Last month’s revelation of the massive Capital One credit breach added to the litany of bad news on the privacy front. Just after the Federal Trade Commission settled with Equifax about its role in leaking the information of 147 million “customers,” Capital One announced that the personal information of nearly 106 million people was exposed.
There’s a certain irony in being called a customer by the credit bureaus. Do you remember giving Equifax the right to track your credit? They didn’t ask and you couldn’t easily “unsubscribe” if you wanted to.
With the Equifax breach settlement, you have the right to two major options even if no harm has come to you. The first choice is that you can elect to receive up to $125. While this would help offset the pain of the breach, when you dive into the details there’s no guarantee of how much restitution you would receive. It’s dependent upon how many claims are made. There is only $31 million set aside to cover this “alternative reimbursement compensation.” After the settlement is apportioned to over 147 million potential claimants, the amount you would get may be enough to cover lunch.
The other option is free credit monitoring for four years with all three major credit bureaus. This monitoring can be extended with Equifax for an additional six years at no charge. Great, you may be thinking. Why would you trust the guys who lost your data to monitor your credit? Well Equifax continues to have sensitive data about your financial life whether you like it or not. Free credit monitoring is available through services such as CreditKarma and most likely your credit card companies. But typically it does not cover all three bureaus.
To take advantage of this offer, go to equifaxbreachsettlement.com to see if you qualify and to sign up for the monitoring (or request the cash) by Jan 22. If you spent time repairing your credit or incurred a financial loss because of identity theft, you can also use the web site to apply for additional reimbursement.
Little noticed in the settlement are the identity restoration services that will be provided free of charge by Experian (not Equifax) if your data was compromised. The service would help you with the mind-numbing chores of repairing your credit for the next seven years. The repair process often has the biggest impact when our identity has been stolen. Usually we will be made financially whole in the end, but it becomes a part-time job contacting credit bureaus, creditors, and government agencies and convincing them that we have had our identity stolen. You don’t need to do anything to activate the identity repair coverage.
So what should you do about these breaches besides wishing we had the European right to “be forgotten?” Freeze your credit (also known as a security freeze) with all three bureaus by visiting the official Equifax, Experian, and TransUnion web sites. If you’re married, you and your spouse both must do this. It’s completely free to place a credit freeze on your accounts and starting last year you can now thaw or remove the freeze at no cost if you need to apply for credit.
Finally, it may surprise you that the people who are most vulnerable to identity theft are children. After all, they are not regularly applying for credit cards and mortgages, and looking at their FICO scores. It can take years to discover that they’ve been targeted for identity theft. I recommend that you freeze their credit with all three bureaus as well, a burdensome step that fortunately is free of charge. Minors also have access to free credit monitoring for up to 18 years as part of the settlement. For more information on the breach settlement, go to equifaxbreachsettlement.com.
David Gardner is a certified financial planner with a practice in Boulder County and can be reached with questions at [email protected] and on Twitter @Dave_CFP. The views expressed in this article are the author’s alone.