The Checkout

The Identity Theft Business

By now, most people have been frightened with statistics about the prevalence of identity theft. Or they have at least seen those Citibank commercials in which identity thieves, speaking through the mouths of their victims, wax on about the joys of their ill-gotten loot.

You couldn't ask for a better marketing campaign for the cottage industry that has sprung up to protect consumers from identity snatchers.

According to the New York Times, 10 million pay about $100 a year to protect their credit information. That adds up to a $1 billion industry.

There are credit monitoring services, offered by the Big Three credit reporting agencies and credit card companies, that charge $30 to $150 to alert you about inquiries or credit applications. Next, there are insurance policies from the likes of Travelers, Chubb, and Farmers Group that charge $20 to $50 a year to insure you up to $25,000 for costs associated with identity theft, such as lost wages and attorney's fees. Consumer Reports says you can monitor your credit yourself for less money and the insurance policies cover so little they're not worth it.

Finally, there are outright scams. Some 300 senior citizens in West Virginia were recently duped by a company called Main Security Center that called them offering to "upgrade" their current anti-identity theft programs. The consumers thought the calls were coming from their banks or credit card companies. After paying $299, they received a CD-ROM allegedly containing anti-virus software, copies of free brochures published by the Federal Trade Commission, and a hand-held paper shredder. West Virginia Attorney General Darrell McGraw settled with Main Security Center last month.

All this means more homework for everyone. Not only do you have to keep on top of identity thieves but you also have to make sure you don't get ripped off while trying to protect yourself.

For tips on how to protect your personal information beyond checking your credit report, and what to do if you discover your identity has been stolen, here are several places you can go:

Consumer Reports has a lengthy page of suggestions.

The Federal Trade Commission acts as a clearinghouse for identity theft complaints. The agency doesn't bring criminal cases but it can share your complaint with the proper law enforcement agencies. An added bonus is the information is available in Spanish.

You can also check out The Post's own new handy, dandy site that amasses in one place, articles and links that appear in The Post about identity theft.

We talked about credit monitoring services not long ago. Has anyone out there signed up for identity theft insurance? What happened when you filed a claim?

By Annys Shin |  October 11, 2006; 7:00 AM ET Credit Issues
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Comments

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"There are credit monitoring services, offered by the Big Three credit reporting agencies and credit card companies, that charge $30 to $150 to alert you about inquiries or credit applications"

So I have to pay them for them to keep my information secure? Now that's a great business model! In the 1920s and 30s they used to call it "protection racket."

Posted by: WDC | October 11, 2006 8:34 AM

"There are credit monitoring services, offered by the Big Three credit reporting agencies and credit card companies, that charge $30 to $150 to alert you about inquiries or credit applications"

So I have to pay the Credit Bureaus for them to keep my information secure? Now that's a great business model! In the 1920s and 30s they used to call it "protection racket."

Posted by: WDC | October 11, 2006 8:35 AM

I considered buying an identity theft insurance rider to my homeowners insurance when I purchased a new home last year. As a former insurance attorney, I read the policy very carefully, and have to agree with Consumer Reports. It sounded good in a soundbite, "$25K of identity theft coverage", but didn't really cover much of anything, making it a complete waste of money. Needless to say, I passed.

Posted by: Josh | October 11, 2006 9:04 AM

As a two-time identity theft victim, I've heard enough about the steps that consumers are supposed to take in order to protect their credit history. What about the creditors and credit agencies that continue to accept and rely upon bad information as a basis for extending credit? I discovered that Equifax, Experian and TransUnion carried incorrect names, addresses, DOB and SSN's on my credit history which were euphemistically referred to as 'alternate'. Shouldn't creditors and credit agencies have the responsiblity to make sure that new credit information is accurate before associating it with my credit history as 'alternate' information? After complaining to the BBB, FTC and FCC in addition to local law enforcement and the FL atty general's office, I am told that it's all up to me, the consumer, to try to protect my cedit history. How can I possibly do that when bad information is assumed to be correct without checking with me first?

Posted by: lkd711 | October 11, 2006 9:22 AM

As I see it, the real problem is how beholden our legislators are to the credit bureaus. Equifax, Experian and TransUnion make money selling our information to anyone who wants it. There are NO LAWS that allow us, as consumers, to put a freeze on our credit - that is, to prohibit the bureaus and creditors from extending any more credit attached to our name - until AFTER we've been victimized.
The credit bureaus claim it's for "convenience", that if we ever want a new card, we don't have to remove a freeze - but heck, I have enough credit cards now and I'd be willing to jump through the hoops that I set up if I ever needed a new card.
We have a "Do Not Call" list, we can talk to the Direct Marketers Association and get on a "Do Not Send Me Junk-mail" list - why isn't there a "No More Credit Cards Please!!" list??

