By Andrea Coombes
Buyer beware when choosing identity-theft-protection products
SAN FRANCISCO (MarketWatch) -- Plenty of products promise to help consumers avoid identity theft, but none of them is foolproof.
If a product claims to prevent identity theft, that should raise red flags for consumers, said Linda Foley, founder of the Identity Theft Resource Center in San Diego. "You can't protect a person from identity theft. It's impossible. All we can do is minimize our risk."
And, while these products can reduce your likelihood of becoming a victim, many employ methods that consumers can use on their own, for free.
Fraud alertsMany products offer to place fraud alerts on consumers' credit reports, so when a retailer or creditor checks your report in response to a request for a new credit card or financing for that plasma television, the fraud alert tells them to double-check that the person seeking credit is you. Ideally, the creditor delays extending credit until reaching you.
But alerts "are not the silver bullet that people are looking for," said Guillaume Deybach, chief executive of Europ Assistance USA, a Washington-based company offering travel aid and identity-theft assistance.
Drawbacks: Alerts focus only on thieves opening new credit lines in your name, not the use of existing accounts. Also, some retailers don't check credit reports before extending credit and those that do don't always try to reach you -- they may just ask the thief some easy-to-answer questions. Still, alerts increase the chance you'll be contacted if someone applies for credit in your name.
Consumers can call or go online to each of the three credit reporting agencies (Experian, Equifax and TransUnion) to place a fraud alert for free. "It's easier to do it by phone," said Paul Stephens, director of policy and advocacy for the San Diego-based Privacy Rights Clearinghouse. "It's faster, and you're not going to get as much of a sales pitch."
Generally, fraud alerts expire after 90 days. If you don't want to bother remembering to renew alerts, several companies, such as LifeLock, sell the service of placing alerts for you, for about $10 a month, or bundled into pricier packages that include other services.
Credit freezeAlternatively, you can place a credit freeze to lock up your report at each of the three bureaus, preventing new credit being extended in your name. This won't affect your access to current credit lines, but will delay your access to new credit (it takes about three days to lift a freeze). Freezes aren't advised for people in precarious financial positions who might need to borrow money in a hurry. But for consumers prepared for unexpected financial emergencies, a credit freeze is a powerful way to stop thieves.
Drawback: Freezes don't stop thieves tapping existing credit or bank accounts, nor do they address other identity theft, such as when a thief provides your name as his identity when pulled over for a traffic violation.
Consumers can freeze their reports by calling each of the three agencies. It generally costs $10 to place a freeze ($30 to freeze all three major reports) and $10 to lift each freeze (these costs are sometimes waived.) For more details, visit FinancialPrivacyNow.org.
Or, you can pay for a product that includes a credit freeze, such as offered by TrustedID and others.
Credit monitoringMonitoring products alert consumers when changes appear on their credit reports.
Drawback: There's often a significant time lag between credit activity and its appearance on your report. Still, monitoring may help you realize sooner that you've become an identity theft victim, enabling you to start resolving the issue before more damage ensues.
Consumers can do their own form of credit monitoring by requesting a free annual credit report from each of the three main credit bureaus on a rotating basis (one request every four months). Go to AnnualCreditReport.com.
Or, you can pay a company for the convenience of having alerts emailed to you. Make sure the company monitors all three bureaus.
Data-sweep servicesCompanies will scour the Internet for your personal information, alerting you to potential misuses of your identity. These services cover an array of online information, including real estate and criminal records. One example is MyPublicInfo's "public information profile," about $80 for one report and six months of access to their member resources.
Drawback: They don't prevent identity theft; they alert you when it might be happening.
"The fraud alert, the credit freeze, the credit monitoring, some of the tips to protect your information and identity, none of them are silver bullets, but all of them contribute to prevent it from happening and all increase your awareness when something is odd" with your accounts, Deybach said. "It's really about raising the awareness of individuals ... so whenever something happens they can take care of the issue and act."
Insurance and victim resolution servicesIdentity-theft insurance helps cover the costs associated with the crime. Your homeowners or renters insurance, or your bank account, may include such insurance already, so check before purchasing. Consumer advocates say the value of such insurance is debatable, since financial losses are often not extensive and credit-card companies generally cover consumers' losses.
Still, insurance could be useful if the policy covers debit-card losses and lost wages due to your time spent resolving the crime. Visit PrivacyRights.org for more on the risks of debit cards.
As for victim resolution services, some nonprofit and state agencies will help for free, though the services companies sell may offer valuable convenience. Visit IDTheftCenter.org for more information.
Protect yourself
Keep a close eye on your financial accounts, whether online or by monitoring paper statements, to be alerted quickly should you become an identity theft victim.
If you prefer plastic to cash -- and you've got discipline -- use a credit card instead of a debit card for purchases. Credit cards come with stronger consumer protections.
To avoid identity thieves online, keep your computer protections up-to-date, including antispyware and antivirus programs, and don't click on links in email messages. Avoid unsecured Wi-Fi networks unless your computer encrypts transmissions.
Don't save passwords on your computer, and turn on password-protection features for your portable devices.
Lock up sensitive financial information stored at home.
Talk to your kids about refraining from posting an abundance of private information on social-networking sites, and do the same yourself.
Avoid leaving sensitive data in your car, where it could easily be stolen.
Use post office mailboxes to send mail, and shred documents before tossing.
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