By J. Preston Carter, J.D., LL.M.
The Consumer Financial Protection Bureau has released a Fraud Alert Fact Sheet that provides servicemembers with information about getting protective alerts inserted into their credit reports when they are away from home. The CFPB Blog post notes that protections include signing up for an Active Duty Alert and a security freeze.
The CFPB reports that since October 2012, over 650 active-duty servicemembers have submitted complaints to the bureau about their credit reports, and one in six of those complaints involved reports of identity theft or account misuse. However, out of those over 650 complaints, less than 1 percent reported putting an Active Duty Alert in place before leaving for active duty.
The CFPB’s Fraud Alert Fact Sheet details the three kinds of alerts that are available: Active Duty Alert, Initial Alert, and Extended Alert. Each alert notifies users of the servicemember’s credit report of the potential for fraud or identity theft. Under each, the lender has to take reasonable steps to verify the identity of someone who requests new credit in the servicemember’s name approving it.
Active Duty Alert. This alert is available for a person in the military, on active duty, and assigned to service away from the servicemember’s usual duty station. The alert notifies credit reporting companies of the servicemember’s military status, which limits new credit offers while he or she is away. The alert lasts for 12 months, unless the requestor removes it. Also, the servicemember’s name will be removed for two years from nationwide credit reporting agencies’ prescreening lists for credit offers and insurance.
Initial Fraud Alert. This Alert is available if a servicemember has a “good-faith suspicion” that he or she has been or will be a victim of identity theft or fraud. The CFPB notes that this alert is a good first step for someone worried that his or her identity has or will be stolen. This alert provides a servicemember with the right to request a free credit report that will enable the person to “keep an eye out for anything suspicious.”
Under the Initial Fraud Alert, lenders are notified of the alert and must take reasonable steps to verify a requester’s identity before approving new credit. The alert lasts for 90 days, unless removed sooner.
Extended Fraud Alert. This is available for a servicemember who has been a victim of identity theft and has filed a qualifying “identity theft report” with one of the CRAs at www.identitytheft.gov. With this alert, lenders must use the information provided by the servicemember to verify a credit requester’s identity before approving new credit.
The alert lasts seven years, unless the servicemember removes it sooner. Also the servicemember has a right to two free consumer reports from each CRA during the first 12 months, in addition to the free annual report all consumers are entitled to. Also, the servicemember’s name will be removed for five years from the CRAs’ pre-screening lists for credit offers and insurance.
Security Freeze. The bureau’s Fraud Alert Fact Sheet also mentions that servicemembers can completely prohibit the release of their credit files to potential new lenders by placing a security freeze on their files. Requirements for doing this vary by state
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