Recently I was asking myself whether or not to enroll in one of the identity theft protection services.  This began a long and winding road of research that raised more questions and unfortunately did not lead to a clear answer.  I found this a difficult topic as the horror stories are scary making it ripe for preying on fears.  After doing some research, thought it helpful to share what I learned and hopefully get more feedback from others.

What is the issue and what can happen?

I am certainly no expert, but did find the information on Wikipedia to provide a nice introduction including references.  

Ultimately there appear to be varying degrees of identity theft.  For example someone can steel your current CC information and end up billing goods to your current cards.   I have personally been a victim of this at least twice (once in the US and once overseas).   Thankfully both times the CC company caught it before I did and had already started corrective action before notifying I was notified.  The biggest pain in this case was having your current card get canceled and your left to update auto-payment services.  

The more severe case is where criminals use your information to obtain credit in various forms which is then tied to your identity (but generally with different addresses).   In addition they can use children’s information which may take longer to surface since children rarely need credit reports.  In these cases, you may not be aware it has occurred for some time and it seems clear if you are a victim of this crime you can be left with a real mess to resolve.

How real is this risk?

While there is much written about the number and severity of “thefts” each year, there seems to be debate about what these numbers mean.

  • As summarized by the Privacy Rights Clearinghouse from the Javelin Strategy & Research Survey of 2007, while decreasing over recent years the number of US adults who reported identity fraud was 8.4 million in 2007. 
  • However you can also find articles such as this one from Bruce Schneier posted in 2005 talking about the issue of Identity Theft Over-Reported.  Although a dated article, it raises a point of how much is hype to drive an industry (I am not making a conclusion here, simply pointing out a consideration).
  • And just last week (April 16), this article came out in the Washington Post suggesting that Organized Crime Behind a Majority of Data Breaches.  This would likely indicate heightened risk (compared to just some hackers) as one can assume their intention is to try and profit from the data.

Ultimately I think we can conclude that identity theft is real and carries at least a reasonable level of  risk.  Therefor you as a consumer must make a calculated decision of “Cost+Headache of prevention” vs “Cost+Pain of identity theft.”

What are the possible services

There is quite a list of options ranging from credit monitoring to identity protection services.  Rather than try to list them here (and certainly miss some), suggest you start with a Google search on “Identity Protection Service.”  While not an endorsement, following my research I had narrowed down my selection of services to the following:

  • TrustedID - provides a monitoring service
  • Debix - provides a monitoring service
  • LifeLock - provides a monitoring service
  • Zander Insurance Group – recommended by Dave Ramsey, while not a service provide directions on what to do and insurance.

It should be noted that generally the actions these companies perform on your behalf can be performed on your own.  The services simply offer to do the work for you (some requires periodic updates for example) along with varying forms of insurance although the requirement and quantity is debated.  Generally the cost is relatively low for a single individual, however if you have a family the cost can quickly climb especially when considering you must pay it annually.

How do the services compare

To understand how these services might compare I asked for internal feedback from coworkers and research the net.   My request for internal feedback included asking for feedback from anyone who has used a service or has an opinion on the risk of identity theft.  Interestingly I received only 2 responses from about 3500 employees (certainly not all saw the request).  This small response is likely telling in itself.  Assuming only 10% saw my request, then 2 responses represents 0.5% maybe suggesting this is either an unknown issue or one that most are not concerned about.  One respondent said they felt these services don’t really do much for you, but this person did recommend Debix and uses it today.  A second respondent claimed to have been using one of the services when the identity of their child was stolen and did not find out until they entered university!  From searching the net, it is clear these services are not perfect (they do not claim to be either) and so the question remains of how much do they help – a subjective question which is hard to answer.

I also found it interesting how both of my internal responders shared about the headaches that signing up for these services can bring.  The process involved in these services generally involves performing actions which should trigger further validation to occur whenever someone trys to obtain credit (or do something that req’s credit like opening a checking account), the goal being to prevent this fradulent credit from being obtained.  With the number of activities which may leverage your credit information (more than you might expect), it sounds like you need to be prepared to complete additional authorizations and verifications if the services are working properly!

From my research, I found the following guides and comparisons helpful:

Would love to hear from you

Do you have any experience with any of these services?   I would love to hear from real customers as to positive/negative experiences.   Ultimately my purpose here is to make a decision, but am hoping to learn a little and possibly help others with some unbiased information and references (meaning I am not paid nor affiliated with any of these groups) .