Identity Theft Services - Are They Really Worth Your Money?
Posted on December 28th, 2007 by Marc Chase Posted in Identity Theft | 15 CommentsMind-boggling identity theft statistics have consumers looking for protection, and financial institutions scrambling for ways to provide it. Some statistics show that somebody’s identity is stolen every two seconds.
Statistics like these have spawned a fast growing industry of products offering identity theft protection - but are these services worth it, or just another attempt to get into your wallet?
I hate to burst your bubble, but I say they are near worthless and I have some preliminary proof of my own.
Let me explain what I’ve done and you can decide for yourself.
A business partner of mine has signed up for 3 major credit monitoring/identity theft services. We had some business filings to do and we thought this would be a good time to run a test of these services because there is going to be a lot of activity with our credit reports. If we were ever to be alerted of out of the ordinary activity on our credit, this would be it.
With our business filings we used a visa online, we used an Employer Identification Number in place of a social (the legal way) and we’ve used a different address because it’s an additional office space.
If you look at that scenario, it’s exactly what would happen had somebody stolen my identity, or credit card. Different address, doesn’t match my social and the visa was charged by a company out of my home state.
How many alerts do you think I’ve been sent with all this activity? None!
Not the credit monitoring services, not the bank – nobody. Had this been a thief using our information, we could have been cleaned out by now. Well, to say that I’m less then impressed is an understatement.
What most of these companies do is something you can do on your own.
1) Fraud Alerts:
2) Credit Freeze:
3) Pre-Screen Opt-out:
Fraud Alert: A fraud alert is a signal placed in your credit report or credit file to warn potential creditors that they must use what the law calls “reasonable policies and procedures” to verify your identity before they issue credit in your name. Fraud alerts may be effective at stopping someone from opening new credit accounts in your name, but they may not prevent the misuse of your existing accounts.
Credit Freeze: A credit freeze is different from a fraud alert in a number of ways. A freeze generally stops all access to your credit report, while a fraud alert permits creditors to get your report as long as they take steps to verify your identity. The availability of a credit freeze depends on state law or a consumer reporting company’s policies; fraud alerts are federal rights intended for consumers who believe they may have been, or actually have been, victims of identity theft. And some states charge a fee for placing or removing a freeze, although it is free to place or remove a fraud alert.
Pre-Screen Opt-Out: if you decide you don’t want to receive pre-screened offers of credit and insurance, you can opt out for five years or permanently by calling toll-free 1-888-5-OPTOUT (1-888-567-8688) or visiting www.optoutprescreen.com.
The Bottom Line
If a thief wants your identity, chances are that he’s going to get it. A great example if this is Todd Jones CEO of Lifelock.com. This is the clown who puts his social security number on TV.
Do I need to tell you what happened to him?
The best protection in the world is your own common sense. You can do all of those things companies are charging you for in a few minutes.
You need to be diligent about securing and/or shredding bank statements, medical records and your online habits.
Another important thing you need to do is check your bank records. Most thieves use your existing credit cards. If I used your visa right now, it’s not going to show on your credit report. You’re only going to notice it if you’re paying attention to your bank/credit card statements.
Over the next month or so I’m going to do a series of identity theft articles and will be signing up for more services to see if any of these companies actually add benefit. My disappointment in these ID monitoring and Watchdog services popping up, are something you need to be aware of and decide whether or not they’re really worth the money.
We looked at how the PINs work for TransUnion, Experian, and Equifax:
http://www.flypublishing.com/articles/2007/using-your-security-freeze-pin/
Thanks for the link, that is interesting information.
Identity theft sucks! my wife and I had ours stolen and even though we’ve reported it to the police and secret service we still have an everyday battle trying to convince companies that we have not run up charges that they say we are responsible for!
trying to stop junk mail credit offers is a big headache. since we moved to another location in the country.
We only realized later that people use these presceen offers to steal your identity.
and the junk mail keeps right on going o your old address!!
I hope checking out these links works!
James
ID Theft does suck and it’s a nightmare to fix for most consumers.
Hopefully you’re looking at the positives and learned how to avoid it in the future.
Another thing you have to be aware of is who sees your information when you sign up for certain services.
I’ll be writing about that later today hopefully.
Fraud Alerts are not going to protect anyone 100%. Common sense and not falling for scams, tricks, and ploys is not going to protect you. That is a huge misconception. Read the latest article at http://www.identitytheftlabs.com to see why this is a fallacy. What you want is identity theft protection and insurance because our personal information is being stolen, and publicized at alarming numbers.
