The Consumer Federation of America released a study in 2009 on identity theft protection services called To Catch a Thief: Are Identity Theft Protection Services Worth the Cost? The study involved taking a look at for-profit identity theft protection and identified some problems in the industry.
As a follow up to this report, the CFA recently released another report in March 2011 called Best Practices for Identity Theft Services which spurred a collaborative effort between the CFA, identity theft service providers, and consumer advocates to organize a “to-do” list for the identity theft protection industry.
The Consumer Federation of America emphasizes that identity theft protection service providers must improve on the methods they use for explaining how their programs work. The CFA determined that there could be more clarity provided in this area in addition to better explanations of privacy policies, insurance, disclosures, and more accurate information on what is covered. Here is what the collaborative effort came up with as a result:
Understand What You Are Purchasing
To ensure you are getting your money’s worth it is best to decide between a proactive service and a reactive identity theft protection service. The difference is that a proactive service will take the actions necessary to protect your identity before it is stolen by scanning black market sites for your personal information, monitoring your credit, and providing notification when something suspicious occurs. This type of service almost always provides remediation services that will work with you to get your life back on track. A reactive service will notify you only after your identity has been compromised or stolen.
Evaluating an ID Theft Protection Service
As a result of the collaborative project with ID theft services, consumer advocates, and the CFA, the following questions should be asked when you are researching identity theft services.
1. How is the service beneficial if you become a victim and exactly how do they help you? Instead of simply providing you with advice the ID theft service should take a proactive approach in helping you restore your identity. If the company does not make their services clear, then move on to the next service.
2. What does the service monitor besides credit reports? It is best to choose a service that scans a myriad of databases instead of simply monitoring your credit report. The proactive companies will scan databases that otherwise might be difficult to access.
3. Should you use an ID theft service that offers insurance? Most of the insurance policies offered by ID theft services will replace the wages that you lose if you must take unpaid time off from employment to resolve the ID theft problem as well as a few other miscellaneous expenses. In most cases, monetary funds that are stolen as the result of identity theft are not covered. For this reason, you should ask a lot of questions if the company offers insurance.
4. Will using an ID theft service prevent you from getting your own free credit report? In most cases, the identity theft protection service requests a free credit report from each credit reporting agency. This can prevent you from getting the one free credit report you are entitled to on an annual basis.
5. Does the guarantee work in your best interests? It is very difficult to provide a 100 percent guarantee that you will not be a victim of identity theft. This is why you should read every word of the guarantee because it may not provide as much protection as it claims.
6. How much does it cost and what are the terms? When you research ID theft services you will find that some offer a monthly plan while others want a full year of payment upfront. Also, investigate the policy if you decide to cancel to ensure you can get the money refunded to you for the unused service time.
Finally, take the necessary precautions to protect yourself and understand that there is no such thing as foolproof ID protection however; you can reduce the chances of identity theft by helping yourself through taking precautions and choosing the right ID theft service.