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Fraud
alerts generally let new creditors know you may
be a victim of fraud and instruct them to take additional
steps, such as calling you, before issuing credit.
Most
people know that much -- but perhaps, not much else. While compiling recent reader
responses to a newsletter query on fraud
alerts and credit
freezes, we discovered that many readers did not understand the difference
between a fraud alert and a credit freeze, or held misconceptions about the way
fraud alerts work. Some wrote about fraud alerts as if they
didn't expire for years. In reality, only the extended fraud alert lasts seven
years -- and you'd know if you had one because you have to submit a copy of a
police report documenting the identity theft to get the alert. Others
seemed to believe that creditors must call you to verify new credit applications.
In a nutshell, that's not entirely true. We decided it was
time to set the credit record straight.
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7 myths about fraud alert: | |
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We asked the credit industry about some
of the biggest assumptions and added a few other important
questions we thought were important to clear up. Clearing
the fog of confusion that hangs over fraud alerts, here
are the answers to some of the mistaken beliefs fluttering
around.
May
you be a little wiser about protecting your credit file from identity thieves.
1.
You must have a suspicion of identity theft to raise
a fraud alert.
While that's generally true, technically, anyone can
set up a free 90-day fraud alert at any time. You merely
have to claim that you believe you may have been a victim
of identity theft. "There's no lie-detector test,"
says Maxine Sweet, spokeswoman for Experian. Only a
seven-year fraud alert requires official documentation
to prove the identity theft.
The credit bureaus will honor requests for fraud alerts,
unless of course, the consumer doesn't have a credit file with that bureau. 2.
The fraud alert requires creditors to call you.
No, it merely asks
them to do so. The actual wording of the Fair Credit Reporting Act states that
creditors must call the number provided (if one is given) in an initial or active
duty alert or take "reasonable steps to verify the consumer's identity
and confirm that the application for a new credit plan is not the result of identity
theft." The law does not spell out what creditors must do. The creditor may
take a number of actions, including calling the consumer at the number provided
with the fraud alert, asking the applicant for more identification or simply denying
the application. If the creditor does not have the time or the resources to take
extra verification steps, the application may get denied.
Only extended alerts require the creditor
to call the consumer or contact him in person before
granting new credit. Not everyone can get an extended
alert -- you must submit a copy of a valid identity
theft report as part of the setup process.
Phone
number or not, the issuer faced with an initial or active duty alert gets to decide
how to treat it. "The credit grantor will follow the policies and procedures
it has put in place to best protect the consumer," says Steven Katz, spokesman
for TransUnion's TrueCredit.com. | 
