As we continue our discussions around the 3 step process for identity theft protection, blocking information flow is the best method for preventing identity theft and fraud. Let’s explore what we mean by information blocking.

As you know, when companies receive new account or credit applications, they must verify the applicant’s information such as credit score, address, and credit history before making a major business decision. As such, they request various consumer reports to verify and reconcile to the information in the application. If a consumer blocks his or her consumer report such as credit report from being shared with the companies who have received a new account or credit application, they will not be able to make their decision and will reject the fraudulent application and second, they will also suspect fraud as applicants will not block the information flow if they are interested in opening new accounts. In many countries where various consumer reports are available and used, consumers have the option to freeze or block their personal reports from being shared with others. Sometimes a freeze is available to consumers by law and other times by sound business decisions. In the US, the three major credit rating and reporting agencies are required by law to allow consumers place a freeze on their credit reports which will prevent creditors from opening new credit accounts or increase the existing credit limit.

An account freeze is also a great method for blocking unused accounts from being abused. For example, cell phone accounts and credit cards can be suspended for a period of time when consumers do not plan to use them for a while due to travel and other obligations such as military assignments. As you can see, information is very important for making business decisions and when key decision attributes are blocked, businesses can not process fraudulent applications.

Click here to learn about US credit freeze laws and fees.

Until next time, be identity safe,
Henry Bagdasarian
Identity Management Institute

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