A decade ago identity theft pundits eschewed identity protection services. Today, many concede that consumers should consider some form of identity theft protection because the crime has reached epidemic proportions and because the majority of consumers have failed to adopt a comprehensive “do-it-yourself approach.” The U.S. Department of Justice estimates that recently approximately 7% of all U.S. residents age 16 or older were victims of identity theft annually.
Some consumer advocates suggest that identity theft protection services are not necessary for any of a variety of reasons including the assumption that consumers can use the “do-it-yourself” approach (some do most do not); the advocate him or herself having a limited understanding of identity theft; and suggestions that identity protection services cost too much.
Some consumer advocates may have ulterior motives or a different approach or understanding about how consumers should protect their identity.
A lawyer recently suggested that identity protection services are a waste of money and makes consumers lax with respect to guarding their identity. He presents the standard approach that all victims should follow (regardless if they have identity protection or not), prescribed by the Federal Trade Commission, and he says it guarantees any victim of identity theft can resolve the identity theft issue him or herself—100% guaranteed!
The lawyer repetitively uses the word guarantee in the television interview, and concludes by saying when the guaranteed approach fails, one should simply hire an attorney to sue the other party. How practical and affordable is that identity protection plan to the average consumer?
We have always said, if you see value in an identity protection service and you can afford it, then purchase it.
How to choose a valuable and affordable identity protection plan can be a challenge, because most consumers don’t know what to look for.
Yes, many protection plans are a waste of money because some of them provide you services that are already provided to you at no cost under Federal law. For example, fee-based credit card protection services that claim they protect you against credit card fraud are of low value because the Fair Credit Billing Act already protects you. (See Federal Trade Commission Publication: Taking Charge: What to do if your identity is stolen for other federal laws that protect you.)
Many consumers purchase celebrity-endorsed identity protection services. Are these frequently advertised services the best value or are the ones that your financial and insurance advisors the best? Or maybe the more expensive services are better than the cheaper the services?
We examined some of the consumer complaints filed with the Better Business Bureau concerning issues experienced by consumers with the most popular protection services. Common complaints included that the services failed to provide early warning of identity theft and that consumers were told they had to resolve their own identity theft issue. Many complaints reported the services were difficult to cancel.
Some of the complaints are rooted in misleading and ambiguous advertising, and others from consumer misunderstandings and their unrealistic expectations of what an identity protection plan can do. To purchase a service based on a celebrity endorsement is like following lemmings into the sea.
Consumers must take the time to understand what they are purchasing and from whom. You are purchasing services from a company, and not from the celebrity paid to make the endorsement. The celebrity is not an expert, although many may sound like they are.
There is no one service that can prevent identity theft regardless of the advertising claims or who is endorsing the service.
Identity theft is so complex and pervasive that the best one can expect is to get an early warning that one may be a victim, and then take early action before the victimization creates a life-long problem.
Identity protection services that offer a combination of three-bureau credit monitoring and “Deep Web” monitoring of the Websites and chatrooms where identity thieves trade and sell identities are necessary components of any identity protection plan.
What happens if the credit monitoring and Web monitoring fails? There is no guarantee that an incidence of identity theft will show up (immediately or even months later) on credit or Web monitoring.
What is the guarantee by the identity protection service? This is the most critical benefit in any identity protection plan—what they will do for you in the event you become a victim.
Forget the multimillion dollar guarantees. They are little more than marketing hype to get you to purchase a service. A frequent complaint of consumers is that million dollar guarantee didn’t do what they expected it would do. That’s because consumers didn’t read the guarantee, and most would need to get a lawyer to read and interpret the guarantee for them. Certainly, the consumer is not going to get a million dollars, if they become a victim!
So what should you look for?
If you become a victim of identity theft, which most consumers will, how will the service help you?
Are they going to give you instructions on how to repair your identity, and maybe even spend up to a million dollars of their time telling you what to do? If so, such a service is called a “resolution service.” Their people, who may not be qualified to do so, will tell you how to resolve your incidence of identity theft.
Imagine this, you are victim of a heinous incidence of identity theft—you’ve been arrested, lost your home, and hundreds of thousands of dollars of credit have been taken out in your name.
What frame of mind are you in to listen to someone give you instructions over the telephone on how to resolve your identity problem? It is not uncommon for victims of identity theft to suffer from posttraumatic stress disorder.
Would it be better if someone else did all that work for you? Such services are “restoration services.” And like resolution services, you must ask when evaluating a service, who will be doing that work for me? An inexperienced person or an experienced certified and licensed professional.
If a professional and experienced criminal caused the problem, it makes sense that a professional and experienced fraud expert would be the best type of person to resolve the issue.
The three key components are to a valuable identity protection service are: credit and deep web monitoring and restoration by experienced professionals. It is the restoration service that brings the greatest value because there is no guarantee that identity theft will be either prevented or detected early enough to terminate before damage is done.
The guarantee of one service is, “We will do whatever it takes for as long as it takes to restore your identity to pre-theft status.” There is no dollar limit, and theoretically they could spend $10 billion. (Practically speaking as one pundit has written, it would never cost anywhere near the silly dollar guarantees that now can exceed one million dollars).
All the services and insurance have exclusions. Many exclude legal issues associated with identity theft and victimization caused by immediate family members. So what happens if something goes awry? For example, you find out that you are a victim of identity theft as you are being arrested for a crime you did not commit. Or, the creditors don’t believe you are a victim and challenge you in court. Quite commonly, you may be able to resolve your identity theft issue with a creditor, but your credit bureau score and credit report remain a mess, and the credit bureau(s) refuse to restore them to pre-theft status.
For these and other reasons, we suggest that the combination of a comprehensive family identity protection plan with a family legal plan provides the best identity protection to consumers. In some cases this comprehensive solution can be purchased at half the monthly rate as some of the most popular identity protection plans that cover families.