Changes to the Fair Credit Reporting Act in 2003

Free Credit Reports

Before 2003, if a person wanted to review his credit profile, he had to purchase it from the credit bureaus. Because unidentifiable or negative credit-report trade lines often serve as the primary indicator of identity theft, FACTA now allows each person one free credit report each year. You can request your free credit report by phone, via mail or online at the AnnualCreditReport website.

Fraud alerts are a new feature consumers can take advantage of to reduce the chance of identity theft. Basic fraud alerts last 90 days and are available to all consumers. A basic fraud alert requests that anyone reviewing a person's credit record contact her by telephone to verify that she has, in fact, applied for credit before approving the application. Unfortunately, while FACTA gives consumers the right to place and renew basic fraud alerts, it is at the discretion of the credit provider to confirm the applicant's identity after receiving the alert.

Identity thieves cause credit damage by incurring bad debts under an innocent consumer's name. When the consumer applies for new credit on his own, his lender takes the negative information into consideration and often declines his application. FACTA gives identity-theft victims the right to block any information within their credit files that appeared as the result of identity theft.

Should a consumer provide the credit bureaus with a copy of his identity theft report, proof of his identity and a letter noting the data connected to the theft and stipulating that he did not receive goods or services as a result of the transaction, the credit bureau must block the information from his record -- preventing future creditors from seeing it and taking it into consideration when determining the consumer's loan and credit eligibility.

One common method identity thieves once used to gain access to consumers' financial accounts was through redirected mail. FACTA prohibits credit card companies and banks from issuing replacement credit card or debit cards to consumers via mail if the consumer requested a change of address within the previous 30 days. The exception is when the company contacts the consumer and verifies that the request for a replacement card was made by the original cardholder.