All the publicity about identity theft – reportedly the fastest-growing crime in America – has spawned a cottage industry of products offering protection.
Companies such as credit bureaus and insurance firms offer credit monitoring, identity recovery and identity theft insurance at the cost of a few dollars to $100 a year or more. But are they worth it?
Some consumer advocates say identity theft protection services are unnecessary because the companies charge you to do things you can do yourself, such as set up fraud alerts on your credit report and renew them every 90 days.
“What they do, you can do for free,” says Beth Givens, founder of the Privacy Rights Clearinghouse.
But you can also mow your own lawn and make your own dinner, yet plenty of people pay others to do those things.
Questions to ask
Before you sign up for some of these services, there are some questions you need to ask.
Is the company you’re dealing with legitimate? Some offers are actually attempts at identity theft.
Then ask what you’re getting for your money.
Identity theft services generally can be divided into two classes – those that attempt to prevent you from being a victim, and those that come in after the fact to help you put things right.
One key thing to remember is that there’s no such thing as 100 percent protection from identity theft, no matter what you do. Only you can shred your credit card offers and other documents containing your personal information, instead of just throwing them in the trash for Dumpster-diving criminals to retrieve.
Likewise, it’s up to you to restrict the amount of information you give out.
ID protection services can augment your own efforts. They can monitor your credit file daily and alert you to any changes and illegitimate transactions.
But make sure the service watches all three national credit bureaus – Experian, Equifax and TransUnion.
And if there’s an abnormality in your credit file, the credit- monitoring service should notify you immediately.
Fraud alerts
Services also can set up fraud alerts for your credit file, which tell lenders to contact you before providing credit in your name, and they can opt you out of receiving prescreened credit card offers.
You can do those things yourself.
Identity theft insurance reimburses you for the costs of restoring your identity.
As with any insurance, you need to understand the terms.
These policies, which can come free with homeowners or auto policies or as a rider, generally cover reimbursement for expenses such as phone bills, notary fees, certified-mailing costs and sometimes attorney fees.
“It should be a low deductible and low premium,” says Linda Foley, who runs the Identity Theft Resource Center with her husband, Jay Foley.
On average, consumers spend $422 to resolve identity fraud.
Frank Abagnale, a secure- document consultant, says identity theft insurance is a rip off.
The insurance gives you a false sense of security, and some consumers end up buying coverage that’s already in their homeowners policies, “giving them two worthless policies,” Abagnale says.
The policies can come with identity restoration services, which can also be purchased separately. They come into play after your identity is stolen.
Some companies will assign a representative or “advocate” to help you through the process, such as filing affidavits, contacting creditors and credit bureaus and setting up a case file for insurance claims.
Just be sure you know what you’re buying, Foley says.
