Equifax Data Breach Requires Action

While most of us have been watching the path of Hurricane Irma, another big news story this past week warrants your attention.  Last week, Equifax announced that a “Cybersecurity Incident” had exposed names, Social Security numbers, birth dates, addresses and, in some cases, driver’s license and credit card numbers, from a whopping 143 million Americans.  We have already received e-mails from clients who have been affected, and expect to receive more since this will likely affect about half of the country.

In fact, this is another massive data breach reminding us how vulnerable we are to thieves seeking our personal information and identity. “Incident” sounds a bit tepid for the magnitude of this particular breach.

Are You Impacted?

To find out if your information has been compromised, check the potential impact on the Equifax website: https://www.equifaxsecurity2017.com/potential-impact/

You should do so for all of your household members, including your underage kids.  In the event that you or one of your family members are affected, Equifax offers to enroll you for free credit monitoring, which they will provide for one year.  I’m generally not a fan of paying for identity theft insurance or credit monitoring services, but there’s no reason not to take advantage of Equifax’s free offer. A credit monitoring service won’t prevent fraud from happening, but WILL alert you when your personal information is being used or requested.  The service includes identity theft insurance, and it will also scan the Internet for use of your Social Security number—assuming you trust Equifax with this information after the breach.

It may take a few weeks before the service becomes effective.  In the meantime, I recommend you plan to monitor transactions on your bank accounts and credit cards.  The credit card companies typically do a pretty good job of catching fraudulent activity quickly and shutting it down, but your own diligence is essential.

Unfortunately, the free credit monitoring service has issues.  According to credit expert John Ulzheimer “You’re only going to get it free for one year” and chances are, your liability is going to last longer. Additionally, it “only applies to your Equifax credit report, and not your credit reports at Experian and TransUnion. That’s like locking one of the three doors to your house.”

I suspect that once the extent of the breach is ultimately revealed, Equifax will highly likely extend the free credit monitoring service period.

How Are YDFS Clients Protected?

Withdrawing funds from a custodian (such as Charles Schwab) account is not possible simply with your login.  This set-up provides higher security than a retail bank or other brokerage account, where a thief could hack your username/password and access your funds.

Without signed documentation and verbal confirmation, funds withdrawn from custodian accounts can only be sent via check to the address of record on the account, or via an electronic transfer to a bank account that has been authorized with previously signed documentation. All wire transfer requests require verbal confirmation before any funds leave your account.

Also, all withdrawals from custodian accounts are seen on the same or next business day by your YDFS team so we can be on the lookout for unusual activity.

If You’re a Victim of Identity Theft

If you’re a victim of this (or any) breach, here’s what to do. The whole process takes about an hour to complete:

  • Contact one of the three credit bureaus Equifax (800-766-0008), Experian (888-397-3742) and TransUnion (800-680-7289) to put a free fraud alert on your credit report. Under Federal law, each is obligated to notify the other two. The alert makes it harder for an identity thief to open more accounts in your name, but experts note that alerts usually just slow down the process of criminals opening accounts in your name; they don’t prevent it. The alert lasts 90 days, but you can renew it, and the alert entitles you to a free credit report from each of the three companies.
  • File a complaint with the Federal Trade Commission and print your Identity Theft Affidavit. Use that to file a police report and create your Identity Theft Report.
  • Place a credit-freeze on your credit file, which generally stops all access to your credit report. Unfortunately, you need to contact all three companies to freeze your file. Here are the links: Equifax; ExperianTransUnion. Important note about a freeze: If you need to access credit, you have to unfreeze your records, which can take a few days. The availability of a credit freeze depends on state law or a consumer reporting company’s policies. Some states charge a fee for placing or removing a credit freeze, but it’s free to place or remove a fraud alert. You can sometimes get this service for free if you supply a copy of a police report (which you can probably file and obtain online) or affidavit stating that you believe you are likely to be the victim of identity theft.
    Another advantage: each credit inquiry from a creditor has the potential to lower your credit score, so a freeze helps to protect your score from scammers who file inquiries.

Best Practices to Employ

According to pros like Ulzheimer and professional hacker Kevin Mitnick, the question is not if your information will be compromised, but when. Criminals are actively stealing your passwords, buying and selling your data and reading your emails. There is no single way to protect your coveted identity, but here are eight best practices to employ to keep the criminals at bay.

1) Protect your information:

  • Refrain from providing businesses with your social security number (SSN) just because they ask for it. Give it only when required. In an antiquated practice, doctors, dentists and some lawyers routinely request your social security number for billing (and collection) purposes. Refuse to do business with professionals who insist on supplying your social security number without a true need to know. Medicare recipients take note: your SSN is printed on your current Medicare card, so be careful with it! The process of changing the cards will take some time, but it is in the works.
  • Don’t give personal information over the phone, through the mail or on the Internet unless you have initiated the contact or you know with whom you are dealing. This is especially important to communicate to older relatives or friends, who are prime targets of fraudsters.
  • Beware of over-sharing on social media, where criminals are finding treasure troves of information. Because they are explicitly targeting children under the age of 18, it’s important for parents to talk to their kids and explain why it is so dangerous to share too much personal information online. Share your vacation photos & experiences AFTER you’ve returned home.
  • Update your passwords so they are difficult to hack. NY Daily News found the top ten worst passwords to include: 123456, password, baseball, football, etc. Others have started to use encrypted password managers where you enter one login/password and they manage all your other passwords for you.
  • Review your banking transactions online or on your statements to look for transactions you didn’t make. Report any suspicious activity to your bank promptly.