Posted by: Dave | October 11, 2006 10:36 AM

There is a "no more credit cards please!" way to stop the offers of credit. It's called www.optoutprescreen.com.

Posted by: To Dave: | October 11, 2006 10:43 AM

I "opted out" of prescreened credit offers almost a year ago, and still get applications daily from credit card companies I have never done business with or expressed any interest in. The applications were probably reduced by about 50 percent, but they keep coming. I even continued getting them after I placed a temporary "fraud alert" on my credit report after being informed my personal information had been stolen from a computer. There is truly no way to stop prescreened credit offers.

Posted by: nomorecreditcards | October 11, 2006 12:06 PM

Even going to optoutprescreen.com won't stop someone with your ssn from opening a Sears Charge at the counter or calling up a CC co. and requesting one. I want even that to be impossible unless I call the credit bureaus beforehand and "unlock" my record.

Posted by: Dave | October 11, 2006 12:18 PM

I use Identity Theft Shield from Kroll and Pre-paid Legal. I'm very happy with their proactive approach to protecting my identity. You can learn more at identitytheftknowledge.com or articles-news-blogs.com/categories/Legal/Identity-Theft/

Posted by: Frank | October 11, 2006 1:33 PM

The blog spammers are getting slow; usually they start flogging their worthless MLM junk within a few minutes of the topic of credit insurance showing up...

Posted by: Burke | October 11, 2006 1:46 PM

Here's the problem with Identity Theft that the media isn't really sharing. Because you can have multiple forms if Identity, there are multiple forms of Identity Theft. What happens if a thief gets a driver's license in your name and travels across state lines? Let's say they get a DUI, get out of jail, and skip town on bail. Two months later, you're pulled over at 9:00 PM for a routine traffic stop. The routine stop turns ugly when the officer HAS to do his/her job and arrest you, and the whole time, you're saying "But it wasn't me!"

What do you think that officer hears every day that they arrest someone?

Credit monitoring just isn't going to cut it.

What about if someone is in this country illegally and working under your social security number? The Social Security Administration and the IRS have to tell you about that, right? WRONG. They're under no obligation to do so, and actually may try to collect unpaid taxes from you for jobs you never worked at.

In that situation, you can fix it yourself, but an attorney would likely be of significant help.

This is not even to mention the other kinds of Identity Theft that are out there that credit monitoring or resolution services simply won't help you with.

Jonathan
www.identitytheftsecrets.com

Posted by: Jonathan | October 11, 2006 2:14 PM

Great post Annys. This is the first time I read the figure of 10 million people doling out $100 a year or more for these worthless credit monitoring and identity theft products.

It saddens me that the American consumer as a whole is so gullible.

Paying for credit monitoring is a rip off. There are two free alternatives out there right now:

* Requesting one free credit report every four months from www.annualcreditreport.com.
* PayPal/Equifax's free credit monitoring service.

Don't be taken in by the identity theft hype. Be prudent with your personal information and use the consumer protections afforded to your as an American citizen and you won't need to be frieghtened into paying the credit bureaus for "protection."

You can hear me skewer the credit monitoring industry more at http://www.knowzy.com/personal_finance/credit/credit_monitoring_is_a_rip_off.htm

I think most people taking the time to read Annys's article and post here realize that this "cottage industry" is an absolute scam preying on naive consumers.

Posted by: Jeff | October 11, 2006 2:30 PM

Consumers need to learn how to analyze all marketing information and websites sent to them and how to verify that they are on the up and up.

If you do a search for identity protection, there are lots of websites out there that sound good but if you don't know who's behind the company and start handing over personal information, you're as good as conned.

The scenario you blogged about seems a lot similar to the IRS phishing scams going around or fake PayPal emails as far as lulling you into thinking it's really from the person they say it is, when in reality it's a swindler.

It's sad but it seems like we need to be more on guard than ever.

Posted by: Sue | October 12, 2006 12:41 AM

Monitoring and ID theft insurance have the same fundamental problem: they are after-the-fact. There was a a time when this was the best we could do. Now we can do better - with over 20 states passing laws that allow consumers to freeze credit reports. Those states - including the big ones - CA, NY, FL, allow their residents to lock their credit reports and not worry about the most dangerous forms of identity theft, though, as Jonathan points out above, this still does nothing to stop medical id theft, gov. document id theft, debit id theft, tax id theft, etc. But something is better than nothing, that's for sure.

Scott
www.trustedid.com

Posted by: Scott | October 12, 2006 2:14 AM

Kroll Background America and Prepaid Legal Services, Inc. provide a great duo of ID Theft daily monitoring, notification AND RESTORATION, along with 24-hour access to quality attorneys to watch for problems and then fix them for you. The cost for both is only $35.95 per month, and they do a lot more in the way of legal services.

