by Wolf Richter Wolf Street:
Third largest US bank reaches out to its customers. A mass credit freeze would have a huge impact.
No one knows yet how the Equifax hack – during which Social Security numbers, birth dates, addresses and, “in some instances,” driver’s license numbers of 143 million consumers had been stolen – will wash out for Equifax, or for the other credit bureaus.
But it increasingly looks like a far bigger and broader mess not only for the credit bureaus but for the overall consumer-based US economy whose grease is easy and often instant consumer credit.
People are trying to put a credit freeze on their data at the three major credit bureaus to protect themselves from identity theft. Victims of identity theft get caught in years of a Kafkaesque nightmare where debt collectors hound them for debts incurred in their name by someone else.
A credit freeze is the best protection against identity theft. It has now been recommended by State Attorneys General, the US Government, the biggest mainstream media outlets, and numerous other outfits including from the first moment on – the evening of September 7 when the hack was disclosed – my humble site. In over 400 comments on my three articles (here, here, and here), readers have shared tips and frustrating experiences trying to deal with overloaded websites that crashed, sent people in wrong directions, or failed in other ways to produce results.
The credit bureaus claim that they have staffed up their call centers, beefed up their websites, etc. etc. But it’s still a mess. And it has been going on for ten days!
So we know there is a surge of consumers trying to protect themselves by putting a credit freeze on their data at the three major credit bureaus. But only the credit bureaus know the actual number. And they keep it close to their vest.
Now even Well Fargo, the third largest bank in the US by assets, posted an “Equifax Alert” on its customer login-page. This is the page millions of customers see when they log into their accounts.
“Here’s what you should know about the recent data compromise,” it says. The link take you to a Wells Fargo page that makes four standard and very sound recommendations on how to deal with the Equifax data hack – including the single most important: “Consider placing a freeze on your credit.”
It encourages its customers to “visit the Federal Trade Commission’s (FTC) dedicated Credit Freeze FAQs.” And it links to it.
When a bank encourages its customers to get a credit freeze and refers them to a federal government website that shows how to go about doing it, people take notice. Other banks may already have posted similar information to encourage their customers to protect themselves, or may soon do so.
This is huge because banks are reaching people who are not paying attention to the news – people who would normally miss the entire debacle. It makes many more millions of people aware of what to do.
And if enough people follow through, it will alter the way an easy-credit dependent consumer economy operates. Here are some of the potential impacts:
Revenues of credit bureaus take a licking. A credit freeze prevents them from selling your data to other companies with which you don’t already have an established credit relationship.
Companies use enhanced “risk modeling” to bypass credit bureaus. A mass credit freeze makes it tough for companies – such as banks, utilities, auto lenders, and credit card companies – to set up new accounts. So they will try to find other ways to confirm the credit worthiness of applicants, bypassing the credit bureaus. Ford Credit already announced enhanced “risk modeling” prior to the Equifax disclosure. These efforts will strengthen.
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