0:45 – ‘What do you know about this Equifax breach?”
The Equifax Breach: What Happened? – Transcript
Tom Mullooly: In Episode 57, Heinz 57, we’re going to talk about credit freezes and what happened at Equifax.
Welcome to Episode 57 of the Mullooly Asset Show. I’m your host, Tom Mullooly. We’re going to jump right in this week. Tim, what we are talking about today?
Tim: What do you know about this Equifax breach?
Tom Mullooly: To answer this, let’s start by asking you a question. How many people in the United States of America have social security numbers? Tim, do you know?
Tim: It should be everyone.
Tom Mullooly: Yeah. It should be everyone. But we’re going to just throw a blanket over it and say it’s over 300 million people in the United States of America have social security numbers. That includes kids. Equifax reported that up to 143 million consumer records have been potentially hacked into and their credit information, their credit file is floating around. That’s driver’s license numbers, dates of birth, social security numbers, the whole magilla. It’s out there. What does this mean?
Well, when hackers get this information, they can use your credit data, your personal information, to open accounts, borrow money, take out loans. They can do a lot of stuff, and of course not pay it back. The only person it really hurts is you and the economy, because we all pay for identity theft.
What do you do with this. Well, you need to understand that there’s two types of account fraud that can happen from identity theft. The first is new account fraud and the second one is existing account fraud. And we’re going to cover both of them.
With new account fraud, if someone’s got access to your credit and all your personal information, they can open up a new account and have all the bills or statements sent to a different address. You won’t even know that you’re a victim of identity theft until months and months go by when you haven’t paid the bill because you didn’t know about it, and you start getting calls from bill collectors. Or you go to apply for a loan buying furniture, and you find out that your credit’s been wrecked. A lot of people fall into this trap because they don’t know that their credit’s been hijacked by someone, and they’re a victim of identity theft. That’s new account fraud.
With existing account fraud, it’s even worse, because that means someone’s got access to your credit card or your account and maybe they’re sitting on the information. A common trick that we’ve heard is you’ll lose a credit card or it’ll be misplaced or something will happen. Anyway, they’ll have your credit card information and they’ll sit on it for a few weeks. They won’t even do anything. Then they’ll try and run through a little thing, like a dollar on some app that they’re buying, or they’ll go and buy $2.00 worth of gas or something like that. They want to see if the credit card works. And if it does on a really small amount, look out.
Existing account fraud, there’s not too much you can do, but just monitor your statements. We can’t say that enough. Go online. Check your accounts. Read your statements when they come in and question every single item that’s on your statement.
But I want to go back to this new account fraud, because with new account fraud, if this Equifax breach turns out to be serious, we’re not going to know about it, because people can set up all new credit identities, and you don’t even know about it. What can you do to stop this?
You can put a credit freeze on your account, and we recommend that you do this. In New York and New Jersey, where a lot of our viewers are, you can put a credit freeze on your account for free. There’s actually on Consumer’s Union, and Tim, I think we’ll put a link to it in the show notes, a lot of states will allow you to put a credit freeze on your account for free, and if you want to unfreeze it or thaw it, it costs five bucks and they just bill your credit card. It’s worth it for you to look into a credit freeze.
What does it do? It doesn’t affect your credit score. It doesn’t even affect your credit limit. What a credit freeze does, basically says no one else can see my credit history or run my credit … do a credit check on me while I have this block, this credit freeze in place. Look, if you know that you’re going to buy new furniture or you’re going to be buying a new car, you’re going to be leasing an apartment, or doing something like that, you probably want to lift the credit freeze. But no one can run a credit check on you while this freeze is in place.
What’s the first thing that happens when you go to apply for a loan or a credit card or you want to borrow money, even if you’re going into Macy’s to fill out a … get a credit card for a discount, you still have to fill out a credit application. It’s going to get blocked, and it’ll be rejected. That’s how you stop new account fraud. These credit freezes are worth looking into to, and we’ll link to it in the show notes.
There’s also things called fraud alerts. If you’ve been a victim already of identity theft, fraud alert is already a term you’re familiar with. It means that when you go to apply for credit, when anybody who’s had this has fraud alerts, and they go to apply for credit, they’re going to get a phone call from the company, so expect a phone call when you go to apply for your next line of credit, wherever you’re doing that.
What about these credit protection plans. Honestly, we don’t think they’re worth the money that you’re going to pay. A credit freeze, in many cases, you can put on a credit freeze for free. It costs a couple of bucks to lift it when you need it, so it doesn’t get in the way. It’s a lot more efficient and a lot more economical than going through one of these credit protection schemes. We are not big fans of them.
There’s more on the website, and we’ll link to the blog posts that we put up about this, but please, make sure you’re up to speed on this. If you’ve got questions about what happened with Equifax or what’s going on with any of this identity theft nonsense, get in touch with us or talk to your investment advisor. Thanks for watching.
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