ID theft protection not always a bargain buy

Fear of identity theft has created an entire industry of firms that say they will monitor your credit records and protect you from fraud. But are these services worth $120 to $360 a year?

It depends, but in many cases the answer is no.

That’s the assessment of the Consumer Federation of America, which has issued a report examining services offered by a sampling of 16 commercial identity theft protection firms.

“There are a lot of things you can do for yourself and a lot of assistance available to you — for free. Much of it is the same type of assistance you get from these for-profit services,” said Susan Grant, the group’s director of consumer protection.

Firms that provide identity theft protection services say they offer convenience and peace of mind to consumers who don’t want to hassle with filing forms and regularly requesting reports from multiple agencies.

And some firms provide more comprehensive services than others, monitoring proprietary data consumers can’t access and employing staff to handle the calls and paperwork needed to restore a stolen identity.

“There are lots of things you can do for yourself,” said Anne Wallace, president of the Identity Theft Assistance Center, which is funded by 48 of the nation’s largest financial services companies. The center provides free help to consumers whose fraud problems involve accounts at member companies. It also sells protection services.

Wallace said not all consumers are comfortable taking action on their own. “You may be particularly anxious about the problem, you may have a busy life and you just like the added convenience or peace of mind,” she said. “Those are the people who decide to buy it.”

While identity theft gets a lot of media attention, the problem is difficult to quantify. The Federal Trade Commission’s Consumer Sentinel Network received 313,982 identity theft complaints in 2008. Nearly 11,000 were from Georgia, which ranked seventh in the nation per capita.

But those are just people who filed complaints. Various surveys have estimated that about 10 million adults are victims each year. Nearly 60 percent involve misuse of a credit card account. Just 22 percent involve the creation of new accounts or the use of personal information for other frauds.

In most cases, laws protect consumers from liability for fraudulent charges or purchases they didn’t authorize, the report notes.

So before buying ID theft services, consumers need to decide how likely it is they will be victims, Grant said. They should shop carefully; the report found that many firms provided confusing, unclear and ambiguous information about what buyers get for their money.

Many firms examined by the report only monitored credit reports or just put fraud alerts on credit files — things consumers can do themselves for free. Some firms monitor credit reports from just one reporting agency, not all three; others don’t monitor them at all. Some tout $1 million guarantees or insurance but have loopholes. If your identity is stolen, some just give advice on how to clear your name; others do all the legwork to correct the problems.

There were three firms, however, that impressed the Consumer Federation of America’s researchers. They saw merit in services offered by ID Watchdog ($19.95 per month), ID Theft Assist ($149.95 per year for a family) and the premium ITAC Sentinel product offered by the Identity Theft Assistance Center ($17.99 per month).

“They have combined broad monitoring with actual assistance — not just advice — if you have a problem,” Grant said.

Justin Yurek, president and co-founder of ID Watchdog, said there are types of identity theft that never show up on credit reports. That’s why his firm is among those that monitor proprietary data involving such things as hospital bills, arrests, rental agreements and utility accounts.

“We can’t say we’re going to stop identity theft from happening to you. It’s not an ethical thing to say,” Yurek said. “We can say we’ll identify it quicker than anybody else and won’t stop until it’s fixed.”

Still, many consumer advocates say most people don’t need to hire a service to protect themselves.

Jeannine Lowery, grass-roots coordinator at the Atlanta consumer group Georgia Watch, said one of the most powerful tools consumers have against fraud is a “freeze” on their credit reports. It costs less than $10 — and is free for seniors and fraud victims.

“I think generally it’s something you can do for yourself and it’s a lot cheaper,” she said. “Nobody has extra money to throw around in this economy.”

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DO IT YOURSELF

Many free or low-cost tools are available to consumers concerned about identity theft.

CREDIT REPORT MONITORING

What is it? Experts recommend all consumers regularly monitor their credit reports, looking for inaccuracies that may damage their credit rating as well as signs of identity theft. Under state and federal law, Georgia consumers are entitled to two free credit reports every 12 months from each of the three major reporting agencies.

Be aware: Some firms that advertise free credit reports actually are selling services or products. You do not have to buy a service to get free reports from official sources.

