Identity theft protection services costly - and of little value
BY PHIL MULKINS World Action Line Editor
Wednesday, January 23, 2013
1/24/13 at 3:42 PM
Everybody is scared to death their credit identities will be stolen and their lives ruined by coldhearted data thieves unless they pay someone $50 a month for so-called identity-theft protection. But the editors of Consumer Reports' Money Adviser magazine found that such protection plans provide little, if any, value.
The magazine's February issue states that "some promoters of these services have been slapped by the Federal Trade Commission for misleading sales practices and false claims." See the article at tulsaworld.com/CRMAIDTheftNot
"About 50 million people subscribed to some form of identity-theft protection in 2010," the magazine reports. "Those services, which cost $120 to $300 a year, promise to protect your ID by monitoring your credit reports 24/7, scouring 'black-market chat rooms' for your personal information, removing your name from marketing lists and filing fraud alerts." Some throw in $1 million insurance guarantees.
Similar pitches come from banks, comprising more than half of the $3.5 billion a year spent on identity-theft protection subscriptions. In a sense, consumers who buy this protection from their banks are helping to foot the bill for services that financial institutions must provide, under federal law, to shield customers from losses stemming from credit card and bank account fraud, the magazine's report concludes.
The staff dug into the latest products sold by two dozen banks, credit-reporting bureaus and independent companies and found that marketers of such plans "use fear as a sales tool."
The claim: Some ID protectors scare up business with inflated claims about crime. "There were 1.2 million more victims in 2009 than 2008," website The Chase warned. "With a growing 11 million victims each year, one of those identities could be yours."
The facts: That promotion, running in November 2011, was based on outdated statistics: latest available data show that identity fraud fell 27 percent in 2010, to 8.1 million victims. As of fall 2011, Experian Protect MyID was also still claiming that ID theft is "one of the fastest-growing crimes." U.S. Bureau of Justice statistics show that 765,000 households were victims of this form of ID theft in 2010, meaning the chance of it happening to you is less than 1 percent a year.
Even the statistic of 8 million victims overstates the danger. More than 80 percent of what's been called "identity theft" involves fraudulent charges on existing accounts, according to the U.S. Department of Justice. What's relatively rare is "new account" and "personal information" ID theft, in which someone uses your name, birth date and Social Security number to open new credit accounts, tap your health insurance, earn taxable income or commit crimes in your name.
Identity fraud is down because financial institutions are doing a better job preventing it. Consumers have become more eagle-eyed about their own accounts, without the need for a paid subscription service, the magazine report concludes.
Protect your credit identity from theft with four tips
One New Year's resolution you don't hear much is, "I will do a better job protecting my credit identity from theft."
A 2011 survey by Javelin Strategy & Research showed the average amount lost to ID theft by people notified of the crime by ID-theft protection plans was $3,363, while people finding theft by reviewing their own bank and credit card statements was only $2,195.
The ID-protection service ProtectMyID ( tulsaworld.com/ProtectMyID) offers tips for saving your own identity.
Guard the card: Never carry your Social Security card in your wallet - lock it up in a safe deposit box with all your other important personal documents. Don't reveal your number unnecessarily.
Ask why your Social Security number is needed and what will happen if you don't reveal it. Legitimate reasons for its use include verifying your identity for employment, establishing new lines of credit, participating in government benefits programs and tax purposes.
Shred it: Invest in a good, cross-cut shredder and use it to destroy all documents bearing your personal identifying information (account numbers, birth dates, SSN, etc.). This includes "pre-approved credit card offers" and "convenience checks."
Lockable mailbox: Buy a lockable mailbox for deliveries to your home while you're away. Take outgoing mail to the post office, and don't use that "come steal me" red flag.
Crack-proof passwords: Password-protect all your accounts, and change the old ones to uncrackable versions. This includes bank accounts, investment accounts, credit card accounts, etc. Use something that cannot be easily guessed by someone who knows you.
Don't use the last four digits of your SSN, your mother's maiden name, your pet's name, anniversaries or birthdays. A random word, not associated with you or your life, is recommended and should include at least eight characters: letters, numbers and symbols.
Original Print Headline: Fear of identity theft a sales tool
Tulsa World consumer writer Phil Mulkins wants to know which topics interest you. Call 918-699-8888, email your suggestion to phil.mulkins@tulsaworld.com or mail it to Tulsa World Consumer, P.O. Box 1770, Tulsa, OK 74102-1770.
Associated Images:
JASON POWERS / Tulsa World
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