Earlier this year, the parent company of TJ Maxx disclosed that information from nearly 46 million credit and debit cards was stolen by hackers - the biggest data breach in history. The stolen information covers transactions dating as far back as December 2002.
The company, which also owns Marshall's and other stores in the U.S. and U.K., revealed that an additional 455,000 customers who returned merchandise without their receipts also had their personal data stolen, including driver's license numbers.
Identity theft is one of the world's fastest growing crimes. A report issued in March by Gartner banking security analyst Avivah Litan estimates 15 million Americans will become victims of identity theft in 2007, up 50% from 2005. Average loss: $3,257 in 2006, up from $1,408 in 2005. With new state laws now requiring the reporting of data breaches, more than 500 incidents of such losses have been reported since February 2005 - losses involving more than 155 million records.
Fifteen percent of identity theft cases involve the opening of new accounts. Criminals use stolen information to open credit card and cell phone accounts, take out loans, and pay medical bills. The victims are left with a corrupted credit history that can take years to correct - and suffer with higher interest rates until their files are cleared.
Consumer advocates and even state governments have been advocating for greater consumer protection in the form of a credit "freeze." Put simply, a freeze prevents the credit bureaus (Experian, Equifax and TransUnion) from releasing your credit report to lenders. Because few lenders will issue credit without this information, it is a good deterrent.
Not surprisingly, this did not sit well with the bureaus, whose core business is making money by selling credit report data. The Big Three issue billions of credit reports each year, amounting to a combined annual revenue of more than $4 billion.
The Center for Responsive Politics reports that the Consumer Data Industry Association (which serves the interests of the credit bureaus) spent $1.4 million on federal lobbying in 2006, trying to fight consumer-ordered freezes and working hard to convince politicians that identity theft wasn't as big an issue as people thought. (Tell THAT to anyone who shopped at TJ Maxx!)
With growing pressure on legislators to enact consumer protection laws, TransUnion decided to offer a file freeze in all 50 states and D.C. this past October. The other two bureaus soon followed.
All three credit bureaus must be contacted for a full credit freeze. Costs are typically free for identity theft victims, and generally $10 or less for non-victims (depending on the state) each time you "freeze" or "unfreeze". This does mean that you will have to unfreeze your file each time you wish to apply for credit - but the increased protection from identity thieves is often worth it.
