Identity Theft Services - How to successfully compare services

I've had people tell me they are not at risk for Identity Theft because they shred everything and do not shop online. Unfortunately, the real risk lies in the "Databased You." Your information lives in so many paper files and computer systems that you have absolutely no control over. Even a quick look around your doctor's office might reveal open-shelved medical record filing. Almost all tell me that they have a cleaning crew come in at night. Some fraud rings operate cleaning services for this reason alone - to gain access to sensitive information when no one is watching.

Chances are likely that you've received a letter in the mail indicating that a computer was lost or stolen or a database hacked with your sensitive information on it (Veterans Administration, TJ Maxx, Bank of America, ChoicePoint, the Colorado child support system and new hire database to name just a few).

Generally, they will say "However, we have no reason to believe that the information will be used for Identity Theft." Some companies will even give you a false sense of security by paying for credit monitoring services for a period of time. Unfortunately, only 28% of Identity Theft is financial (criminal is the second most common as well as social security, medical and drivers license) and credit monitoring doesn't even address all areas of financial ID Theft.

Chances are also likely that you own or have been offered some form of either "free" or "fee-based" Identity Theft Service from your bank, credit union, Credit Card Company, credit monitoring company or even your homeowners insurance. It is critical that you take the time to explore what you really have. There are so many restrictions and exclusions on many of these policies, that they won't really help you in your time of need. Some even only cover ID Theft relating to their specific account.

Be cautious of any service that claims to "prevent" identity theft. There are things you can do to minimize your risk and minimize the nightmare when it happens to you, but there is absolutely nothing that will protect you from becoming a victim. Also, watch out for the "free trial period." I just received a call from my credit card company last night offering me a free month of service. I started asking questions and found that the service would not really do what I would need it to do - despite some of the slick marketing phrases.

Credit Monitoring Services:

• Credit Monitoring usually costs between $10 and $30 per month.
• Most services only monitor one of the three credit bureaus. Keep in mind monitoring is not a 100% system. Some creditors report daily, quarterly, monthly, yearly or not at all. Instant creditors don't even check your credit report. Some creditors report to one company or all three. Major accounts like home and auto loans are generally reported to all three bureaus, so is it really worth monitoring all three bureaus if we know monitoring is only as good as the companies reporting in a timely manner?
• Look at the frequency that the report is monitored. The best services provide continuous daily monitoring and a nightly download from the Postal Service for change of addresses. This is the best method for early detection of mail diversion and types of ID Theft that would show up on a credit report.
• Monitoring services alone only let you know the nightmare is about to begin. You are on your own to do all the notification work and restoration.
• You must follow-up on new activity on your credit report. Only you can tell if something is valid or not.
• Business owners who personally secure loans must keep a close watch on their credit score. If it plummets, the loans will be called and could shut down the business.

Thoughts:Credit Monitoring is an important thing to have, especially if it is continuous and looks for things like inquiries, new accounts, late payments, new mortgages, new car loans, change of address, or derogatory comments. Remember, it is not 100% and only shows a portion of financial ID Theft problems that can occur.

Identity Theft Reimbursement Services:

These ID Theft "insurance" coverages give consumers a false sense of security. The marketing says "$25,000 in Identity Theft protection." As the saying goes, "The bold print gives and the fine print takes away" really rings true on these policies.

Expenseslike legal fees and time away from work can add up quickly and create a financial hardship, especially if accounts were drained or creditors are calling.

• Normally, they exclude financial losses from ID Theft.
• Most plans are very limited in what they cover - long distance phone calls, certified mail, copies, and attorney fees to remove wrongful civil judgments. What about the attorney fees during the original civil case? There are usually caps on how much time you can take from work and get reimbursed. With potentially hundreds of hours of time required (generally the work must be done during normal business hours), $5000 does not go very far.
• Check the deductible. Not only are you paying for the insurance, then paying all the out-of-pocket expenses, and dealing with potential financial losses; now you must also come up with the deductible too.
• There is no guarantee that your claim will be reimbursed. What if an Identity Theft changed your address and ran up your accounts? You were busy and didn't notice until after the required 60 day window under the Fair Credit Billing Act. Now the debt is legally yours and the insurance company will not pay for it.

