Do Identity Theft Protection Services Work? It seems that every time you turn around, there's news about another information security breach involving people's personal data. Just last week, marketing services firm Epsilon warned clients that hackers may have accessed the names and emails of thousands of users. Those affected included customers of such major companies as JPMorgan Chase (JPM), Citigroup (C), Capital One, (COF), Best Buy (BBY), Target (TGT) and Verizon (VZ).

Your information is everywhere in cyberspace, and identity thieves never take vacation: It's enough to make a person feel downright insecure. Capitalizing on those fears, a crop of companies has sprung up offering identity theft protection services. The question is: How well do they protect you?

The Consumer Federation of America recently released a new report, Best Practices for Identity Theft Services, a follow-up to its 2009 study, To Catch a Thief: Are Identity Theft Services Worth the Cost?, which took a critical look at for-profit identity theft services. That report identified some serious problems in the industry, including misleading claims about preventing identity theft, unclear information about how services worked, and exaggerations about what guarantees or insurance provided.

Last month, the CFA, along with a group of identity theft service providers and consumer advocates, came up with a to-do list for the industry.

Over-Promising, Under-Delivering and Obfuscating

For starters, identity theft service providers should avoid making claims that imply they can provide complete protection against all forms of identity theft, detect all instances of identity theft, or stop all attempts to commit identity theft -- claims that no service can legitimately make, notes the CFA.

The industry also came under fire for using misleading "testimonials and statistics" in its advertising, as well as for unclear disclosures about costs, cancellation and refund policies, and how to resolve complaints with the services, among other things.

The CFA recommended that identity theft service providers do a better job of making clear how their programs work, exactly what you get and don't get, and what their privacy policies are. Companies that offer insurance or guarantees should make thorough and accurate information about what they cover and what is excluded easily available. Finally, it suggested that customers' powers of attorney should only be obtained when needed to help those who request assistance, and should be only used for that purpose.

"The root of the identity theft protection industry issue is a fundamental lack of transparency," says Robert Siciliano, a McAfee consultant and identity theft expert. "Most companies offering identity theft protection sell smoke-and-mirror offerings."

Know What You're Buying

Identity theft protection services typically run around $150 to$ 200 a year, so the fees likely won't bust your budget. Even so, you want to get your money's worth. What yardstick can you use to see how a company measures up?

First, decide whether you want a proactive service which helps protect you before you become a victim of identity theft. These companies will scan underground websites for your social security number, credit card numbers and other personal information. They also monitor your files at the three credit bureaus, and alert you if there's a change in your information.

Reactive services alert you only after an identity theft has occurred, explains Todd Davis, chairman and CEO of LifeLock, which offers identity theft protection services. Some firms offer remediation services, meaning they'll help you cancel your credit cards and replace the contents of your wallet, contact your financial institutions, and work with you to complete the necessary paperwork to get your life back in order if you become a victim of ID theft. "Remediation should be a necessity when selecting ID theft protection services," says Davis.

How to evaluate a company

The CFA offers six questions to ask when shopping for identity theft services.

1. Does the company monitor more than credit reports? Consider services that scan other commercial databases, public records, rogue websites that sell stolen credit cards and social security numbers, and other places that aren't as easy for you to monitor yourself.

2. How does the service help if you become a victim? Most identity theft services only provide advice about the steps you'll need to take, but some take a more active role in helping victims resolve their problems. If you're unclear how the service will help you should the need arise, keep shopping.

3. Will signing up with the service prevent you from getting your free annual credit reports? Some services obtain your credit reports by requesting the free reports that everyone is entitled to get once a year. That effectively prevents you from exercising your right a free report should you want it.

4. Should you look for identity theft services that offer insurance? Insurance generally reimburses you for lost wages if you must take unpaid time off work to resolve an identity theft problem, as well as for long-distance calls, postage and other expenses. Money that an identity thief steals from you is usually not covered. Since most identity theft victims have few or no direct expenses related to resolving the issue, insurance should not be an important factor in deciding which service to buy.

5. Does the guarantee really protect you? No service can absolutely assure you that you won't become a victim. Read the guarantee carefully: It may not provide as much protection as you expect.

