The Consumer Federation of America released their most recent report on identity theft this week; To Catch a Thief: Are Identity Theft Services Worth the Cost?
I agree with their many findings and most especially their stance that consumers need to ask the right questions when determining what id theft protection service best fits their needs. And that consumers should have access to their own credit reports for free -any time they want! But that won't be occurring anytime soon.
They are also right in that no service or person can prevent an identity theft from occurring. But with various reports and studies indicating a sharp rise in identity theft -and stats indicating an id theft occurs every 3 seconds, I am someone who wants to do whatever I can to soften the blow, should someone steal my identity again.
Until there are stronger consumer protection laws in place and a reduction in the sale of my personal information, (whether by thieves in underground chat rooms or those who legally sell it) I choose to turn the burden of watching over my identity -and repairing it if need be, to someone else! Why? I find having someone to turn to 24/7 - both a value and a convenience. After many years of trying to protect my identity, and always coming up short, I no longer want the sole responsibility of both protecting it and fixing it should a problem occur.
Each and every day we hear stories of identity theft and news of newly "reported" data breaches and I don't want to spend any time worrying about it. The reality is, we have very little control over our own information anymore. If we don't take control of it -someone else will! If the worst were to occur and my identity was stolen -the burden to recover it now falls on LifeLock. Some people say that id theft protection companies are fear mongers. The truth be told, LifeLock doesn't prey on my fears, they relieve them!
Here' a bit of The Consumer Federation's recent report... (see full PDF version here)
What is the impact of identity theft on victims?
It is unnerving to discover that your personal information has been stolen, whether it has been used by someone else or not. Resolving problems if it has been used it can cost time and money. According to the Identity Theft Resource Center (ITRC), a nonprofit organization that provides advice and education, victims who responded to its 2007 survey spent an average of 116 hours and $550 to repair the damage that identity thieves caused to existing accounts and even more time and money when the thieves created new accounts.
Expenses included postage, copying, obtaining police reports and court records, travel, attorneys' fees, and childcare. Seventy percent of victims said that it took up to a year to clear all the misinformation from their records, and not all succeeded. Victims also reported that the identity theft sometimes had secondary effects, such as increasing their credit card interest rates or causing stress in the family.
The value of credit monitoring is limited by its narrow scope.
Many types of identity theft, such as those involving account takeovers, employment, utility accounts, medical services, and government benefits, may not show up in credit bureau files. Furthermore, since consumers can check their files themselves for free once a year, and more frequently, if they desire, at relatively low cost (or at no charge if they are fraud victims and in other situations as described in this report), and since those with Internet access can monitor their financial accounts online, it may not make sense to pay $10 or more per month for a credit monitoring service.
If consumers are interested in purchasing identity theft services, they should start by looking at those that offer a broader range of features than just credit monitoring.
What other types of for-profit identity theft services are there?
CFA found a wide range of for-profit identity theft services that go beyond just credit monitoring. Some services monitor customers' personal information more widely (in addition to or instead of monitoring credit reports), searching various commercial and public databases, online chat rooms, and "underground" Web sites that identity thieves use to trade in stolen credit card numbers, bank account numbers, Social Security numbers, and other information. Other services operate primarily by placing fraud alerts on consumers' credit files.
Most services offer some type of assistance for customers who become identity theft victims, from providing advice to taking direct action to resolve their problems. For some services, fraud resolution is the main benefit they provide.
Six Questions to Ask When Shopping for Identity Theft Services
1. Does it monitor more than credit reports? Since it's easy to check your own credit report and you can access it once a year for free, and because many types of identity theft don't show up in credit reports, credit monitoring alone is of limited value. Consider services that scan other commercial databases, public records, rogue Web sites that sell stolen credit cards and Social Security numbers, and other places that may have your personal information and that aren't as easy for you to monitor yourself. Also check the options for receiving alerts; some services only send alerts by email, others offer more alternatives.
2. How does the service help if you are a victim? Most identity theft services only provide advice about the steps you'll need to take, but some take a more active role to help resolve your problems. Depending on the terms of service, assistance may be limited to identity theft that occurs, or is discovered, after you join. If it's unclear how the service will help you, continue to shop around.
3. Will it prevent you from getting your free annual reports when you wish?
Credit reports are often provided to customers as part of identity theft services. But some companies obtain them by requesting the free reports that you are entitled to get once a year, effectively preventing you from exercising your right to ask for your free annual report when you want it.
4. Should you look for identity theft services that offer insurance? Insurance generally reimburses for lost wages if you must take time off from work without pay to resolve an identity theft problem, long-distance calls, postage, notary fees and other miscellaneous expenses. Money that an identity thief has stolen from you is usually not covered. Since most identity theft victims have little or no expenses, insurance is not an important factor in deciding which service to buy.
5. Does the guarantee really protect you? No identity theft service can guarantee that you won't become an identity theft victim. Guarantees are promises about what the service will do if you are victimized. They may provide for expense reimbursement and/or assistance resolving your problem. Some only promise to resolve problems resulting from a defect in the service. Read the guarantee carefully; it may not provide as much protection as you expect.
6. What are the costs and terms? Many identity theft services offer "free trials," during which you can test some of the features, but unless you have an identity theft problem immediately, you can't fully assess the service during the trial period. Pay attention to the terms of the trial offer; usually consumers must cancel before it ends to avoid charges. Some services charge month-to-month, others require payment upfront for a year or offer pre-payment options that are less expensive than paying month-to-month. Not all will provide a pro-rated refund if you decide to cancel before the term you paid for is up, however. Read the terms and conditions carefully to understand the cancellation policy.
