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Consumers who are victims of Identity Theft, or who suspect Identity Theft, are often encouraged to place Fraud Alerts on their Credit Report. By placing a Fraud Alert, a consumer is encouraging the Credit Reporting Agency to take steps to safeguard the consumer's Credit Report against fraud. Such steps include asking Creditors to verify the Identity of the consumer through direct contact, prior to issuing credit.

Fraud Alerts are undoubtedly a great tool to utilize to safeguard one's Credit Report, and consumers are definitely encouraged to use them. In a study published in 2003 by the FTC, under the title: "Federal Trade Commission - Identity Theft Survey Report," it was reported that 94% of respondents who placed a Fraud Alert did not witness accounts being opened in their name after the Fraud Alert was placed. However, 2% of respondents said that accounts were opened after the fraud Alert was placed. How is it possible at all that an account is opened after a Fraud Alert is placed?

Fraud Alerts will not necessarily stop the issuance of credit in a person's name. Fraud Alerts do not Freeze nor Lock access to a Credit Report. A Fraud Alert merely flags an account as being either a potential or existing target of Identity Theft.

When a Fraud Alert is placed on an account, Credit Reporting Agencies are not required by law to contact the consumer to verify his/her identity. Hence, it is possible for accounts to be opened once a Fraud Alert is placed.

Furthermore, there are two different types of Fraud Alerts: Initial Fraud Alert and Extended Fraud Alert. If a consumer suspects Identity Theft, but is not an actual victim of Identity Theft, an Initial Fraud Alert is placed. Such Fraud Alert is active only for 90 days, entitles the consumer to a free Credit Report from the three Credit Reporting Agencies, and unless it is renewed after 90 days, it will disappear.

On the other hand, an Extended Fraud Alert is typically active for 7 years and entitles the consumer to two free Credit Reports every year from each of the three Credit Reporting Agencies. In addition, the name of the consumer is removed from marketing lists and pre-screened Credit offers for 5 years, unless the consumer gives instructions otherwise.

The only way to effectively totally lock or freeze a credit report is by requesting a Credit Freeze, also known as a Security Freeze or Credit Lock. By law, wherever Credit Freeze laws have been passed (availability and state-by-state details about Credit Freeze are available at http://www.creditlock.com/creditlockdownpro.html), when a consumer requests a Credit Freeze to be placed on his Credit Report, the Credit Reporting Agencies are required to prevent access to the consumer's Credit Report. A consumer can always grant authorized access to his Credit Report by requesting either a permanent removal of such Credit Freeze, or a Temporary Removal for such Credit Freeze. A Temporary Removal of a Credit Freeze is often available either for a specific period of time, or for a specified Creditor.

Fraud Alerts, Credit Monitoring and Credit Freeze are all great tools to help deter, detect and defend against Identity Theft. Consumers are encouraged to use all such measures in protecting themselves against Identity Theft. It is also important for consumers to understand the distinction between such tools, in order not to be face any unexpected surprises once such tools are utilized.