What is a Fraud Alert

A fraud alert can be placed on a person's credit report. It informs a financial institution that further due diligence will be required for the person who submitted their application. Fraud alerts are often paired with frozen credit, but credit does not need to be frozen to place one.

The fraud alert will include a phone number provided by the signer to the credit bureau for financial institutions to call. Signers with fraud alerts typically have previously been victims of identity theft and institute these alerts to prevent identity theft from recurring; however, fraud alerts can be placed on an account even if identity theft has not previously impacted an individual. Calling the provided number to verify the signer did apply is a sure way to determine if the application is legitimate.

There are two different types of fraud alerts: an initial (one-year) alert and an extended alert.

An initial fraud alert will expire after a year for anyone concerned that they might become a victim of fraud or identity theft, and it must be manually renewed by the individual after the year has passed if they would like to continue the alert monitoring. Extended fraud alerts last seven (7) years but can only be placed if the individual has been a confirmed victim of a fraud event. This requires either a police report or a Federal Trade Commission Identity Theft Report submission to a credit bureau. All credit bureaus are notified to ensure the extended fraud alert is placed for the individual.

Fraud Alert during the Application Process

Beginning July 1, 2023, if a signer of one of your merchant’s accounts has either of the fraud above alerts on their profile, Stax will call the phone number provided to the bureau by the merchant to confirm the signer has submitted the application and there are no concerns of identity theft or fraud. Stax will indicate that we are calling on your behalf to prevent confusion and align with white-labelling guidelines.

If Stax can confirm that the merchant applying for payments is who they say they are, we will proceed with reviewing the account. If Stax cannot verify the merchant's identity, the application will be rejected for potential ID theft.

If you have any questions or concerns about implementing this process, please contact your Growth or Implementation Manager to discuss an alternative action plan.