Freezing your financial identity
New changes to privacy rules mean you can snap freeze your credit file so no-one can take out a loan in your name. When should you? Eloise Gibson explains
Maybe it was the takeaway bar. Possibly the taxi. Or did you leave it in the bottom of the supermarket trolley?
In the age of electronic money, losing your wallet is no longer a mere matter of ordering a new driver's licence.
The most seemingly boring collection of details - birthday, IRD number, a coffee-stained bank statement or the name of a long-dead pet - can be used to poach your identity.
Sadly, when the repo man calls, it may be your door they are knocking on, not that of your high-rolling alter-ego, whom we'll call Fake You.
You may realise there are unpaid debts in your name when you are declined for a loan.
But there are ways to ruin the fun for Fake You - including a new option to freeze your financial identity.
Since April last year New Zealanders have been able to snap freeze their credit files like a pack of Watties minted peas.
It's free, all it takes is contacting three companies: Centrix, Dun and Bradstreet and Veda. Those are the credit bureaus Fake You will have to turn to if they want to take out any serious credit in your name.
By freezing your file, you may be able to prevent someone who has your personal details from opening new store cards, car loans, cellphone accounts or other debts in your name.
The new freezing feature was introduced as part of sweeping changes to privacy and credit rules.
A freeze, known as a suppression, means the credit bureau can't share any details about your credit history with banks, telcos, car financiers, department store card companies or other lenders.
If they can't check your file, companies usually won't lend, making it harder for Fake You to borrow.
HOW IT WORKS
When you contact the credit bureaus you will get an automatic two week suspension of your file. This is the financial identity equivalent of putting a stop on a lost credit card until you get a new one or find the old one under a car seat. You'll be asked for a passport or driver's licence and supplied with a PIN. (Keep the PIN, because the company can charge you for a second one.)
When the two weeks is up, you can request an extension for a minimum of a year. The company can ask for a police or bank letter showing you are risk of being defrauded. At this point you'll also get a list of current loans and debts under your name - handy for checking whether Fake You has taken on any debts without your knowledge.
Once the danger is over you can cancel the suppression permanently.
COPING WITH A FREEZE
Even a frozen credit file keeps living and breathing.
Companies with whom you already have credit - telcos, power companies, banks, car lenders - can keep updating your file showing how timely you are at making repayments, something they are now allowed to do under new credit rules. Previously they could only record if you had made a major default.
The system will go on building up a credit score going back two years.
But the score will reflect you - not your thieving namesake.
If you want to borrow money while the freeze is in effect, or open a new hire purchase or electricity account, you will need to give the bureau special permission to release your file to a particular lender. That rules out spontaneous borrowing for big purchases. The lender will need your PIN to see your file.
You might need to allow extra time if you make a mortgage application or plan to do any borrowing to work around the freeze.
IN YOUR NAME
So a freeze is an option but are you likely to need it? Numbers on the prevalence of identity fraud are hazy: the latest New Zealand guesstimate, by the Department of Internal Affairs in 2010, was that 133,000 people a year might have their identities stolen, costing between $132 and $209 million.
The Privacy Commission says US research suggests 18-24 year olds may be at greater risk, although they also take less time to untangle the mess than victims over 65.
Sometimes fraudsters trick people into revealing their information. Other times they steal or copy someone's identity documents.
Unfortunately the responsibility for undoing the damage falls squarely on the person who's identity is nicked. In the US it takes an estimated 40 hours to contact all the requisite organisations and clear things up once Fake You has opened an account in your name.
The Privacy Commission offers the example of Jane, whose name, appropriately, has been changed for privacy reasons.
Jane returned from holiday to find her mailbox empty. Four weeks later, $31,000 disappeared from her account, after fraudsters used her name and date of birth to make fake IDs. Two years later she was hit again by thieves using the same information. Another victim, John, was convicted of someone else's drink driving offence after he gave his full name and details to someone he met travelling in the South Island.
The Commission says people's personal information is frequently traded, so it is possible the original Fake You will sell your data and a different person will try to use your details months or years later.
The police say you should tell them if you suspect identity theft, even though fraud can be difficult to track if the thieves are overseas.
WHEN TO FREEZE
Usually when people think of someone stealing their details, they are worried about losing their credit card or account information. That kind of fraud at least shows up on a bank statement and the Privacy Commission says a file freeze is probably not the answer: Better to cancel your cards and keep checking your statements to see whether anyone else has used them.
If you choose a file freeze, it won't stop a thief using your existing bank accounts or credit cards.
It is trickier to spot when someone takes out a whole new line of credit in your name. By the time you notice, your hitherto-good credit history might be damaged or a company might be chasing you for Fake You's debts. This is where freezing comes in.
The Privacy Commission has a handy list of times to consider a freeze.
You might notice some mail missing, lose your wallet, or notice a bank transaction you don't recall making.
Big warning signals should flash if you find out someone has tried to open an account in your name, or you receive a letter, receipt or invoice about a debt or purchase you don't recognise.
Or a company or, ahem, Government agency might contact you to say there's been a security breach and some of your personal details have accidentally been released.
Or you might be turned down for a loan or credit card even though you thought you had a good payments history.
One of the most under-used features of privacy law is the ability to check your credit file for free at any time.
Credit bureaus' websites highlight the wonders of their paid alert systems and paid quick-turnaround options, but unless you need the file quickly the companies have to give you a free copy by law within 20 days of asking. Often you'll get it within a week or less.
Checking your file regularly means you can see if a Fake You is taking on debt.
You can also check the accuracy of information the credit bureaus hold about you. If anything looks wrong you can contact them to correct it before it becomes a problem. It's more important to keep checking your file regularly now that companies are allowed to hold additional information about you, including how timely your payments are.
- Put a lock on your letterbox
- Call the bank and other companies if you seem to be missing statements.
- Shred or destroy old bank statements, credit card bills, utility bills or other documents.
- Be careful giving information over the phone or internet (including putting your full date of birth on Facebook).
- Prune what you carry in your wallet, don't carry your passport or birth certificate unless you have to, and don't carry PINs
- Check your bank and credit card statements for unauthorised transactions
- Delete personal information when you get rid of old computers
- Avoid using public computers for online transactions and banking
- Destroy old credit and debit cards and cancel all cards and memberships if your wallet is lost or stolen.
- If you move house, update your address details with all companies that may send you mail.
Source: Police, Privacy Commissioner