Are you one of the 47.5 million Americans who purchased “identity theft protection” last year? If so, you wasted your money.
Credit reporting agencies and identity theft protection services push statistics like “almost 14 million adults were victims of identity theft in 2011” or “over 100 million Americans have had their personal identifying information placed at risk of identity theft as a result of governmental and corporate data breaches.”
These statements are made while prodding you to purchase a service that could cost up to $189 annually. What these companies fail to tell you is that identity theft protection does not cover IRS tax return filings, account takeovers, the misuse of credit or debit cards, prior instances of identity theft or the establishment of personal identification (such as a driver’s license or Social Security card) in your name.
According to recent reports, Americans are spending an estimated $3.5 billion a year on identity theft protection. Most of these services are a waste of money as almost all of the services provided are available at little or no cost to the consumer.
There is no reason to pay a monthly or yearly fee for something you can do yourself for free.
Periodically review your credit report
By keeping close tabs on your consumer credit profile, you can detect signs of identity theft early. If you find an account not opened by you and have positively identified it as fraudulent, enter a dispute directly with the creditor as well as with the credit reporting agencies of Equifax, Experian and TransUnion. You can obtain a free credit report at www.annualcreditreport.com or (877) 322-8228. When you pay for identity theft protection, this free credit report is one of the “benefits” they tout.
Place a 90-day initial fraud alert on your credit report
Contact the credit reporting agencies and request a 90-day initial fraud alert on your credit report. Not only will this trigger a free credit report but will advise potential creditors to investigate any application prior to issuing credit, goods, benefits, services and/or employment. Contact Equifax at (800) 525-6285, Experian at (888) 397-3742 and Trans Union at (800) 916-8800. When you pay for identity theft protection, this fraud alert is one of the “benefits” they tout. Just be sure to renew the alert every three months.
Freeze your credit report
Identity thieves are frozen in their tracks without access to your credit report as potential creditors will not have access to your credit history. In most states, you are entitled to temporarily “freeze” access to your credit profile without cost if you are over 65 years of age or are a verified victim of identity theft. All others may be required to pay a small fee. Without access to your credit report, a responsible lender will not issue credit. When you pay for identity theft protection, a credit report freeze is one of the “benefits” they tout.
Stop unsolicited credit card offers
Are you tired of junk mail filling your mail box? Opting out at www.optoutprescreen.com or (888) 5OPT-OUT will stop most unsolicited pre-approved applications and reduce the incidence of identity theft. Opting out refers to the process of removing your name and address from lists supplied by the Equifax, Experian, Trans Union and Innovis credit reporting agencies to be used for firm (preapproved/ prescreened) offers of credit or insurance. When paying for identity theft protection, opting out is one of the “benefits” they tout.
Purchase a cross-cut shredder
“Dumpster diving” is still a very popular method of obtaining credit card applications and supporting documentation. Purchase a cross-cut shredder that cuts vertically and horizontally, turning sensitive mail into confetti. If you think a torn up credit card application will be rejected by a credit card company, you have not heard the story of how Chase Bank approved a ripped up application.
Victims of identity theft often feel pressured into purchasing additional identity theft monitoring products when contacting the Equifax, Experian and Trans Union consumer reporting agencies to repair their credit. So much so that the Federal Trade Commission has recently reported the conduct in a 73-page report titled: “An FTC Staff Report on a Survey of Identity Theft Victims.”
The FTC report also found that the vast majority of consumers dealing with identity theft issues were unaware of their rights under the Fair Credit Reporting Act. These rights included the ability to request free credit reports when placing a fraud alert, the ability to block fraudulent information from appearing on their credit reports and to receive a notice of these and other important rights directly from creditors and consumer reporting agencies.
While the Credit Card Act of 2009 mandated a number of changes in relation to “free credit reports,” the area of identity theft protection is an area to watch. Reduced fees in one area will only mean enhanced fees in another. There is no reason to pay a monthly or yearly fee for something you can do yourself for free.
Bill Lewis is the principal of William E. Lewis Jr. & Associates and host of The Credit Report with Bill Lewis — a daily forum for business and financial news, politics, economic trends and issues on AM 740 WSBR in south Florida.