ID theft monitoring services: Worth it?
Everyone is afraid of identity theft. It seems as if every couple of days there are new reports of Social Security numbers and other sensitive information stolen, lost or leaked.
Just last week Countrywide Financial, which is now owned by Bank of America, said it would provide two years of free credit monitoring for customers whose confidential data were allegedly stolen by a former employee.
But should you spend money to buy services that promise to protect you from identity theft?
As in so many matters financial, it depends: on whether you don’t mind paying for something you could do yourself for free, and on whether the company offering the protection can really deliver on its promises.
Most identity theft protection services actually watch out for only one type of fraud -- in which hackers or other thieves take out new credit in your name.
But there are seven types of identity fraud, said Avivah Litan, vice president and analyst at Gartner Research in Stamford, Conn.
They include abuse of an existing credit card account, abuse of an existing debit card account and checking account fraud, ranging from forgery to account takeovers.
New account identity fraud -- the type monitored by most services -- hits only about 1.45 million people each year, said Litan, who compiles industry statistics. “You have about a 1-in-200-million chance of it happening to you,” Litan said. “Is avoiding that chance worth $120 a year? If you are a statistically based person, probably not.”
But add in the other types of identity theft, she said, and the number of people affected goes up to between 9 million and 15 million annually.
Another problem, said Jay Foley, executive director of the Identity Theft Resource Center, a San Diego nonprofit organization that does not sell monitoring services, is that most companies that do claim to be preventive in fact are simply offering a way of detecting that you’ve already become a victim.
The service sold by another nonprofit, the similarly named Identity Theft Assistance Center, for instance, alerts you when new accounts have been opened in your name. The service is $10 to $18 a month and the center earns a fee whenever consumers buy it.
The group’s website warns consumers not to be taken in by services that promise more than they deliver -- but the service offers little more than most of its competitors.
There are some identity theft services that aim at prevention rather than detection. Two such services -- LifeLock and Debix -- put a fraud alert on your credit file, which demands that merchants call you before issuing credit in your name. LifeLock Chief Executive Todd Davis widely publicizes his own Social Security number to show the effectiveness of his service, which charges $10 a month. However, Davis’ identity has been stolen once and he admits that a handful of his company’s customers have had problems too. But, he says, LifeLock works with them to fix anything that gets through.
Debix offers a similar service for $24 a year.
However, what LifeLock and Debix offer for a fee can be done by consumers for free. To place a fraud alert on your credit file, you simply need to fill out a form with one of the three major credit reporting bureaus online or by phone. The bureau you contact is supposed to pass the alert on to the other two.
To contact them start at their websites: experian.com; equifax.com; or transunion.com. If you find it difficult to fill out the online form, these sites offer toll-free phone numbers.
You may also check for fraudulent items on your credit report at no charge.
For a limited time, you can get free credit monitoring from TransUnion, thanks to a legal settlement that gives every American with an active credit file the ability to claim up to nine months of free services. To sign up, go to www.listclassaction.com. But do it soon. The settlement demands that you register before Sept. 24, if you want to get in on the deal.
In addition, every consumer has the right to one free credit report per year from each of the three major credit bureaus. Sign up at www.annualcreditreport.com.
Annual monitoring isn’t enough? Foley suggests you order one report every four months, rotating among the companies. In other words, you might request your free annual report from TransUnion in January; your free report from Experian in May and your free report from Equifax in September. Start again the next year.
Too much work? Then buy the credit monitoring services, experts say. But buy them like you buy housekeeping services or lawn mowing -- knowing that you could do it yourself but are willing to pay someone else, if the price is right.
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Kathy M. Kristof welcomes your comments at kathy.kristof@latimes.com but regrets that she cannot respond to every question. For past Personal Finance columns, visit latimes.com/kristof.