How to do it: Experts recommend requesting your report from a different credit reporting agency every few months so you can monitor activity in your credit files throughout the year. For more information or to request reports, go to annualcreditreport.com or call 1-877-322-8228. Georgia consumers have to contact each agency directly to get their second free report.

CHOICEPOINT REPORT REVIEW

What is it? ChoicePoint is a firm that collects information used by businesses for pre-employment, tenant and insurance background checks. Data include insurance coverage and claims history, criminal records, credit information, eviction reports, real estate ownership records, bankruptcies, professional licenses and historical addresses. You should review this information to ensure no claims or other reports show up that you aren’t aware of — both to protect your reputation and look for signs of identity theft.

How to do it: Georgia consumers can get two free copies of their “full file disclosure” each year. For a request form and detailed instructions, go to choicetrust.com and click on “Access Your Personal Information.” Or call 1-888-497-0011.

FRAUD ALERTS

What is it? A way of flagging your credit reports warning potential creditors that they need to use “reasonable policies and procedures” to verify your identity before issuing credit. You can ask for an “initial” fraud alert, which lasts 90 days and can be renewed, if you suspect you have been — or are about to be — a victim of identity theft. If you have already been the victim, you can ask for an “extended” fraud alert that lasts for seven years. Military personnel can put an “active-duty alert” on their credit files that lasts one year and can be renewed for longer deployments.

Be aware: Alerts may not stop misuse of existing accounts. While an “extended” alert requires the creditor to contact you, it may not necessarily contact you directly if it just sees an “initial” fraud alert or an “active-duty” alert. The use of initial fraud alerts can be controversial for people who merely fear being victims of identity theft but haven’t had a specific incident, such as losing a wallet. Yet several commercial services file initial fraud alerts on all customers.

How to do it: Call the toll-free number for any one of the three national credit reporting agencies: Equifax, 1-800-525-6285; Experian, 1-888-397-3742; or TransUnion, 1-800-680-7289. The company you call is required to contact the other two, who also will place an alert in their files. You should receive a confirmation from each of the companies.

CREDIT FREEZE

What is it? A credit freeze allows you to restrict access to your credit reports unless you specifically authorize access with a personal identification number (PIN). This makes it difficult for an identity thief to open new accounts in your name because creditors can’t view your file.

Be aware: A freeze doesn’t prevent misuse of existing accounts. And a freeze can make it inconvenient for you to apply for credit cards or loans because you’ll need to lift the freeze. Georgia law requires credit agencies to temporarily lift the freeze on your reports within 15 minutes of the request; consumers pay $3 to lift the freeze.

How to do it: Georgia residents are entitled to apply a credit freeze to their files at the three major credit reporting agencies for $3 per agency (it’s free to people 65 and older and victims of identity theft who provide a copy of a police report). To start a freeze, send — by certified mail — your full name; addresses in the past five years; birth date; Social Security number; a copy of a government-issued ID card such as a driver’s license; and one copy of a phone or utility bill, bank or insurance statement and the $3 payment by check, money order or credit card.

Experian Security Freeze; P.O. Box 9554; Allen, TX 75013, experian.com/freeze, 1-888-397-3742.

Equifax Security Freeze; P.O. Box 105788; Atlanta, GA 30348; 1-800-685-1111.

TransUnion Security Freeze; P.O. Box 6790; Fullerton, CA 92834-6790; transunion.com/securityfreeze; 1-888-909-8872.

OPT OUT OF CREDIT OFFERS

What is it? Pre-screened offers for credit cards and loans that fill your mailbox can be used by identity thieves. If you don’t want to receive them, you can opt out of these mailings for free.

How to do it: Call 1-888-567-8688 or go to www.optout prescreen.com.

Sources: Georgia Watch, Federal Trade Commission, Governor’s Office of Consumer Affairs, AJC research.

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CHECK OUR SOURCES

The Consumer Federation of America, founded in 1968, is a nonprofit consumer advocacy, education and research organization, and association of 300 nonprofit U.S. consumer groups.

To read its full report go to consumerfed.org/pdfs/ID_THEFT_REPORT.pdf