Protecting What’s in Your Wallet: Responding to the Equifax and Capital One Data Breaches
By now you’ve probably heard about the massive data breaches at Equifax and Capital One. About half of Americans — somewhere in the neighborhood of 147 million — were affected by the Equifax breach. Capital One’s breach impacted some 106 million people.
This article seeks to help you understand what all this means and more importantly, what you can do about it. Because as the well-worn motivational quote says, it’s not what happens to you, but how you respond to it that matters. In fact, this unfortunate event could turn out to be a good thing for you… by impressing upon you the importance of actively managing and protecting your credit.
What is a data breach?
A data breach is an incident that exposes private or protected personal information, such as your Social Security number, bank account or credit card numbers, personal health information, passwords, etc
Data breaches can be accidental or intentional. For example, an employee could inadvertently expose personal information you shared on the internet. Or the breach could be the work of a cybercriminal who hacks the database of a company to access your personal information.
Either way, criminals may access your key personal details and try to use that information for their own profit (at your expense).
What Happened at Equifax and Capital One?
The Equifax data breach was one of the largest in history. Hackers exploited a security flaw to expose the names, Social Security numbers, birth dates, home addresses and driver’s license numbers (in some cases) of 147 million people — and 209,000 credit card numbers. The hacks took place from May through July 2017.
In the Capital One breach, which occurred on March 22 and 23, 2019, a hacker gained access to personal information from consumers and small businesses that applied for a credit card from 2005 to early 2019. The personal information includes names, addresses, birth dates, credit scores, transaction data, Social Security numbers and linked bank account numbers. According to Capital One, the incident exposed approximately 140,000 Social Security numbers and 80,000 bank account numbers — and about 1 million Social Insurance Numbers for Canadian consumers.
How Can You Protect Yourself?
When your personally identifying information is hacked, it makes you vulnerable to identity theft. Criminals with access to your data can open new bank accounts, get new credit cards and potentially even a new drivers’ licenses in your name.
Here are a few action steps to take to protect yourself:
1. Find out if your information was exposed.
Equifax has a webpage that makes it easy to check your status. Just enter your last name and the last 6 numbers of your Social Security number and it will tell you if your information was impacted.
If you are one of the millions affected, you may be eligible to be part of a class action settlement against Equifax. You have the choice between up to $125 one-time payment or 10 years of free credit monitoring. It may make your decision easier to know that the cash settlement will likely be significantly less than $125 due to the overwhelming number of requests. Credit monitoring services can cost $20 per month or more. Ten years of coverage could be worth $2,400 or more. So purely in terms of retail value, credit monitoring is the better deal. Plus, protecting your credit from fraud could save you countless hours and untold sums of money.
As for Capital One, the company said it will send a physical letter to Americans whose Social Security number or linked bank accounts were part of the data breach. It will NOT send notifications via email.
2. Check your credit reports immediately.
You can request a free copy of your credit report once a year from each of the three credit reporting agencies: Experian, TransUnion and Equifax (yes, we know). Go to www.annualcreditreport.com and request them. This is worth doing every year, but if you were exposed by these data breaches, it’s especially important.
Your credit report will tell you if anyone has requested a check on your credit. If someone applies for a new credit card or tries to take out a loan in your name, you’ll see it in the report. It’s an effective way to spot fraud. But suspicious activity may not show up on your report right away. Hackers and identity thieves may take time collecting more information so they can better impersonate you, and then strike later.
3. Pay extra close attention to your bank account or credit card statements.
Make sure you recognize all the withdrawals or purchases listed. Investigate and report anything you don’t recognize.
4. Put a fraud alert on your credit.
Set this up with one of the credit agencies, which is required to notify the other two. Anytime someone tries to apply for credit in your name, you’ll be contacted to verify your identity. This makes it harder for criminals to set up bogus accounts on your credit.
The fraud alert lasts for one year.
5. Get in touch with your financial advisor.
Depending on your situation, your advisor may have additional precautions you can take or specific dangers you should watch out for. He or she can provide personalized advice and walk you through the activities you can do to protect yourself and your money. If you don’t have financial advisor, we may be able to help you.
Data breaches are becoming increasingly common and costly. According to In 2018, 1,244 breaches were reported, exposing a total of 447 million records. It’s a little frightening. But when you acknowledge reality, you can do something about it.
We encourage you to be proactive about keeping your personal data safe and building a positive credit history. Freeman Capital is here to help.
Freeman Capital Advisors is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.