What’s stopping consumers from using credit freezes?
A Identity Theft Resource Center and DIG.Works research explored the relationship between data breach notices and a decision for a consumer to freeze their credit, as well as credit freezes in general.
Consumer credit freeze awareness
The research surveyed 1,050 U.S. adult consumers on the topic and discovered that most consumers are familiar with the credit freeze process. However, there is a disconnect between awareness of credit freezes and how often consumers use them to protect their or their family’s identities.
- More than three-fourths of consumers responding to the survey said they were familiar with the credit freeze process.
- Fewer than one-third of overall survey respondents had frozen their credit at one time for any reason; only 3% of consumers froze their credit after receiving a data breach notice.
- Confusion and incorrect information about the process, cost and impact on credit scores caused a significant number of consumers to avoid freezing their credit. 11% of respondents have never placed a credit freeze because they incorrectly believe it will impact their credit score or require payment to freeze or thaw. However, most respondents did not freeze their credit because they didn’t think they needed to do so.
- One-third of respondents said they did not believe it was necessary to freeze their children’s credit to prevent identity misuse; a slightly larger number reported freezing their children’s credit.
“A credit freeze is generally considered the most effective tool to prevent new accounts from being opened in your name. This research shows that there needs to be improved awareness and utilization of credit freezes, particularly for minor children.”
- Data breach notices issued under state laws and federal regulations should include an explicit recommendation for victims to freeze their credit as soon as possible, regardless of the type of data compromised in a breach.
- Data breach notices should include information that clarifies that credit monitoring alone cannot prevent a new account from being created.
- Businesses, victim advocates and government representatives should collaborate on a comprehensive education plan to improve awareness and utilization rates of credit freezes. A special emphasis should be placed on the benefits of freezing a minor’s credit.
- The consumer reporting industry should improve the ease of operation of credit freeze and thaw requests, especially for minor children. This includes creating a common system where consumers can freeze or thaw their credit without contacting each Credit Reporting Agency (CRA).