Approximately 50 million consumers in the United States spent a whopping $3.5 billion dollars on identity theft protection in 2010, a figure which has likely increased in the years since.
So do paid identity theft protection services really work? According to some people, they’re just as effective as helping yourself. When it comes to protecting your identity online, you may find that you already have all the tools you need. Read on to find out why.
Deceptive marketing tactics. The identity protection industry has a dubious record when it comes to the truth of advertising claims. In 2009, Discover Financial Services and Capital One were ordered by the federal government to pay $410 million in refunds and fines related deceptive marketing practices in ID protection and credit monitoring, while prior to that, companies including Experian Consumer Direct, LifeLock, and Affinion were also found to be betraying consumers through their marketing practice. While the industry has changed since then, consumers should still be wary of exaggerated claims.
The threat is blown out of proportion. According to the National Crime Victimization Survey, two-thirds of identity theft reported involved stolen credit cards as opposed to stolen identities. Together with stolen credit cards, stolen debit cards, account fraud, and forged checks make up 80% of all identity-theft related crimes. You can protect yourself by protecting your cards.
It’s cheaper to do it yourself. Today, it’s easy to monitor your accounts for suspicious activity. Online banking gives consumers the tools to check their accounts on a regular basis to monitor purchases and withdrawals. If you notice activity that you can’t account for, you can call your bank and they will investigate the transaction and take swift action to suspend your account. In addition, you have a legal right to look at your credit report once per year, which means you can access it free of charge from one of the three major credit bureaus without having to pay. If you want to see your credit report more frequently, you can file a request with each of the three bureaus and stagger your requests in four-month intervals. If you notice fraudulent activity, you can place a fraud alert on your file which entitles you to an additional three months of monitoring.
New types of identity fraud are less common. The most pernicious type of identity theft is when a social security number is stolen, along with an address, name, birthdate, and other private personal information. This information can be used to tap into your health insurance, file a false tax return, and open a line of credit. But fewer than 1% of all households were targets of this kind of identity theft in 2010. While there is still a risk, you can minimize it by only using your social security card or number when you’re legally required to.
Web scans promote a false sense of security. Some types of identity theft protection services conduct scans of black-market chat rooms or forums. If they find your social security or credit card numbers, they can’t do much to help you. There’s no way to get this information back once it’s out there.