Special Alert About the Equifax Data Breach

The Equifax Data Breach:
All You Need To Know

The Equifax Data Breach – What Should You Do

The recent data breach at Equifax has sparked a lot of discussion about how vulnerable the personal information of all Americans may be to theft.  Is there anything you can do to protect yourself in our computer-driven society?  While the Equifax hack was by far the largest in history, it’s not the first and will not be the last.  In 2017 alone, Verizon, Blue Cross Blue Shield/Anthem, Dun and Bradstreet, Chipotle, Washington State University, and even the IRS have discovered that they’ve been hacked – exposing the personal information of millions of Americans to thieves.  The breach at Equifax was so far-reaching that several corporate officers have retired, and many on Capitol Hill are calling for a complete investigation.  With over 143 million Americans at risk of being involved in this massive breach, you could very easily be affected.

What You Can Do If Your Information Has Been Compromised

So what can you do to protect yourself?  You probably know that Equifax has set up a website where you can check to see if your number has been exposed.  If your information was exposed in the breach, you can get free credit monitoring for one year.   In my opinion, that’s like closing the barn door after the horse has gotten out.  They’re happy to let you know that someone has opened up a fraudulent account in your name, but it’s still up to you to clean up the mess if they do!  And what happens when your year of free credit monitoring is over?  If you don’t pay for credit monitoring every year for the rest of your life, you may never know if someone is using your identity at some point down the road.

What Does Freezing Your Credit Report Do?

Some experts are recommending that you place a freeze on your credit files.  A freeze prevents lenders from even accessing your credit report.  The advantage to freezing your file is that, if they do not know your credit history, lenders will not offer credit to a thief who is trying to use your identity.   What are the disadvantages of freezing your credit files?  First, it’s not an easy process.  There are three major credit reporting bureaus, and you will have to place three separate freezes.  You can do so by using these links:

Equifax freeze

Transunion freeze

Experian freeze

If you are a Pennsylvania resident, the law permits the credit bureau to charge you $10 to freeze your file.  Equifax has agreed to waive their fee, but only after public pressure.

Unfortunately, the data breach at Equifax has caused all three credit reporting agencies to be overwhelmed with requests to freeze accounts.  Many consumers are complaining that they can’t even get into the websites or if they do get in, that the site crashes after they fill out the application form.  If you have not already frozen your account, you may have a better chance of getting through if you try before 7:00 a.m., or after 11:00 p.m.  Another disadvantage of freezing your credit files is that if you need to apply for credit yourself – for a car loan, a home equity loan or even a medical credit card – you must first remove the freeze from your files.  You will need a PIN number to remove the freeze and, if you lose your PIN number, you will be facing a time-consuming and difficult process to get another one.

The Equifax Data Breach and Your Tax Return

Opening phony credit accounts in your name, unfortunately, could be just the tip of the iceberg.  The Internal Revenue Service (IRS), which has issued more than $20 billion in fraudulent tax refunds over the past few years, could be plundered unless there is intervention by Congress.  By law, the IRS must process your tax return within a specified period – generally 45 days – or they have to pay you interest on your refund.  To meet those guidelines, they’ve adopted a “pay first, ask questions later” philosophy.  In our practice, it’s not uncommon to see a client get a tax refund check and then an audit notice a year later! The IRS’s system requires little more than a name, date of birth and Social Security number to process tax returns – information which was exposed in the Equifax data breach – and they accept returns as soon as January 1st.   On the other hand, employers aren’t required to submit updated employment information to the IRS until March.  By that time, about half of all of the refund checks have already been issued!

Protecting Yourself After the Equifax Hack

So what can you do to protect yourself?  If you don’t want to freeze your credit files, then you should be checking your credit reports regularly for fraudulent activity.  Most of the major credit card companies allow you to request that you be notified if a charge is processed on your account that exceeds a certain dollar amount.  You should consider placing an alert for an amount that exceeds your normal spending threshold.   If you are traditionally a procrastinator when it comes to filing your tax return, don’t wait – get it filed as soon as possible.  Even if you owe, you don’t have to pay the IRS until April 15th.  If you have any credit card debt, get it paid off.  Financial institutions that fall victim to fraudsters because of the Equifax data breach will have to pass the cost of their losses on to their customers – and you don’t want to be one of the unlucky ones footing the bill.

Last but not least – whatever you do to protect yourself, make sure that you do the same for those who might not, including children and elderly parents!

Stay safe out there!

Jim

 

Don’t Become a Victim of a Financial Scam

Special thanks to our latest radio guest, President and CEO of fiduciary360 (fi360), Blaine Aikin, for taking the time to give us insight into several of the proposals currently before Congress dealing with regulatory reform. Blaine gave up his time during an especially busy week – he joined us on Wednesday night (9/9) and then traveled to Washington, D.C. for a scheduled meeting on Friday (9/11) with SEC Chairperson Mary Shapiro.

The trip to D.C. was taken with members of the Committee for the Fiduciary Standard – a group that was formed to draw the public’s attention to the movement to create a unified fiduciary standard.  Fiduciaries are people who manage money on behalf of others and stand in a special relationship of trust and legal and ethical responsibility – including CPAs, CFPs, stock brokers and insurance brokers.

Currently, some fiduciaries are held to a fiduciary standard while others are held to a suitability standard.  It is the goal of the Committee for the Fiduciary Standard that the fiduciary standard apply to all fiduciaries and that disclosures become crystal clear.  (For more on this effort, visit fi360’s website at www.fi360.com).

During the second half of the show, Blaine took a close look at some of the recent financial scams and scandals (including the Bernie Madoff scandal) and what the average investor should be doing to avoid becoming a victim of such a scandal.

Blaine’s advice was excellent and taking a minute to review his suggestions could save you financial heartbreak in the future.  For starters, Blaine recommends that investors rely on RFPs (requests for proposals) instead of third party testimonials.  Do a background check – read the fine print in disclosures.

Don’t work with people who don’t have time to answer your questions or tell you that you don’t really need to know.  This is one of the ways that Bernie Madoff was able to avoid detection for so long.

Make sure that your advisor uses a system of checks and balances.  For instance, Bernie wore four hats – broker, advisor, manager and custodian.  Included in this system of checks and balances is making sure that your advisor does not take custody of your assets directly.

Do your homework – look for 3rd party verification – audited financials, GIPS certified performance standards, CEFEX.

Finally, keep in mind the old adage – if something seems to good to be true, it probably is.

If you missed the show with Blaine Aikin and you’d like to hear either the entire show or portions of the show – check back to this website soon.  Audio will be posted by next week (the week of September 21st).