Credit Freeze: The New Normal In Data Breach Protection?

Another day, another computer security breach; it’s time for the experts to roll out the inevitable article about how to protect yourself now that your data are in the hands of criminals The advice is always the same: “change your password,” “maybe get a fraud alert or credit freeze,” and the ever comforting “watch and wait.” Why is it that this never changes?

What Could Go Wrong?
If a breach is “just” exposure of login credentials, the main thing to watch out for is thieves using those credentials to log into your account. Promptly changing the stolen password might keep unauthorized people out. And enabling a second factor of authentication is enough to thwart the average adversary.

If a breach reveals payment card information, banks will generally revoke the affected cards and reissue new ones. While this is not ideal because it’s quite costly and problematic for both banks and consumers, that problem is usually solved as soon as the new card is activated.

For breaches that reveal social security numbers or medical IDs, things get significantly more difficult. Revoking and reissuing these credentials would create many more logistical hassles, and have the added potential for causing life-threatening errors. Worse, there is typically little to no authentication tied to use of ID numbers that would prevent their misuse, unless a credit freeze is already in place. We’re now at a point where most of us have been affected by a breach where these “permanent” credentials have been lost, and many of us have either had to correct frauds due to identity theft, or live in a state of perpetual vigilance waiting for frauds to occur. 

The main threats caused by loss of medical IDs or Social Security Numbers are allowing criminals to open new financial or utility accounts in our names, acquiring medical goods and services, or stealing our income tax refunds. There is no password to change, no authorization or authentication techniques that are currently used to prevent these things from happening. There are only the fraud detection capabilities of insurance companies and banks between us and such problems, plus our own watchfulness to catch the things that slip through that net.

Why Has Nothing Changed?
When I first started writing post-breach advice columns, credit freezes were considered too much of a hassle to recommend to the average user. Having to call the credit bureaus each and every time we wanted to apply for a store credit card or adjust our insurance, and (in most US states) pay for the privilege of the protection it offers was considered too much to ask. But as a growing number of people are already shelling out money for credit monitoring services, or dealing with expenses incurred from identity theft, the cost argument is losing its weight. And the hassle of having to thaw your credit each time you want someone to be able to view your credit report pales in comparison to the hassle of having to correct fraud on your record.

As of this year, every state in the US has some law detailing who is allowed to freeze their credit (or that of a dependent minor), and how much they may be charged for freezing or thawing their reports. Several states do not allow credit reporting agencies to charge fees for freezing or thawing credit reports, even for those who do not yet have proof that their identities have been stolen. In states that do allow charging fees for freezes, it would seem that officials are trying to dissuade the average person from taking these measures “unnecessarily.” I wonder at what point placing a credit freeze will be treated as something that is not only desirable for those who have already had their identity stolen, and instead be actively encouraged to improve the average person’s protection or, better still, be treated as the default behavior.

Does it make sense that we have better standards of authentication for accessing our email accounts and phones than for making insurance claims, or creating new bank accounts? As we rapidly approaching the point where everyone in the US will have had their “permanent” details released to the black market, it remains to be seen whether dealing with identity theft will simply become background noise like spam in email, or if its increase will bring about meaningful change. 

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