Source: Consumer Federation of America
I agree with their many findings and most especially their stance that consumers need to ask the right questions when determining what id theft protection service best fits their needs. And that consumers should have access to their own credit reports for free -any time they want! But that won't be occurring anytime soon.
They are also right in that no service or person can prevent an identity theft from occurring. But with various reports and studies indicating a sharp rise in identity theft -and stats indicating an id theft occurs every 3 seconds, I am someone who wants to do whatever I can to soften the blow, should someone steal my identity again.
Until there are stronger consumer protection laws in place and a reduction in the sale of my personal information, (whether by thieves in underground chat rooms or those who legally sell it) I choose to turn the burden of watching over my identity -and repairing it if need be, to someone else! Why? I find having someone to turn to 24/7 - both a value and a convenience. After many years of trying to protect my identity, and always coming up short, I no longer want the sole responsibility of both protecting it and fixing it should a problem occur.
Each and every day we hear stories of identity theft and news of newly "reported" data breaches and I don't want to spend any time worrying about it. The reality is, we have very little control over our own information anymore. If we don't take control of it -someone else will! If the worst were to occur and my identity was stolen -the burden to recover it now falls on LifeLock. Some people say that id theft protection companies are fear mongers. The truth be told, LifeLock doesn't prey on my fears, they relieve them!
Here' a bit of The Consumer Federation's recent report... (see full PDF version here)
What is the impact of identity theft on victims?
It is unnerving to discover that your personal information has been stolen, whether it has been used by someone else or not. Resolving problems if it has been used it can cost time and money. According to the Identity Theft Resource Center (ITRC), a nonprofit organization that provides advice and education, victims who responded to its 2007 survey spent an average of 116 hours and $550 to repair the damage that identity thieves caused to existing accounts and even more time and money when the thieves created new accounts.
Expenses included postage, copying, obtaining police reports and court records, travel, attorneys' fees, and childcare. Seventy percent of victims said that it took up to a year to clear all the misinformation from their records, and not all succeeded. Victims also reported that the identity theft sometimes had secondary effects, such as increasing their credit card interest rates or causing stress in the family.
The value of credit monitoring is limited by its narrow scope.
Many types of identity theft, such as those involving account takeovers, employment, utility accounts, medical services, and government benefits, may not show up in credit bureau files. Furthermore, since consumers can check their files themselves for free once a year, and more frequently, if they desire, at relatively low cost (or at no charge if they are fraud victims and in other situations as described in this report), and since those with Internet access can monitor their financial accounts online, it may not make sense to pay $10 or more per month for a credit monitoring service.
If consumers are interested in purchasing identity theft services, they should start by looking at those that offer a broader range of features than just credit monitoring.
What other types of for-profit identity theft services are there?
CFA found a wide range of for-profit identity theft services that go beyond just credit monitoring. Some services monitor customers' personal information more widely (in addition to or instead of monitoring credit reports), searching various commercial and public databases, online chat rooms, and "underground" Web sites that identity thieves use to trade in stolen credit card numbers, bank account numbers, Social Security numbers, and other information. Other services operate primarily by placing fraud alerts on consumers' credit files.
Most services offer some type of assistance for customers who become identity theft victims, from providing advice to taking direct action to resolve their problems. For some services, fraud resolution is the main benefit they provide.
Six Questions to Ask When Shopping for Identity Theft Services
1. Does it monitor more than credit reports? Since it's easy to check your own credit report and you can access it once a year for free, and because many types of identity theft don't show up in credit reports, credit monitoring alone is of limited value. Consider services that scan other commercial databases, public records, rogue Web sites that sell stolen credit cards and Social Security numbers, and other places that may have your personal information and that aren't as easy for you to monitor yourself. Also check the options for receiving alerts; some services only send alerts by email, others offer more alternatives.
2. How does the service help if you are a victim? Most identity theft services only provide advice about the steps you'll need to take, but some take a more active role to help resolve your problems. Depending on the terms of service, assistance may be limited to identity theft that occurs, or is discovered, after you join. If it's unclear how the service will help you, continue to shop around.
3. Will it prevent you from getting your free annual reports when you wish?
Credit reports are often provided to customers as part of identity theft services. But some companies obtain them by requesting the free reports that you are entitled to get once a year, effectively preventing you from exercising your right to ask for your free annual report when you want it.
4. Should you look for identity theft services that offer insurance? Insurance generally reimburses for lost wages if you must take time off from work without pay to resolve an identity theft problem, long-distance calls, postage, notary fees and other miscellaneous expenses. Money that an identity thief has stolen from you is usually not covered. Since most identity theft victims have little or no expenses, insurance is not an important factor in deciding which service to buy.
5. Does the guarantee really protect you? No identity theft service can guarantee that you won't become an identity theft victim. Guarantees are promises about what the service will do if you are victimized. They may provide for expense reimbursement and/or assistance resolving your problem. Some only promise to resolve problems resulting from a defect in the service. Read the guarantee carefully; it may not provide as much protection as you expect.
6. What are the costs and terms? Many identity theft services offer "free trials," during which you can test some of the features, but unless you have an identity theft problem immediately, you can't fully assess the service during the trial period. Pay attention to the terms of the trial offer; usually consumers must cancel before it ends to avoid charges. Some services charge month-to-month, others require payment upfront for a year or offer pre-payment options that are less expensive than paying month-to-month. Not all will provide a pro-rated refund if you decide to cancel before the term you paid for is up, however. Read the terms and conditions carefully to understand the cancellation policy.
Source: Consumer Federation of America
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