Thoughts:Reimbursement Services need to be closely reviewed for the coverage and especially the exclusions. You are still doing all the work and paying all the money upfront.

Identity Theft Resolution Services:

These services are sometimes marketed as "Prevention" or "Protection" services. Remember, ID Theft cannot be prevented.

• Monthly fees are charged on an ongoing basis - typically $10 to $30 per month.
• You must enroll before something happens.
• Look for additional fees that are charged once something happens and you need to use some services.
• Watch for upfront fees for things that you can do on your own - notifications, opt-outs, phone number registration, etc.
• Read the contract closely as there are many exclusions. They often exclude non-financial related ID Theft. You are on your own to resolve liens, judgments, duplicate licenses, wrongful criminal records, medical insurance fraud, and social security fraud to name just a few.
• Often all you get is a kit in the mail and maybe phone consultations (generally someone reading the same manual you are). You still have to do the work.
• It is after the fact care. No early detection.
• If you are a victim once, you will likely be a victim again. This can mean additional fees down the road.

Thoughts:Resolution Services are not as valuable as Restoration Services. Be sure to read the contract carefully.

Identity Theft Restoration Services:

These services handle all aspects of restoring the victim's identity including financial and non-financial.

• You must enroll before something happens to get the services without additional cost. Some offer discounted services on pre-existing conditions.
• Is much better than resolution services.
• Sign a limited power of attorney and a licensed investigator will do the majority of the restoration work on your behalf.
• True restoration services can save you time and stress.
• Employers are offering services as employee benefits because of the impact Identity Theft has on their employees and their bottom line.
• It is still after the fact care. No early detection.

Thoughts:True Restoration Services are an important component to save you time, money and hassle. As always, be sure to read the contract carefully as there are always exclusions. In 2005, 1 out of 4 people in Colorado had some form of Identity Theft, so statistically your chances of needing and using a service are pretty good.

Legal Service Plans:

Although these plans help consumers have access to legal advice, contract reviews, traffic ticket defense, will preparation and more, Identity Theft makes the need for the services even more important.

It is estimated that an attorney is needed to help clear up 70% of Identity Theft cases.

• Most victims cannot afford to get legal counsel at $175+ per hour.
• With criminal Identity Theft being the second most common type, having 24/7/365 access to an attorney in emergency situations (arrests, detainment, questioning) can make a huge difference in where you spend your weekend.
• Legal plans can vary greatly in their coverage, so be sure to review the contract.

Overall Summary:

Do not go off the marketing document alone. All make their services sound wonderful. Be sure to ask the tough questions. What will the services really do for you? What kind of help will you really get? What is the background of the "experts" who are helping you? Are they only advising you or are they doing the work on your behalf? How long has the company been in business? How long have they been offering these services? Are the expenses covered really the ones you need? Is the service price stable or will it increase after a few months? What are the additional charges and fees involved?

There is not one component that really addresses everything. Access to legal counsel (especially 24/7/365) is very important to clear up a variety of problems. Continuous Credit Monitoring can serve as an early warning system to minimize damages. True Restoration Services are critical to minimize the impact on your day to day life. As virus protection on our computers became a reality overnight, so will the necessity for Identity Theft Services. Knowing you have a team of experts on your side can definitely help you sleep better at night.

Be sure to make sure you clearly understand what is covered and what is excluded. Compare monthly prices and any additional fees. Check for components that will help with early detection, legal counsel, and true restoration.

Susan Trost is a Certified Identity Theft Risk Management Specialist interested in educating consumers and businesses about Identity Theft, their risks and how to minimize the impact when it does happen. She also helps business owners create an affirmative defense to the numerous privacy regulations. Susan is an Independent Associate with Pre-Paid Legal Services which offers legal plans and the Identity Theft Shield. More information is available at www.prepaidlegal.com/hub/susantrost or by calling her at 1-888-333-4032 or 303-663-2952. Her email is susantrost@prepaidlegal.com.