The problem with checking your credit every quarter or every year free is that a lot of harm can be done to you in between checks. Time is of the essence if you are going to practice damage control and repair. Kroll monitors daily and checks many data banks since financial ID theft is only about 27% of the whole problem.

Find out more at www.prepaidlegal.com/hub/knop30.

Posted by: Robert | October 12, 2006 6:39 AM

It is not naive (JEFF) to protect your self from Identity Theft or to prepare yourself to take action if it happens to you! There are a multitude of ways it affects people and it can be an absolute nightmare to repair the damage! Prepaid Legal and The Identity Theft Shield along with Kroll Worldwide is the best solution!
The nightmare of reclaiming your identity and regaining a clean record is reason enough to look into these services which will help take care of that for you! If you want a great example of what its like after your information has been compromised and the hell you have to go through to repair it go to:
www.jerryeller.com

To find out more about the Identity Theft Shield call 1-888-373-4336

Posted by: Lauren | October 12, 2006 9:43 AM

Type "prepaid-legal" and "mlm" into google to get a clear grasp on this company.

It's an MLM scam, and its minions troll around the Internet looking for discussions of credit insurance so that they can spam their nonsense into the discussion (this is called "blog spamming", which you can also look up in google).

Cool thing is, you don't have to take my word for it (or theirs); all the information's out there for you to make you own judgement.

Posted by: Burke | October 12, 2006 10:19 AM

Hello Annys - thank you for your article.

Every day my mailbox loads up with links pointing to Identity Theft stories from all around the country. Each story has a different take and approach.

Today, your headlines refer to the Identity Theft Business; looking at companies who are well-blessed by this misfortune offering products and services to stop it, provide alerts and do many sorts of other things. Many of these, after the fact.

When I started EZFind https://www.ezfind.com over three years ago, it was obvious our simple product and efficient service helped protect a person's identity in unthinkable but simple ways. I didn't think three years later, EZFind would be using the Identity Theft protection angle to spin the company and I didn't think I would be blogging about Identity Theft.

In an article I read the other day, a reporter called Identity Theft "a knowledge crime." Did you ever hear that before? Since when is knowledge a crime? The answer is; I guess when it's misused to this extent of Identity Theft. But when you really think about this, the crime is simply gaining, sometimes basic knowledge and knowing how to best use it or even sell it.

Earlier this year, a police captain in New Jersey spoke at a town meeting and addressed identity theft - he said Identity Theft was "the gathering of basic, personal information."

Another article illustrated this problem with a visual comparison. "There are a reported 28-million cases a year of identity theft and that alone won't usually get one's attention, but if you drove into your neighborhood and every fourth house was burning, that would get your attention."

We focus too much on gathering personal information from big sources like hard drives that was stolen containing an estimated 35,000 Social Security numbers or our entrusted Commerce Department losing 1,100 laptops over time.

Here's a dreadful thought: Stand in line at the busy airport where everybody today is focused on how quick they can get through ticketing and security - to them, nothing else much matters. In line you will find John Smith with his luggage at his side proudly displaying he is John Smith and lives at ___ and his phone number is ___ etc., etc. Next, digital-age miniaturization allows anyone to flip open a cell phone, look like they're making a call and now the little camera has John Smith's picture. There's enough basic information there to more than begin the gathering process.

An EZFind luggage tag is secure and eliminates the need for anyone to place their name on the bag. The tag also gives complete instructions to a finder on how to contact EZFind and it's up to EZFind to efficiently and confidentially contact the owner. These are even safer than the tags that hide personal information because even those can be compromised internally.
The same goes for EZFind's simple return labels - a 24x7 toll-free number that connects you to a live person, a Global Collect number, web URL and a unique encoded number. That's Identity protection.

Do you know how many identities are compromised today due to lost items never being returned to their owners? There's a good story there, in itself.

Earlier this year in March, we learned that airlines lose 10,000 bags a day. In reality, we do realize this number includes misdirected bags which make up the most part. But what if this number was one-percent (1%) correct of bags truly lost and you were among the one percent? Extrapolate and do the math over a month and a year. Do you think this provides opportunity for Identity Theft? The other day, it was reported that more than 14,000 bags a day are lost and this is probably the result of more people checking bags because of the liquids ban. I am singing to the choir here just looking over your recent blog about lost luggage.

Just how did our Commerce Department lose more than 1,100 laptop computers over the past five years? That's about one computer for each government workday.

I started EZFind in 2002 when I left a bank money bag on a Washington DC-bound Amtrak. The bag slipped out of my briefcase and onto the floor, under the seat in front. The contents included a few dollars, a credit card, a checkbook, a bunch of receipts and some travel documents.

