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NEW YORK (MONEY Magazine) -
Grinding through the D.C. sausage factory is some constructive legislation that clamps down on the use of Social Security numbers and further restricts the sharing and brokering of data. But real, permanent protection requires giving consumers more control.
You should be able to request a credit freeze at minimal cost. Credit rating agencies and mortgage brokers hate this one. But consumers ought to have the choice of limiting access to their own data -- and that power should extend to all consumers, not just victims of ID theft or security breaches.
This could add some inconvenience to your life, but Vermont attorney general William Sorrell thinks businesses overstate the problem.
"A person who would put a freeze on would have the brains to think ahead before they go out and buy a car or apply for a card," he says.
You should be notified whenever a third party asks an agency for your credit rating. Privacy advocates like Solove have proposed this idea to help people who don't want to keep their accounts frozen. But the credit rating industry grumbles that a notification rule like this would force it to give away something for free.
If people are going to grant credit in your name without your permission, however, you should know about it.
You must be notified when personal data is stolen or goes missing. This is already required by several states and certain federal regulators. Many businesses embrace the idea in principle, though they'd like more say in deciding which dangers you need to hear about.
"We get into a situation where there's a 'crying wolf' syndrome," says Acxiom's Barrett, who would like a federal law pre-empting California's.
Then again, notes consumer activist Mierzwinski, forcing firms to admit to serious data security breaches might embarrass them into beefing up their protections.
It should be much easier for you to repair your credit after an ID theft. If the government can't stop identity theft, it can certainly help you clean up the mess by putting the entire time-eating, paper-gobbling process on one simple Web site that creditors can check so that you don't have to contact each one individually.
Observes Indiana University professor Fred Cate, "Identity theft victims tell us that their biggest problem is just getting their reputations cleaned up."
Can the credit industry's interests and your privacy needs be reconciled?
They will have to be -- the status quo won't hold much longer. Criminal networks stealing hundreds of thousands of names at a pop could become a nightmare for the data industry, not just consumers.
And bubbling public anger could boil over into an issue that Washington pols won't be able to ignore. Both the industry and the politicians should face up to the fact that the foot dragging can't continue. After all, consumers' interests are everybody's interests.
Protect yourself
Your data can't be made totally secure, but these moves will reduce your odds of becoming a victim.
Guard your data Don't carry vital ID in your wallet. Always ask whether you need to give out your Social Security number; offer a driver's license or other ID instead.
Erase your trail Reduce documents to confetti with a crosscut shredder ($50 and up). Call 888-5-OPTOUT to get off mailing lists for pre-approved credit cards. Get bills online, not through the mail.
Learn not to share Ask financial firms not to trade your personal data. Privacy policies explaining how to opt out are mailed each year. Request a copy if you need one. Ask that your data not be shared with affiliates or with outside (nonaffiliated) firms.
Don't be a phish Computer hackers send out mass e-mails that look as if they come from banks, brokerages and online retailers. Never click on a hot link in such an e-mail and never respond with any personal information. (No legitimate business would ask you to do so.) Instead, use your browser to log on to the company's Web site independently.
Stand on watch By Sept. 1, everyone in the U.S. will be entitled to one free credit report a year. Go to www.annualcreditreport.com or call 877-322-8228 to request it. For continuity, you can get a report from one of the three big rating agencies every four months. You'll find their numbers below.
Fight back
Here's what to do if you think your identity could be used to make fraudulent transactions.
Set up fraud alerts Contact one of the three credit rating agencies (Equifax, Experian and TransUnion; see resources box for phone numbers) to place a 90-day alert and get a free copy of your credit report. If you tell one agency, it should notify the rest. Or call each for extra assurance.
Inform creditors Call the security departments of your credit-card issuers and other creditors. Close accounts that have been tampered with, and have the accounts marked "closed at consumer's request." Ask not to be held responsible for accounts you did not open.
Tell the police You'll need to file a police report if you want to extend your fraud alert for seven years and correct records. Be detailed, using copies of your credit reports and communications with creditors.
Keep good records Follow up by sending certified letters that confirm details of your talks with credit bureaus and lenders. Request that you not be held responsible for fraudulent activity. Fill out lenders' fraud forms or send copies of your police report and a Federal Trade Commission ID theft affidavit.
Monitor accounts Many companies offer monitoring services for a fee. But you can do this yourself at no cost, obtaining free credit reports as often as possible and reading over all statements of credit-card and banking activity.
For more on keeping your data secure, click here.
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