2) Protect your Password: You know the drill; you should be changing logins and passwords every few months, and sign up for two-factor authentication (where your cell phone is your 2nd device used to authorize access) for those sites that are used frequently.

3) Shop carefully: Stop sending your credit card information over unsecured wireless networks, and when making purchases, use a credit card, which has more fraud protections under federal law than debit cards or online payment services. Free (public) Wi-Fi hotspots are prime targets for banking and credit card information theft. Never do your personal or business banking over these hotspots.

4) Review credit card statements: Before you pay, be sure to spend a few minutes to verify that there are no fraudulent charges. While you’re at it, enroll in your credit card’s notification program, where the company alerts you to charges over a set amount.

5) Review your (and your kids’, for reasons mentioned above) credit report (free) every 12 months at annualcreditreport.com. You want to make sure that nothing fishy has cropped up. If you find an error, report it immediately and stay on top of the process.

6) Protect your Social Security account from identity theft by claiming your record at https://www.ssa.gov/myaccount/. Two-factor authentication will prevent others from attempting to steal your social security identity and records. Do it before they do.

7) Avoid maintaining large balances in checking or savings accounts with a debit card attached: Keep larger account balances in brokerage accounts or accounts without debit and/or check writing features.

8) Opt out of pre-approved credit card offers: ID thieves like to intercept offers of new credit sent via postal mail.  If you don’t want to receive pre-screened offers of credit and insurance, you have two choices: You can opt out of receiving them for five years by calling toll-free 1-888-5-OPT-OUT (1-888-567-8688) or visiting www.optoutprescreen.com. Or you can opt out permanently online at www.optoutprescreen.com.  To complete your request, you must return a signed Permanent Opt-Out Election form, which will be provided after you initiate your online request.

It’s important to remember that breaches like these have happened before and will happen again.  Taking preventative measures like those listed above limit the potential damage of such events.  Please contact us if you have any further questions or concerns regarding this topic.

If you would like to review your current investment portfolio or discuss any other financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fee-only fiduciary financial planning firm that always puts your interests first. If you are not a client yet, an initial consultation is complimentary and there is never any pressure or hidden sales pitch. We start with a specific assessment of your personal situation. There is no rush and no cookie-cutter approach. Each client is different, and so is your financial plan and investment objectives.

How to Navigate a Homeowner’s Insurance Claim

The disaster in Texas, for the unfortunate souls living there, reminds us how vulnerable we can be, and how being prepared before disaster strikes, can make the aftermath so much easier. While the odds of losing everything in a natural or man made disaster are relatively low, it helps to know that you took some steps ahead of time, like having a recent video tape of your entire home and it’s contents, and meeting with your insurance agent to update the coverage and discuss the available “riders” to minimize surprises at claim time.

But suppose your number is up, and you’re the victim of a huge natural disaster like Harvey, or have experienced some more local damage, like a tree falling on your house. What are the best practices for filing a claim for the damages your home and property have suffered?

Recently, the Consumer Federation of America (CFA) offered tips on how to get all that you’re entitled to from your insurance company. I’ve added my own personal tips based on my experience dealing with a homeowner’s insurance loss claim.

The CFA starts by noting a disturbing trend: families victimized by Harvey-related wind and flood damage will have to dig deeper into their pockets because few of today’s homeowners have federal flood insurance, and because insurers have been steadily increasing hurricane wind coverage deductibles and imposing other homeowners insurance policy limitations. Discuss flood coverage with your agent, find out the premium, and decide whether your risk is higher than average. If it’s only a few hundred dollars a year, it may be worth it. Also, most people are surprised that some wind damage to roofs may not be covered if your roofing has been neglected or is past its useful life.

Among the tips: Report your claim as promptly as possible, since insurance companies generally handle them on a first come, first serve basis. Be sure to write down your claim number, because insurance company claims departments locate your file most efficiently using your claim number.

Depending on the circumstances, you may be responsible for mitigating the damage. That is, if the dwelling was safe, and you had the ability to take steps to reduce the overall loss (say by shutting off the water supply in the event of a broken water pipe, or fixing a broken window), and you didn’t, your claim payout may be reduced.

Sometimes the damage requires a contractor to come out prior to an insurance adjuster’s arrival to mitigate the damage. Contractors by their very nature can be overzealous or aggressive, so try and be there onsite before they arrive to take pictures and control or limit their activities to damaged areas. You don’t want to be responsible for costs that may not ultimately be covered by insurance. In the case of water damage, keep samples of the wood flooring, carpeting, tiles or wall coverings before they’re hauled off the property. You’ll be glad you did when starting reconstruction and trying to find matching replacements. Remember, it’s your home; nobody cares more about it than you-let the contractors know you’re in charge, and that you won’t be pressured to make unnecessary improvements or replacements.