Andy, while I appreciate your input - I took a look at the services you’re promoting.
Your site services page.
“A warning call whenever someone applies for credit”
That is a security Freeze
“Fool proof identity authentication – 24-hours a day, you can be 100% sure that no one can impersonate you. With your phone, PIN”
Again a Security Freeze issues the Pin
“Free copies of your Credit Report”
Free to everyone – That’s nothing new.
“Limit your Junk Mail”
That’s Opting out
“Eliminate unwanted telemarketing calls – by opting to include your phone numbers in the National Do Not Call Registry”
Free to everyone with a simple phone call
So what is offered that I didn’t put in my post? I’m not bashing your company but identity theft solutions have turned into the new credit repair industry. In fact, I know a couple credit repair companies who failed and are now hiding under ID theft services simply because it’s the new buzz word and opportunists know that fear sells!
I just called Experian and issued a credit watch which was good for 120 days. It propagated to the other credit bureaus. What it did was put an alert on my credit report and it required all inquiries to get verbal approval by me over the phone.
Hi Marc,
Heres the difference for three options.
Credit monitoring - monitors your credit and informs you of any changes-i.e. after thief has gotten you.
Fraud Alerts- your phone number is put in your credit file and per the FACT ACT passed by Congress creditors are required to call you before approving credit. Expires every 90 days. Highly Recommended.
Credit Freeze - Your credit account will not be provided to creditors without your permission. No new credit accounts can be opened. You pay to freeze and unfreeze each time. Highly Recommended for identity victims.
Your tests are a great idea but these services only protect consumers not businesses.
Your right that most things can be done for free but people choose these options for two reasons.
One - Identity insurance coverage as their is no full proof protection. Highly Recommended.
Two - They don’t have to worry about resetting fraud alerts, making calls, ordering credit reports, etc, etc.
This aspect is a service like paying someone to cut your grass or change your oil.
There are other benefits to using a service as well and depending on which service you choose. Some examples are LoudSirens technology which provides an audit trail in case of dispute and higher level of protection.
Lifelocks walletLock and cheap childrens services.
Trusted Id credit card and SIN monitoring and option to freeze. More info coming soon on them.
I would be really interested to see the results of your test but am not encouraging you to do one. Make sure whatever you do that your test is legal and that it is set up right to evaluate the options properly. For example, sign up personally to one of the services and pay monthly so you can cancel, then go to Best Buy or something and try to buy something of value on credit. With a fraud alert you will have to approve the transaction.
Good Luck
Out of all these, the simplest and most effective is a credit freeze. It’s free if you suspect fraud and only $10 otherwise. You get a verbal PIN and they have to call you on any inquiry. Just call a major credit bureau and ask them to freeze your account.
Andy - Ok, now I’ll agree with part of what you said. Identity theft protection can be done by consumers on their own. However, like credit repair, the biggest benefit to hiring a company to do it is to save the headache.
That I’ll buy.
Ghillie - Agreed!
Guys don’t forget that to place a credit freeze you have to do so by certified mail and you have to place it all 3 bureaus. So thats $30 not $10. Then when you go to buy a TV or cell phone package, or utilities, or apply for a loan or credit card thats another $30 to unfreeze. This is more for identity theft victims. Rememer too that this only protects you from new accounts, a thief could still access your bank account or existing credit cards even with the freeze. That is why identity theft insurance is extremely important.
Ok well Andy I was with you on your last post, now Im going to say wrong.
You do not have to do it by certified mail, we do it for our clients every single day and have done so for about the last 4 years.
You dont have to pay extra to to apply for credit, you have to verify its you.
Furthermore, many states offer it free to identity theft victims, not charge extra.
Look, I dont mind you posting your affiliate links here….but please be accurate
In regards to it not monitoring your bank accounts…thats where 97% of identity theft happens. Current credit cards, not new ones opened.
If I were to choose one way only to monitor my credit, it would be watching my bank / credit card statements for charges that werent mine
Andy, You do not have to do it buy certified mail, I just called them and told them. When I did it with Equifax, they said they automatically contact the other credit bureaus (I never checked this out).
When you apply for something with credit, the credit bureau will call you and ask for your PIN. There was no need to unfreeze my account once I verified my PIN with the credit bureau.
Marc, you are correct about accounts. I learned all this cause a few of my accounts were compromised. Now I have daily monitoring emails sent to me with any account activity.
This actually caught some fraudulent activity as I got an email saying I had charged $200+ on a CC that I rarely use. I caught it the same day.
What about programs like privacy assist from Bank of American? It gives you your score and identity theft so they say.