Wednesday, July 30, 2008

Should You Sign Up for ID Protection?

I've been itching to write about Identity insurance programs for quite awhile. I'll start by giving my personal opinion that I'm not convinced of the value of these programs . Like most insurance programs they are born from fear. I don't want to universally diss ID insurance though because there's a chance they could save you many sleepless nights and we all should sleep.

Anyway Equifax recently released their ID Patrol product and I stumbled across an interview regarding the product with Steve Ely, Equifax President, over at Free Money Finance.

Let's take a look at what you can do without a ID theft insurance (for free):
  • Check Your Credit Report--Don't get all 3 credit reports at the same time. Spread out your requests for free reports throughout the year. Then scour them for mistakes. But remember reporting is delayed. It could takes months for an error to appear.
  • Fraud Alerts--You can set up fraud alerts with all three credit reporting agencies (Equifax, Experian, Transunion)that will flag your credit file. When you or someone else, tries to open up a a new credit card, car loan, cell phone, etc., the lender will then have to contact you by phone to verify that you really want to open a new account. If you aren't reachable by phone, the credit account shouldn't be opened.
  • Credit Freeze--Similar to a Fraud Alert, a freeze means that a new credit account cannot be opened.
  • Online Banking--The fastest way to catch a theft is to watch your account online. Check it daily or a couple of times a week. If anything unusual happens call the credit union right away. It doesn't matter if you just made a mistake, it's better to find out.
  • Shop Securely--Only use well known online shopping venues, check their security and look for the "https" in the address.
  • Be Suspicious--I was in Macy's a few weeks ago and the clerk told the woman ahead of me that even though she didn't have her credit card they could look it up and she could get some special discount. All they needed was her social security number. The woman didn't want to give her SSN and she shouldn't have to. Macy's system is out of touch. I hate to say it but when it comes to your personal information TRUST NO ONE. Watch where your credit cards go after restaurant staff take them away, don't give out your info over the phone, don't open emails from people you don't know, and if it seems weird (an offer, request, phone call, or email) it is...don't fall for it.
  • Shred It--Sadly most ID theft occurs in the home when visitors or relatives snoop. Shred all things you don't need and lock up those that you do need.

So what do ID theft insurance programs offer?

Well if you read the interview with Ely Equifax has a lot of fancy sounding product names (i.e., nice marketing) to go with their ID Patrol, but the descriptions don't really say how they are different. In summary it appears that they have a 24/7 approach. They have a software that scans the web for suspicious activity (don't ask me how), you can call a specialist anytime with questions and a feature that looks a lot like fraud alerts. They're working on easy credit freezes and thaws (turn it on or off as needed via online access). The current special offer price for Experian's ID Patrol program is $14.95/month.

If you've ever known anyone who was an ID theft victim you'll know what a horrible experience that is. Though there are lots of other Id theft protection plans on the market I haven't had any personal experience with them. My guess would be that a good program will help you deal with the aftermath more than the prevention.

What's your experience with ID theft insurance policies?

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