Luckily (for me) the conductor who diligently did his job and checked the train after the run found my bag. The next morning I got a phone call from the conductor who was at his house. He called early and apologized in case he woke me but said I would probably want to know that he had my bag and he wanted to know how to send it back.

The conductor had more than enough clues on how to find me and did well in reaching me quickly. He also told me it was uncustomary for a conductor to do what he was doing and asked for my total confidence. The man was honest and said, "If I had done my job and put this bag in lost and found, you would never see it again and you would have many problems, probably for years to come."

I sent FedEX to the conductor's house that morning with a pre-paid air bill and I had my money bag the next morning by 10am. The conductor wouldn't accept a monetary reward of any kind so I asked him if I could make a donation in his name to a charity I was helping out. He obliged. EZFind: "A Business built on Giving Back."®

In late September, EZFind announced 'WAIT' â„¢ - EZFind's War Against Identity Theft. Along with this program we are giving away return labels for FREE at the company's site www.ezfind.com. The labels are free but the customer must pay a nominal fee for shipping and handling. A small remainder of this charge is donated to charity.

What's that saying, "An ounce of prevention ...."

Posted by: Vince Moro | October 12, 2006 3:40 PM

Great blog entry Annys. Very perceptive.

It has been amazing, but not surprising, to see all the ID Theft protection businesses cropping up in the past year, and your advice to consumers to be sure and do their homework on the companies and products they are considering is excellent.

(Disclosure: I represent a company as an independent associate - see below)

Continuous credit monitoring can be valuable, since checking your credit report yourself periodically would be similar to turning on your burglar alarm for one night once a month, but it cannot prevent your ID from being stolen.

The same could be said for all the standard precautions the FTC and others recommend - shredding, guarding and locking up info, etc. Great advice, but given that our individual personal information is stored in numerous data bases across the nation (and possibly around the world), it is clear that we personally cannot prevent the breach of these systems, so the best any of us can do is to try and be prepared to deal with an ID theft situation once it arises.

Of course, anytime the public senses a new "need" such as this, there are bound to be many competing services and companies offering solutions and consumers are right to be wary.

I suggest considering several issues:

1) How long has the company been in business? Is their stock publicly traded on a major exchange, which promises a degree of corporate transparency?

2) How long have they been offering ID Theft protection or other security services? Are they "jumping on the bandwagon" or are they a leader in this area?

3) Are they offering real restoration services or just help answering questions on the phone? Do they have licensed, experienced investigators to work with or novice phone counselors?

4) Do they provide access to legal counsel, both routine and emergency, for all identity theft problems affecting victims (not simply financial or credit card related issues), i.e. crimes committed, medical claims submitted or tax liabilities for wages earned in the victims name?

5) Can they provide support from independent, 3rd party firms or research publications for their marketing and corporate strength claims?

I am pleased and proud to say I represent, as an independent associate, the leaders in this market, who I believe offer the only identity theft solution that will stand up to this type of scrutiny.

The Identity Theft Shield, developed under a partnership between Pre Paid Legal and Kroll Worldwide (both 30+ year old, publicly traded companies), combined with PPL's Life Events Legal Plan is the best solution that can protect families (and businesses) for less than what you could pay for coffee every month.

I encourage anyone concerned about this issue to do their own research and see if they come to the same conclusion.

MartyB
www.EnforceYourRights.com

I do notice there are some disparaging comments about our company in these comments.

Consider this:

Is it likely a company that has been praised by the US Chamber of Commerce, multiple current and former state Attorneys General, the former head of the New York Stock Exchange, major financial publications such as Fortune, Forbes, Black Enterprise fits the negative profile claimed?

Be sure and get the facts!

Posted by: MartyB | October 12, 2006 4:26 PM

The card companies can use methods and procedures that once would have been conidered illegal or unethical. This may bother enough people to get the system changed. Taking money without due process is not impossible in the current environment.

Posted by: Gary Masters | October 12, 2006 5:09 PM

Prepaid Legal is MLM and says they can protect you from id theft. Balony- no one can protect you. Not only that but you have to sign a power of attorney to Kroll to help you. I'm a victim of id theft. No way. There are FREE programs that are award winners or sponsored by state Dept of Consumer Affairs or Attorney General's office. Use those.

Posted by: susan | October 12, 2006 7:48 PM

The Identity Theft Resource Center is a nonprofit that freely helps victims of id theft. We too have been interested in hearing from people who have Id theft insurance and applied for insurance benefits after being a victim. Please let us know how satisfied you were.
Send to itrc@idtheftcenter.org (for victims too). If you are writing about insurance satisfaction put: "attn. Linda- insurance." Thank you.

Posted by: ITRC | October 12, 2006 7:51 PM

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