Sony’s remedy for data breach falls short

Sony may have had the most serious data breach ever in the history of corporate America and their remedy for it is really lame.

In the continuing fallout from the data breach, Sony has come up with a plan to give 1 year of free credit monitoring to the tens of millions of PlayStation 3 customers and other gamers who had their billing address, purchase history, account info and credit card information stolen by crooks.

But the problem is that credit monitoring is worthless. It’s like the corporate equivalent of going into battle with a nuclear power and you are equipped with a slingshot. Sony should have instead offered a credit freeze to everyone affected.

A credit freeze is much more effective and would likely cost Sony less than credit monitoring. (A full credit freeze typically has a one-time fee that’s just a third of what credit monitoring costs annually.)

What exactly is a credit freeze? It is process where you shut off the access that a criminal could potentially have to open new lines of credit in your name.

As you probably know, each of the 3 main credit bureaus maintains an active dossier on you that contains info about your payment history, lines of credit and more. A credit freeze allows you to essentially seal your credit reports with each bureau. It does not affect your current use of credit in any way.

When you do a freeze, you get a personal identification number (PIN) that only you know. That added layer of security means that crooks can’t establish new credit in your name even if they are able to take over other elements of your identity — because they don’t have your secret PIN.

Then when you actually want to apply for a new line of credit, you simply use your PIN to temporarily “thaw” your files. That makes them accessible to the creditor who’s considering you as a customer.

The cost to freeze your credit ranges from free to $10 per bureau, depending on your state. When you multiply that by 3 credit bureaus, you could pay anywhere from nothing to $30 for a freeze. Victims of identity theft can have any fees waived, and seniors are often exempt from the fees in most states.

If you get notification from Sony saying your account has been breached, see my credit freeze guide for directions on how to proceed.