Credit monitoring services can trigger false alarms
By Erica Sandberg
April 12, 2016
This morning I got an email message from Experian’s ProtectMyID that there was fraud on my account. I was at work, so couldn’t check it out and was scared to death. When I got home I found out that it was not fraud at all, but one of my credit cards was late. Why would they email me saying this was fraud? I’m thinking of writing to them and telling them to stop scaring people. — Jayne
I got the same fraud alert email! It’s a generic message distributed by the credit reporting agency Experian’s monitoring service. If you enroll, ProtectMyID will send out an alert when it detects potential fraudulent activity. I agree that the verbiage is alarming. However, it is the company’s way of warning you that something is being reported about you that may indicate a serious problem.
A late payment could have been flagged as possible fraud because it might have been someone else charging on a card you are not aware of. If you didn’t know a thief was using a fraudulent card created using your identity, you would not be aware that a payment was due — until the account was late. Hence the message from ProtectMyID.
In this case, it was just a matter of you falling behind on a payment on a card you opened yourself. (My alert was due to a silly calculation error — it happens to the best of us, you know!) Now you have to get back on track by paying what’s due and minimize the damage to your credit score.
If you did miss an entire payment cycle, the notation will show up on your credit report for seven years as a 30-day late payment. For the first couple of years this late payment will negatively affect your credit scores, but if that’s the only ding and you’ve managed all other accounts well, the impact will be minor. By keeping all accounts in positive standing from this point forward by paying on time and not carrying over credit card balances, your credit score should recover quickly.
I’m a fan of credit monitoring services because the alerts make you aware of issues that need attention fast. Yet it’s even better if you can prevent issues, such as fraud. To stay on top of accounts, all borrowers should review their credit card statements regularly and always be mindful of due dates, as well as check credit reports regularly. As humans we’re apt to make mistakes, so institute a six-step system to minimize them:
1. Set up automatic bill pay with your bank. Then all you have to do is make sure there’s enough money in your checking account on the date of the month that the funds are set to be withdrawn.
2. Use your smartphone’s reminder function to plug in account due dates. It’s easy and free.
3. Set up text alerts from your card issuer to notify you of payment reminders, card usage and other information about your account.
4. Consider buying and installing a money and credit management app on your phone. There are many of these apps to choose from — check the app store for one with high ratings.
5. Mark your wall calendar with your due dates. Sometimes old school is the way to go!
6. Pay your credit card bill immediately after making a charge.
As far as telling the company what you think, I say go ahead. Experian and the other big credit reporting agencies (TransUnion and Equifax) rely on customer feedback to improve their programs. The word “fraud” might be too extreme. Your letter (and if you have a suggestion, that too) may prompt a change.
In the meantime, don’t be frightened even if your identity and credit cards are compromised. If you catch fraud quickly, notify your card issuer, and take the necessary rectifying steps. You’ll be reimbursed for any unauthorized charges and keep your credit rating from tumbling.