6. What are the costs and terms? Some services charge month-to-month, others require payment upfront for a year. Not all will provide a pro-rated refund if you decide to cancel before the term you paid for is up. Read the fine print and understand the cancellation policy.

Help yourself


Truth is, there's no silver bullet that will protect you, whether you pay for protection or try to ward off identity thieves on your own. If you're a do-it-yourselfer, there are some smart strategies to apply. First, under the Fair and Accurate Credit Transactions Act, each credit reporting agency is obligated to provide you with a free credit report every 12 months when requested.

"Hypothetically, you can obtain a credit report from TransUnion, then four months later from Equifax, and then four months later from Experian," explains Darren Hayes, a professor at Pace University's Seidenberg School of Computer Science and Information Systems. "Four months later, a year has passed and you can then ask TransUnion to send you another report, and so on."

You can also consider placing a freeze on your own credit file, advises Mary Ann Campbell, a certified financial planner with IndexCreditCards.com. This adds an additional layer of security questions to the process of opening a new account. It makes applying for new credit more cumbersome, but it helps ensure that only you can add a new account in your name. Each state has its own rules and fees ($10-$15) for putting a freeze in place.

Otherwise, she says, limit the number of credit cards you carry, and leave your social security number and passwords in a safe place at home. Also, photocopy the front and back of everything in your wallet and put the copies in a file marked so you -- or someone else you direct -- can easily find it if needed.

Securely dispose of your mail: Shred pre-approved credit card offers and anything with account information.

Finally, says Siciliano, understand that no matter what you do, there is no such thing as perfect identity theft protection. "The fact is, you can't protect yourself from all forms of identity theft, and the types that you can guard against require a Rain Man-like focus. One way or another, it's going to cost you time or money, or both."



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Type your comment hereI personally get my Identity Theft Protection from the #1 company in the world. I get combined plan which includes unlimited Legal Advice and Identity Theft Protection for about $28 a month. That is extreme low for the value you are getting. The Legal Plan and Identity Plan can be sold separate but i recommend getting both. The plans cover your entire family for the low monthly cost. Check it out - www.anmorgan.com

September 22 2012 at 2:01 AM Report abuse rate up rate down Reply
Halina & Arthur

obama says we must protect our people- so, he sends troops to libia to get them out. now, what about our borders next to mexico? we have our own people in trouble there. why don't we jusst blitz them (the mexican cartel) and protect our peopleand our land and borders-not to play games with them. withj our armies and muscle it should only take a week. they'll think twice to come our way. we have to let them know they can't screw around with us the usa.

April 13 2011 at 12:22 AM Report abuse rate up rate down Reply
paper7559

Why is it that it never gains like it loses?? Hmmmmmmmm.

April 12 2011 at 3:27 PM Report abuse rate up rate down Reply
paper7559

Let's all pull all our monies out of it, and crash the SOB. Then there won't be a stock market to worry about. Oh......I forgot, the world can't survive without it. I often wonder.... what did they do before they created the damn thing?

April 12 2011 at 2:11 PM Report abuse rate up rate down Reply
amato3035

MR. OBAMA COULD STOP THIS IF HE WANTED TO ITS A REAL JOKE

April 12 2011 at 1:52 PM Report abuse -1 rate up rate down Reply
pfwebext52

test comment

April 12 2011 at 11:36 AM Report abuse +1 rate up rate down Reply
1 reply to pfwebext52's comment
tallbussys

This comment makes more sense than the rest.

April 12 2011 at 4:57 PM Report abuse +1 rate up rate down Reply
1 reply to tallbussys's comment
Best SiteReview

I personally get my Identity Theft Protection from the #1 company in the world. I get combined plan which includes unlimited Legal Advice and Identity Theft Protection for about $28 a month. That is extreme low for the value you are getting. The Legal Plan and Identity Plan can be sold separate but i recommend getting both. The plans cover your entire family for the low monthly cost. Check it out - www.anmorgan.com

September 22 2012 at 2:02 AM Report abuse rate up rate down
inasctg56

And the gop wants to do away with the consumer protection agency. They passed legislation in 2002 that lead to predatory lending, less oversite for wallstreet and banks. And now Michelle Bachmann wants to repeal the new banking legislation that addresses the problems of the 2002 gop legislation.

April 12 2011 at 11:22 AM Report abuse +1 rate up rate down Reply