Do Identity Theft Protection Services Work?

Category: Privacy

Many people are concerned about identity theft these days, with good reason. If someone assumes your identity they can commit crimes for which you are blamed; raid your bank accounts; even ruin your employment prospects. With so much at stake, many people are paying over $20 a month for identity theft protection services. But are they wasting their money? Here's the scoop…

Lifelock Identify Theft

Is Identity Theft Protection Effective?

Todd Davis, CEO of identity theft protection service LifeLock, is famous for billboards that bore his Social Security Number and a dare to ID thieves: "Steal my identity" which was protected by LifeLock, of course. Well, it turns out they did, at least thirteen times! Earlier this year, LifeLock was ordered by the Federal Trade Commission to pay more than $12 million in fines for false and misleading adverting.

Although LifeLock has since changed their advertising and the means they use to spot identity fraud, no identity theft protection service can absolutely ensure that your identity will not be stolen!

The problem is that your identity can be vulnerable to theft from sources far outside of your control, or even sources that you don't know about. Most identity security breaches occur at merchants, service providers, government agencies, and other institutions to which you have given your personal information, and at still others to whom those entities have given your information without your knowledge.

Most people's identities are exposed to theft in so many different places that it is impossible to protect them all. You have to rely upon the security measures taken by those entities to protect you. Until quite recently, most entities were very lax about protecting personal information from theft.

According to the Identity Theft Research Center, there were 489 security breaches involving the theft of thousands or millions of persons' identities in 2009! Major retailers, banks, government agencies, utility companies, schools, and other institutions left the doors open in often stupendously stupid ways. There is nothing that LifeLock or any other identity theft protection service can do to force third parties to protect your data. So what do you get for your subscription fee (or "insurance policy")?

What Protection is Actually Offered from Identity Theft?

LifeLock and its competitors monitor the activity of your identity online and in the economy. They monitor applications for credit cards, bank accounts, and other financial instruments made in your name. They look for "unusual activity" and alert you to it; effectively asking, "Hey, did you really do this?" If you didn't, then some thief may have. Then it's time to hit the panic button.

If it appears that your identity has been stolen and is being misused, LifeLock can take care of alerting credit card companies and other institutions for you. Accounts can be locked or closed; new credit cards issued; and other measures taken to thwart thieves' use of your identity. But that won't stop a shoplifter who's caught by police from giving them your name and address as his own.

Repairing the damage done by identity theft is a years-long, painful, and expensive process. Some things that you never did may remain on your record forever. In one case, a sex offender used another man's identity, and the innocent man was told by authorities that his name can never be removed from databases of sex offenders.

LifeLock and others in the fraud protection business promise to help you repair the damage if you are a victim of identity theft. But how far they'll actually go is a bit fuzzy. In their Service Guarantee , LifeLock says they'll pay for any lawyers, investigators or consultants that are needed, and that they'll "help you recover the direct losses from the identity theft." But later on that same page, it says "but NOT any direct losses as a result of the theft… NO money passes directly to our LifeLock members." Huh?

I don't personally know anyone who has suffered from identity theft while a LifeLock subscriber, and then tried to submit a claim for help. I do know one person who suspected that her mother (a LifeLock subscriber) had become an ID theft victim. Fortunately, it was a false alarm. But she says that LifeLock certainly did everything she would have wanted, when it came to investigating the situation, and that gave her confidence that LifeLock would have honored their guarantee if there had been a real problem.

Here's the bottom line… Identity theft protection services can provide you with some protection from identity theft, but they cannot guarantee that it will never happen. And if it does, they will provide some assistance in cleaning up the mess, but don't expect them to make it like it never happened. You'll have to decide if that's worth the $10 a month that it costs.

Do you have something to say about identity theft protection? Post your comment or question below…

 
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Posted by on 29 Jul 2010


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Most recent comments on "Do Identity Theft Protection Services Work?"

Posted by:

Ken Bush
30 Jul 2010

Lifelock uses the example of stolen credit cards to sell its service. What Lifelock doesn't say is that federal law limits unauthorized charges before the loss is reported to $50 and nil thereafter. Many credit card companies waive the $50 charge, too.


Posted by:

Marc
31 Jul 2010

Doesn't most people's banks or credit unions assist someone who had their identity stolen? In addition, you can send a letter to the credit agencies alerting them of fraud yourself. What advantage does Lifelock provide? Regardless if you have Lifelock or not, it seems it will be just as a problem to fix your credit so why pay $10-$20 a month? And this doesn't protect you from people using your identity for crimes as mentioned in your article or someone using your information to obtain a job and the only why you will know they did this is when you receive a letter from the IRS about your "unreported earnings".


Posted by:

Bob Shier
31 Jul 2010

My in-laws are particularly careful [some might say paranoid] about sharing any of their information. They do not have an internet connection, nor do they use the internet anywhere else, yet they were victims of identity theft. They found out when Blue Cross sent a "claim paid" form to their home for medical services in another part of the country that they'd not used. They quickly reported this to the insurance company, and it was removed from their file, but it does show that you can be a victim even if you don't even have an internet account and never share your information online.


Posted by:

Mike
08 Sep 2010

The state with the highest incidence for ID Theft is AZ, at a per capita rate of 1.4 victims per thousand population. That's 0.14%, meaning that 99.86% are NOT victims. And the singular most common ID Theft (48%) is from parents hijacking their child(ren)'s Social Security Number to establish new credit for themselves. The remaining 52% is largely due to adults giving away too much private info that can then be combined to appear to be the original individual. The single most important defense to ID Theft is (dare I say it?) Common Sense.

Looking both ways before crossing the street does not guarantee that you won't be hit by a car, but it does provide the best way to avoid it.


Posted by:

Jason Vinansky
08 Feb 2011

Thank you bob rankin; I can't even explian how
many days for me to find an honest souce on
Identity protection services.


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