Three Months Post Equifax Breach
What is our new normal?

Recently one of my dearest college buds called me. The conversation went something like this:
“Hey Barb!” (Fictional name) “Great to hear from you! How are you?”
“Actually, I’m really aggravated. This is a professional call.”
“Really? What’s wrong?”
“Someone stole my identity! Can you believe it? The miserable thieves tried to open several new credit cards using my personal information. They had my name, address, social security number, and my date of birth. They had everything!”
“Oh wow. How did you find out about it?”
“I was notified by the credit card companies. The thieves used all of my personal information, but the tip off was they asked to have the cards delivered to a different address from mine. I feel so invaded! What should I do?”

I am sorry to report that we are expecting to get a lot more calls of this type from clients and friends. Security breaches like the one that occurred at Target a few years ago and, more recently, Equifax, have the potential to affect just about everyone everywhere. I advised Barb to take a deep breath and simplify her financial life as much as possible. “Have only a few credit cards, one primary card and an alternate in case one gets compromised. Then follow them closely, but only on secure, private email or internet sites, never hotel or public sites. Watch for suspicious activity on your current cards, and bank accounts. Limit use of your debit card to ATM withdrawals since protection against fraud is better on credit card accounts than on bank accounts. Don’t be surprised if you suddenly find your card declined at a cash register. Credit card companies are getting jumpy too and are freezing cards the minute they suspect dubious activity. You generally will have to call or respond to an email or text from the company to let them know things are OK. However, it is important not to just rely on the credit card companies to spot fraud. You must also understand that potential thieves can wait patiently until memory of a security breach fades, then they can begin quietly testing the waters. In most cases, theft happens over time, starting with small amounts stolen from across your accounts.”

Additionally, I told her that it is important to check in with the major credit rating agencies to see if anyone is trying to open a credit card or other form of credit in your name. Currently, federal law requires each credit rating company to offer customers at least one free report annually. This allows a person to check a credit report every four months. The three major credit reporting companies are Equifax, Experian, and TransUnion. Go to www.annualcreditreport.com to obtain a report. Again, you can check every 122 days by rotating among the agencies. If you see something suspicious, go to http://www.Identitytheft.gov/databreach to find out how to mitigate the damage.

If your information has been compromised, you may be offered free credit report inquires by the breached company for a period of time. Experian has done this with its Trusted ID business, but stay on top of this as well, since your free period could lapse and you may find a credit reporting fee popping up on your credit card one day. Another strategy is to freeze your credit reports disallowing the major credit reporting agencies the ability to share your information with a potential inquirer. However, should you want to borrow or establish a new credit account, you would need to unfreeze your credit report. It may surprise readers to know that credit reports are available to a wide range of financial institutions such as property and casualty insurance companies who want to know how reliably you pay your bills before they quote you a rate on your home or car insurance. If they happen upon a frozen account they will likely use the old number available at the time the account was frozen. This may be OK for the insured if the frozen credit rating number is high. However, freezing the credit report may be quite disadvantageous to a young person who is just establishing credit, or someone working on improving his/her credit number.

To conclude, there is no “silver bullet” solution to information breaches. We all need to stay on top of our financial affairs. Now, more than ever, it is important to keep things as simple as possible and to be financially well organized. At Deighan Wealth Advisors, we are very careful to protect client information, and Schwab is as well. This is why we carefully review the Schwab transaction download every day, and why Schwab as your securities custodian requires more and more paperwork before addresses can be changed or accounts money-linked. You can be sure that the SEC Examiners were very interested in our protocols with respect to client privacy when they were here for a routine visit in July. We were glad to show them our systems and to demonstrate that we take compliance with the securities laws and regulations seriously. We will continue to be vigilant and vigorously protect our clients’ information.

In the meantime, my friend Barb, and all of us with her, will be spending a lot more time reviewing our credit card and bank statements, as well as checking our credit reports. Unfortunately, routine personal vigilance must be our new normal. Please call us if you have any questions or concerns about this very important issue.