Meanwhile, maintain receipts for any expenditures related to immediate repairs you had to make to secure your home, or any living expenses (hotel, meals) if you could not return to your home in the wake of the storm, or as a result of your own home damage experience. (If your claim is limited to flood insurance, additional living expenses are usually not covered.)

When an adjuster arrives to survey your damage, ask if he/she is an employee of the insurance company, or an independent adjuster (I.A.) hired by that firm. If this person is an independent adjuster, ask if he or she is authorized to make claim decisions and payments on behalf of your insurance company, and ask for the name of the in-house company adjuster to whom the I.A. is sending your information.

Many insurance companies will send out one of their approved contractors to estimate your property damage. You are not under any obligation to use them, and you should realize that these approved contractors have likely agreed to limit repair costs based on average cost estimates in the area. You might benefit from getting an estimate from other local contractors, since your damage situation will be unique. Just because your insurance company approves of a contractor, that doesn’t mean they’re the best or most qualified for you.

Before you file a claim, know that it helps to have pictures or a video of your possessions, which you can file as evidence of what you’re claiming. Make as thorough a list of your possessions as you can ahead of time. When the claim is made, start a notebook documenting contacts with your insurance company and contractors, writing down the date, time and a brief description of every exchange. Keep receipts from emergency repairs as well as any costs you incur in temporary housing, which may be reimbursable under the “Additional Living Expense” portion of your homeowners’ policy.

Suppose the claim is denied or you feel the offer is too low. At that point, you should ask the company to identify the language in your homeowners’ policy that served as the basis for denying your claim or offering so little. Once the company pinpoints the appropriate language in the policy, you should be able to determine the fairness of the offer. If you feel that the company has slipped new limitations into the policy and has not adequately informed you, it might be a good idea to consult an attorney. If a structural engineer has deemed your repairs not due to a disaster (but say to normal wear and tear), it may pay to hire your own licensed structural engineer to refute the insurance company’s report. If it’s an independent engineer hired by the insurance company, and you disagree with his or her conclusions, you have every right to call and discuss their conclusions with them.

For those not living through Harvey, this might be a good time to look hard at your current policy. The CFA has noticed that new provisions are showing up which limit replacement cost payments, and many insurers no longer cover the additional costs to bring a damaged home up to new building codes (wiring, elevation for flood risk, etc.) Remember that sewer backup coverage is usually an additional low cost rider, so consider adding it, especially if your home has a finished or even an unfinished basement.

Once the insurance company tells you the reasons for its action, it cannot produce new reasons for denying payment or making a low offer at a later time. You have locked them in—an important protection for the consumer.

If you still feel that their claim settlement offer is too low, or the claim denial is wrong, complain to an executive in the firm’s consumer relations department (who is paid to keep consumers happy) rather than an executive in the claims department (who is paid to keep claims costs low). In the conversation, use the records you’ve kept since the claim process began. The more serious the insurance company sees that you are in documenting how you were treated, the more likely they will make a more reasonable offer.

If that doesn’t get you anywhere, complain to your state insurance department. All states will at least seek a response to your complaint from your insurance company, which will give you more information as you consider your next steps.

Your last option is to consult a lawyer. If you’re sitting in the attorney’s office, the notes you took take on additional importance. If your treatment was particularly bad, the courts in many states will allow additional compensation if the insurance company acted in “bad faith.” Since insurance companies take your money in exchange for their promise to make you whole when disaster strikes, they must act in utmost good faith in performing that obligation. With that said, it may be time to evaluate whether the insurance company you’re doing business with is “solid” and reputable enough to handle a flood of claims. Saving a few dollars on insurance premiums by using lesser known (and lesser capitalized) insurers may not be worth it.

Finally, try and be onsite to inspect each step of the rebuilding process once underway. Insurance repair estimates can be tediously detailed, and are not always easy to understand. But you want to be sure that the appropriate quality replacement materials are used, and that workmanship is of the highest standards. You may have to do some of your own legwork to find suitable replacement materials if the contractor tells you that your original materials are no longer available. After the work is done, you’ll likely find or remember (damaged) items that were missed during the original claim, so most insurance companies give you 1-2 years after the “claim date” to add other items that are detected, without having to file a new claim, or incurring a second deductible. Keep that important deadline in mind.

If you would like to review your current investment portfolio or discuss any other financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fee-only fiduciary financial planning firm that always puts your interests first. If you are not a client yet, an initial consultation is complimentary and there is never any pressure or hidden sales pitch. We start with a specific assessment of your personal situation. There is no rush and no cookie-cutter approach. Each client is different, and so is your financial plan and investment objectives.

Source: http://consumerfed.org/press_release/consumers-get-fair-claims-payments-wake-hurricane-harvey/

The MoneyGeek thanks guest writer Bob Veres for his contribution to this post