus, TransUnion and Experian, we counted on Equifax to take all measures to prevent such an occurrence. Unfortunately, even after they were informed in advance that they were susceptible to such a breach, Equifax failed to adequately protect this data.
We live in a world where cyber crime has become prevalent and exponentially more damaging than street crime. There is no way to completely safeguard your identity and credit but there are measures that can be taken to prevent theft and minimize the potential damage.
Five prevalent scams all seem to derive from three separate information hacks - social security numbers, email addresses and online accounts, and credit card information. Specifically, these information breaches have been used to perpetrate the following crimes: 1) purchasing items using stolen credit card information, 2) applying for credit using a stolen social security number, 3) accessing funds from financial accounts, 4) filing a false tax return that requests a refund, 5) accessing your medical information and filing claims for false prescriptions or other medical expenses.
There are several steps that you can take to alleviate potential problems. First, use a strong password to safeguard all of your financial accounts with online access as well as all frequently used accounts such as Facebook, Amazon, Google, iTunes, etc. You may wish to employ a password manager that stores all accounts in one secure place. Second, set up a two factor authentication for all of these accounts. When someone attempts to access an account from an unknown device, a special code will be texted to you. Third, only use credit cards not debit cards for purchases. If your credit card is hacked, it's not your money and the credit card company is responsible to reimburse you. Fourth, consider freezing your credit with the three major credit bureaus. While you will need to notify each bureau when you wish to release this information whenever applying for new credit, this action will prevent any hacker from applying for unauthorized credit in your name.
If you remain concerned about a breach despite taking these preventative steps, you may wish to set up a fraud alert with one of the credit bureaus. This action forces lenders to take extra steps to validate the request for credit. Finally, you should be diligent in checking your credit on an annual basis. Every 12 months, a free report can be delivered to you from each of the three major credit bureaus. If you are concerned that 12 months is too long, you may pay for services on a monthly basis. If a credit check is requested, you will be immediately notified. I opted for this service with Experian a few year ago when I was concerned that my credit information had been compromised.
In our practice, we encountered a case where both a client's social security number and email was hacked. We received an email ostensibly from the client requesting that funds from an investment account be wired to an overseas financial institution to pay for an emergency medical procedure. In all cases when we receive an email requesting a withdrawal of funds to be sent to a heretofore unknown account, we always speak to the client directly for verbal confirmation of the request. In this case, the client had not initiated this request and was stunned to learn of this breach. Please be assured that all requests for funds are funneled through us so that we can ensure the legitimacy of the action.
We live in an age where the financial devastation of hacks can result in issues that may take years to remedy. While it is a sad fact of life that criminals are continually devising new ways to steal, measures can be taken to protect yourself.
We hope you have a happy and healthy holiday season.
Clifford L. Caplan, CFP®, AIF®
Stephen W. Caplan