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:
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