Every South African consumer is entitled to a free copy of his or her Credit Report from each of the credit bureaus every 12 months – but is that enough? Should consumers also consider subscribing to a credit monitoring service?
While only individual consumers can determine whether credit monitoring is what they require, it could come in handy when one least expects it.
Here's a typical scenario which may appear to end well, but the happy ending could actually be only the start of a whole saga of problems.
It starts with a stealthy steal. Let's say you lose your purse or wallet. Perhaps you drop it in a parking lot or accidentally leave it in a shop; perhaps your handbag or briefcase is stolen; or perhaps you are pickpocketed.
A few hours later, a good Samaritan finds your purse/wallet, manages to trace you and makes arrangements to return it to you. You are so delighted to get it back – with everything intact including your credit cards, driver's license, store cards – you don't mind losing the little cash that was taken. You reward the good Samaritan and spread the news about your good fortune. End of story.
Only it isn't. Because between your wallet disappearing and it being returned, the someone has had an opportunity to go through your wallet and take down all your details before discarding it in a place where the good Samaritan picked it up.
Using the information in your wallet – your name on your cards for starters, your ID number from your driver's license, and the little note you keep in your wallet with your cell phone number so anyone finding your wallet can easily trace you – the thief (or more likely, thieves) starts pretending to be you.
They call up the credit card's customer service number and say you've moved to a new address with a new cell phone number and a new work email that's more convenient. The customer service representative goes through the usual customer address and phone number verification process, and the thieves pass with flying colours. Your account is now theirs, and to the credit card company, you've moved.
Now the thieves start using your credit card, but not maxing it out. They want to fly under the radar, at least for a little while. The next month, the statement goes to the thief's email address and you don't notice it because you're managing several other cards, you're having a really hectic month, you assume the bill will come later.
Anyway, the credit card company hasn't contacted you about any suspicious activity.
Guess who pays the bill? That's a trick question because nobody does. Meanwhile, you get hit with a late payment on the credit report you last checked months ago and your credit rating starts suffering.
Since you won't be checking your report for a while, this process continues for a few months. The thieves are now increasing their spending and digging you a deeper hole. The longer it goes on, the more of a hassle fixing it will become.
Eventually, you will find out about the fraud. Could credit monitoring have helped you stop it sooner? Quite possibly. One of the advantages of credit monitoring is it can help you stay in touch with credit information more frequently than once every year, once a month, or even once a week.
The dangers of 'account takeover' fraud
In the fictitious scenario described above, there was a specific type of fraud perpetrated—often called an 'account takeover.' It's a type of crime that really exists, and it's becoming popular for thieves because the victim may not even find out about the crime for some time. Account takeover fraud is dangerous for precisely that reason: because it has the potential to buy the thief a lot of time so they can buy themselves a lot more stuff at the expense of your credit health.
Credit monitoring offers an additional layer of protection. Credit monitoring services get their information from your credit report, and in the scenario above the credit card company may have reported that the thief changed the address on your credit card. If you subscribe to a good credit monitoring service, you will have been alerted to this.
TransUnion's credit monitoring service will send you alerts when something in your report has changed. To find out more about this service, contact TransUnion on 0861 482 482.