Consumer services pop up to fight ID theft
Times consumer-affairs Reporter
Take advantage of free tools for preventing identity theft before paying for protection, advises Gail Hillebrand, director of Consumers Union's Financial Privacy Now campaign.
• Order your free annual credit reports. You're entitled to one every 12 months from each of the three major credit bureaus. Order one from a different bureau every four months to keep an eye on your credit history. Go to: www.annualcreditreport.com.
• Check your homeowners insurance policy, your bank and your employer to see if you already have identity-theft protection. Some employers offer ID-theft insurance and related services as a job benefit.
• If you are worried about identity theft, consider placing a 90-day fraud alert on your credit file. By law, you're entitled to such a fraud alert if you can "assert in good faith" a suspicion that you have been or are about to become a victim of ID theft. In practice, such requests are rarely turned down by the credit bureaus, consumer advocates say. The alert requires companies to verify your identity before issuing credit. Victims also are eligible for a seven-year fraud alert. For more information: www.consumer.gov/idtheft/
• The ultimate protection is a credit freeze. In Washington, victims of identity theft or a data breach can place a security freeze on their credit files. It's more effective than a fraud alert because potential creditors get an "access denied" message when attempting to see your credit history, keeping them from approving new accounts. For more information: www.atg.wa.gov/consumer/
Help for veterans
If you are one of the 575,000 Washington veterans whose personal information was compromised in the recent Veterans Affairs security breach, the state Attorney General's Office suggests you continue to be vigilant about possible misuse of your information. The stolen laptop containing data on 26.5 million veterans and active-duty military personnel has been recovered, and there have been no reports of identity theft linked to the incident. But FBI computer-forensics experts continue to examine the laptop to ensure none of the personal information was accessed.
The Attorney General's Office has compiled some useful tips to help you take advantage of tools for preventing ID theft. Among them: placing a security freeze on your credit file to prevent potential creditors from accessing it to open new accounts in your name.
For more information: www.atg.wa.gov/releases/2006/
For $110 a year, an Arizona company called LifeLock promises to "lock" your identity to keep it away from identity thieves — and offers a $1 million guarantee they will fix things if bad guys get it anyway.
Identity Guard of Chantilly, Va., charges about $142 a year for a fraud-protection package that includes daily monitoring of your credit cards for evidence of misuse.
Washington Mutual customers automatically get $5,000 in free ID-theft insurance and other services — or, for $120 a year, additional coverage that includes a dedicated case manager to help if they're victimized.
Identity theft has spawned a flourishing industry of new products and services offered by businesses, banks and insurance companies that aim to protect consumers or help victims recover from the crime.
Many rushed to publicize discounts for veterans in May after a Veterans Affairs employee's laptop was stolen. After weeks of worry, the computer was recovered, and it appears no one accessed the data on as many as 26.5 million veterans and active-duty military personnel, the FBI said.
With ID-theft services being aggressively marketed, consumer watchdogs advise you to stop and do some homework before you rush to sign up.
Many are wary of the services and say they overstate how much protection they offer. Others say companies are basically repackaging tools consumers could use for free.
"They're taking advantage of people's fears to sell products that cost too much," said Ed Mierzwinski, with the U.S. Public Interest Research Group.
ID theft is one of the fastest-growing consumer crimes, according to the federal government. Last year, 4 percent of the U.S. adult population — nearly 9 million people — became victims.
Companies providing ID-theft services say they offer convenience and security to consumers who feel vulnerable. The growing popularity of these new products shows consumers don't mind paying someone to help watch their backs, they say.
The Times looked at more than a dozen companies offering ID-theft services, then asked consumer advocates to weigh the pros and cons.
Identity-theft insurance is available as a stand-alone policy, an optional rider on a homeowners insurance policy or as part of a package of identity-theft services offered by private companies.
Most major homeowners-insurance companies now offer it or will soon, said John Spagnuolo of the Insurance Information Institute, an industry group. And a growing number of banks are joining them.
Typically, it costs $25 to $60 a year for $15,000 to $25,000 in coverage for such things as costs for certified letters or notarizing documents, lost work time or attorney fees.
Consumer advocates are mixed on the value of insurance.
The insurance doesn't fix the damage done to your credit by a thief; you have to do that yourself.
But a low-cost rider on your homeowners policy may be worth some peace of mind. Look at what the policy covers, the deductible and the premiums, advised Jay Foley, executive director of the nonprofit Identity Theft Resource Center.
A number of companies offer services designed to give you an early heads-up about fraudulent activity.
Credit-monitoring services are offered by the three major credit bureaus — Equifax, Experian and TransUnion — as well as companies bundling credit monitoring with other services.
Credit monitoring lets you know quickly when there's new activity on your credit file.
TransUnion, for example, offers credit monitoring with an e-mail alert sent within 24 hours of any critical change on your credit report. The fee: $119.40 a year.
But consumer advocates almost unanimously pan credit monitoring because it's expensive and often tracks only credit activity recorded by one credit bureau, not all three. And it's not proactive, they say — by the time you learn about suspicious activity, you've already been victimized.
Others acknowledge that the sooner you know about an identity theft, the easier it may be to contain the damage. It may be particularly helpful if you've already been a victim and want to know if your information is still being misused.
An Arizona company takes a different approach to prevention.
LifeLock CEO Todd Davis said his year-old company places 90-day fraud alerts on client credit files with the credit bureaus and then continually renews them.
That alert is supposed to prompt potential creditors to call you before opening a new account.
Davis acknowledges that creditors don't always pay attention to fraud alerts. As much as 20 percent of the time, they ignore the alert. (Consumer advocates say it may be as much as half the time.)
So LifeLock offers a $1 million guarantee: "If anyone steals your identity while you are our client, we fix it. Period."
Companies that pledge to prevent ID theft rankle Foley, of the Identity Theft Resource Center, and other consumer advocates who say such a promise is overreaching.
"How can you prevent something you don't control?" he asked. "Our information is out there, all over the place."
One of the newest niches for ID-theft protection: restoration or "name recovery" services that promise to hold your hand if you are victimized and guide you through the process of recovering your good name.
For example, National ID Recovery of Norcross, Ga., offers a $100-a-year package that includes credit monitoring and "complete managed restoration" of your identity, with necessary documents selected, filled out and delivered for your signature.
If you've already been victimized, you can opt for the $495 Emergency ID Recovery Service.
Beth Givens of the Privacy Rights Clearinghouse said resolution services may be a good buy for some consumers. "Time is the real loss for most people" affected by ID theft, she said. It can take hundreds of hours to set the record straight.
Still, you have to do a lot of the legwork yourself — police reports have to be filed in person by the victim, for example. "You can't pay to make the headaches go away entirely," said Gail Hillebrand of Consumers Union.
No service is foolproof
The business of ID-theft protection seems likely to keep growing, advocates say. But none of these services is foolproof.
"We still are hearing people coming to us for help who had these services, and it didn't prevent identity theft," Foley said.
Many say the burden shouldn't rest solely on consumers to protect themselves.
Consumer advocates would like to see credit freezes made available to all consumers, not just ID-theft victims, for example.
They want tougher rules to keep credit from being granted to anyone using a minor's Social Security number.
And they argue that credit issuers need to tighten their rules for granting credit.
If the credit-granting industry were more careful on the front end, Hillebrand said, "there would be nothing to sell you on the back end."
Jolayne Houtz: email@example.com; 206-464-3122.
Copyright © 2006 The Seattle Times Company