A fraud alert is a tool to help you against falling prey to identity theft. A fraud alert is a statement that's placed on your credit report to alert creditors that your private financial information has been or may be compromised. A fraud alert also lists your telephone number. Creditors are asked to call and verify all credit applications made in your name before granting credit. Fraud alerts are supposed to curb identity theft by preventing impostors from receiving credit in victims' names. But a fraud alert will only work if a creditor takes the time to read it. This doesn't always happen. And some lenders grant credit without even pulling a person's full credit report.
A fraud alert is something that the major credit institutes attach to your credit report. Putting a fraud alert on your credit file is one of the first things you should do if you suspect someone is trying to open credit accounts in your name. It is something one must do, even if you don't think identity theft is an immediate danger. When you, or someone else, try to open up a credit account by getting a new credit card, car loan, cell phone, etc., the lender should contact you by phone to verify that you really want to open a new account. If you aren't reachable by phone, the credit account shouldn't be opened.
To set up a fraud alert is not a big deal. Just contact the fraud department of each of the credit bureaus and ask them to mark your credit file for fraud. In general, you'll probably talk to an automated voice response system and it should only take a few minutes. You should consider using your cell phone as a contact number, so creditors can reach you more easily. Within 24 hours, an alert will be placed on your credit file at all three major credit bureaus. They now share data so when you call one of the bureaus, your alert request is sent to the other bureaus automatically. Your name will be removed from all pre-approved credit and insurance offers for approx two years.
The fraud alert remains in place for generally six months. When the time runs out, you'll need to reactivate the alert. You can also apply for a seven-year victim statement that will keep the alert in place for, you guessed it, seven years. For this, you will have to provide proof that you've been a victim of fraud.
There are several techniques that are in practice to prevent fraud. Online card-not-present fraud is becoming more and more sophisticated. Traditional fraud screening tools can only determine if a credit card is legitimate or if the user-entered account information matches those on record. Today, fraudsters can obtain personal credit card information, pose as the legitimate card holder, and bypass standard fraud checks. Thus now generally transactions are manipulated from various angles to prevent frauds, present ways focus on identifying if the purchaser is the legitimate card holder or not. Through by analysis, it has been possible to identify traits and patterns that are associated with fraudulent orders. By asking the right questions, bureaus provide e-commerce businesses with the necessary information to detect fraudulent orders before the payment is processed. Some key checks that are done are geographical IP address location checking, high risk IP address and e-mail checking, issuing bank BIN Number country matching, enhanced AVS checking, easy integration and supported by various e-commerce software, cost-effective pricing starting at very minimal amount per transaction. To apply these anti-fraud weapons banks often lay focus on them through various schemes like smart banking, online banking, keeping customer’s bank book balanced, applying various surfing and shopping online constrains.
Fraud alerts are not a cure-all, however. A fraud alert can be, and sometimes is ignored by creditors. If you suspect you're a victim of identity theft, or have already become a victim, fraud alerts are only a start in trying to protect your credit. You also need to pay close attention to your credit report to make sure no new credit inquiries or credit accounts are being opened. Activating a fraud alert will cause you a problem if you're used to walking into an electronics store, signing up for their amazing credit offers like those which are meant for many years, and walking out of the store with a new article, object or a product. With a fraud alert active, you have to be available at either your work phone or home phone to approve opening the credit account. But it is not a big deal. It will just require a short delay in your instant gratification and a call-back to the credit company authorizing the new account. If one can live with that, putting a fraud alert on your credit then that will help protect you in some situations.