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ID Protection: Worth It?

Posted by Diane H. Blackwelder on 3 November 2009 | 0 Comments

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Have you ever considered "identity theft" is a brilliant marketing term: a fear campaign designed to get us to buy expensive services we don't always need?  Julia Angwin of the WSJ.com reports identity fraud is on the wane and customers aren't getting very badly hurt: The median victim has to pay nothing out-of-pocket and has his or her complaint resolved within five hours.

"According to Javelin Research and Federal Trade Commission data, the vast majority of identity-theft cases involve a stolen credit-card number, which is usually caught by the bank and resolved within hours at no cost to the victim. The bigger problem is when thieves steal enough information about you to open a new account in your name -- and many of those cases involve a family member or someone known to the victim.  Even in those rare cases, a victim's average loss only totals $579. The biggest victims of fraud are large computer and electronics retailers, which lost an average of $1.2 million selling to fraudulent customers last year."

In light of the data, you may be wondering if signing up for expensive fraud-protection service is worth the cost.  While these products can reduce the risk of becoming a victim, many employ methods that consumers can use on their own, for free.

Fraud Alerts

Consumers can go online or call each of the three credit-reporting agencies (Experian, Equifax, and TransUnion) to place a fraud alert with no cost.  Generally, fraud alerts prompt a creditor to double check that the person seeking credit is you.  The alert is only effective in preventing theives from opening new lines of credit. Alerts expire after 90 days and would need to be renewed.

Credit Freeze

A freeze locks up your credit report, preventing new credit from being extended in your name.  This won't affect access to current credit lines in your name, but will delay access to new credit (it takes about three days to lift a freeze).  To freeze your report, call each of the three agencies. Generally, it costs $10 to place a freeze or $30 for all three major reports. There is an additional $10 charge to lift each freeze. Sometimes these costs are waived, so don't be afraid to ask.

Credit Monitoring

You can monitor your own credit report by requesting a free annual report from each of the three main bureaus on a rotating basis (one request every four months).  Go to annualcreditreport.com.  Often there is a significant time lag between credit activity and when information appears on your report.  Still, it is worth monitoring for discrepencies and misuse.

 


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