San Diego, CA - With recent events
such as the ChoicePoint, Bank of America, and CardSystems
Solutions incidents drawing significant national attention
to the crime epidemic of Identity Theft, consumers
nationwide are now being bombarded with offers for credit
monitoring, identity theft insurance, identity theft
protection, and a host of related fee-based services. The
San Diego based Institute of Consumer Financial Education
(ICFE) cautions consumers to carefully review and
understand the limitations of any service offered in
conjunction with identity theft in order to make an
informed buying decision without regard to marketing spin.
Most of these services require an ongoing monthly service
fee to perform tasks that an informed consumer can and
should easily do him or herself generally at little, if
any, cost. Many ID theft services companies actually claim
that their service 'protects' or even 'guarantees against'
identity theft. This is a marketing claim proven wrong
time and time again and also one that is clearly disputed
by privacy experts and consumer advocates alike.
The ICFE and Global Fraud Solutions, (GFS) the world's
leading anti-fraud solutions provider for consumers,
businesses, and law enforcement, based in Salt Lake City,
Utah, believe that consumers need to have the facts
regarding such services, and make informed decisions as to
how they can manage and reduce their own risk of becoming
a victim of identity theft.
The ICFE and GFS reviewed the many areas where consumers
may be misinformed of all the facts as a result of
marketing spin. These facts include:
Credit Monitoring services
- Most credit monitoring services only monitor one bureau.
Some services provide an initial three-bureau report on
the first order, and then revert to monitoring only one.
Consumers should carefully read the fine print before
signing up. While major accounts such as home and auto
loans are typically reported to all three bureaus,
non-major account creditors often report to only one
bureau. If the service only monitors one bureau, it will
show only what is reported to that bureau and may miss
anything and everything else.
- Many creditors report to the bureaus only once per month
or quarter, and credit bureaus only report what is
reported to them. Expensive daily or weekly monitoring may
provide early notice of inquiries, but many potential
credit grantors regularly make inquiries for pre-approved
offers, and inquiries often are not differentiated or
explained. If an account is opened, it may still be some
time before it is reported. In cases involving in-store or
utility accounts, the account may never be reported until
after it has been sent to collections.
- With very rare exceptions, credit monitoring does not
monitor specialty-reporting companies, such as ChoicePoint,
or check verification companies.
- Credit monitoring will not alert the consumer if someone
has obtained a driver's license, birth certificate, Social
Security card, or other such documents in their name. It
also will not alert the consumer if someone has used their
name during interactions with law enforcement, resulting
in arrest warrants or erroneous criminal records.
- Credit monitoring will not report to the victim in a
timely fashion, if at all, when an identity thief has
taken a job using the victim's name and Social Security
number -- in some States, this type of employment fraud
approaches one-third of all identity theft cases, and
causes significant financial cost, inconvenience, and
embarrassment to the victim.
- Credit monitoring typically costs between $10 and $30 or
more per month.
Conclusion: Credit monitoring may be useful to alert the
consumer that an account has been opened in his or her
name, but afterwards the task of disputing the accounts
and resolving the matter still falls squarely on the
consumer's shoulders. In most cases, experts contend that
consumers may be far better off ordering their reports
themselves, and staggering their requests throughout the
year. FACTA-mandated free reports are available in all
fifty states after September 1st, 2005, so this may be
performed for free. If the consumer is a victim of fraud,
or has been denied credit due to information on their
credit report, he or she can also obtain a copy of their
report for free.
Other options available to consumers include 'opting-out'
of pre-screened credit offers, 'Fraud Alerts', and credit
Fraud alerts are statements that may be included in the
consumer's credit report intended to alert potential
credit issuers that the consumer is or may be a victim of
fraud. A fraud alert is temporary, 90 days in length, it
may be extended, however, at the consumer's written
request for up to seven years. Fraud alerts are sometimes
completely ignored, but an alert can stop many instant
credit applications. The alert should include a request
for potential credit grantors to contact the consumer
directly at a specified number to confirm the legitimacy
of the application before granting credit.
Where available, credit freezes are a powerful tool that
essentially prevent third parties from accessing the
consumer's credit file, until he or she instructs the
credit bureaus to unfreeze or "thaw" the report. This
request can be general or only for specific companies. To
be effective, the consumer should place a freeze on their
file at each of the three bureaus. Freezes are currently
available to consumers in California and Texas, Louisiana
and Vermont. Freezes are free for confirmed Identity Theft
victims, where available. For non-victims, there is
typically a small charge imposed by the bureaus for each
'freeze' and 'thaw' action. Eleven other states are
considering implementing their own legislation on
Identity Theft Insurance
"Insurance" in this case is a bit of a misnomer, and is
often presented in a manner that may give consumers a
false sense of security. Though it may offer reimbursement
of certain expenses, Identity Theft insurance cannot
protect a consumer from falling victim to the crime, and
the fine print typically imposes substantial restrictions
on what expenses may be eligible for reimbursement.
- Significant expenses, such as legal fees or time lost
from work, often require pre-approval. In many cases, the
services of an attorney are not required, though this is
often presented as a key component of a policy.
- Identity theft "insurance" in most cases does not cover
financial losses from identity theft, only out-of-pocket
expenses and limited "lost work time" of the victim.
- Many policies have a significant deductible, such as
$500 or more. This means that in many cases, the
policyholder bears all of the expense despite having paid
the premiums for "insurance".
- Identity Theft insurance may reimburse or offset some of
the costs of resolving the incident, but in most cases it
does not reduce the time and hassle of the work required
by the victim to resolve the incident.
If the deductible is zero, or very low for those policies
providing reimbursement for time lost from work, then the
'insurance' may be worth a premium of $25 to $45 annually.
Consumers should read the fine print very carefully,
however, and pay close attention to exclusions,
restrictions, and claims requirements before signing up.
Identity Theft Protection services
- Many companies offer Identity Theft
"resolution" services for an ongoing fee. As recent events
and data breaches make abundantly clear, it is impossible
for any ID theft service to prevent Identity Theft. In
2005 alone, over 55 million American consumers have
already been put at risk of Identity Theft due to serious
data breaches at major financial institutions, data
warehouses, retailers, major corporations, colleges and
universities. At best, a consumer can take reasonable
precautions within their own control to reduce or minimize
their risk. However, in an information-based society where
countless organizations and persons have access to a
consumer's confidential personal and financial
information, consumers may easily fall victim through no
fault of their own, other than having done business with a
- "Protection" and "Restoration"
services often have
substantial exceptions in the "small print" that carve out
significant incidents, such as where a family member of
the victim is the perpetrator or even knew of the identity
- These companies charge fees to perform the task of
cleaning up credit report issues related to the incident
on behalf of the victim. services typically range from
$120 to over $200 if the customer is enrolled before an
incident happens. For those consumers that engage these
services after falling victim, if permitted at all, the
costs often range from $300 to $1800.
- These services involve tasks that an informed consumer
can easily do themselves, such as writing letters, making
telephone calls, and disputing charges. In many cases,
despite the fees involved, the consumer must still do
these items themselves. In order to perform these services
on behalf of the consumer, the companies generally require
a limited power of attorney in order to be able to act on
the victim's behalf. Regardless, many creditors may still
require communication directly with the consumer, rather
than though a third party.
- The vast majority of these services are limited strictly
to matters of standard financial accounts, leaving the
victim to struggle through resolving liens and judgments,
clearing erroneous criminal records, duplicate licenses,
and countless other non-financial account matters. Often a
simple "kit" is provided which consists of a few generic
form letters and a simple one page contact sheet.
- In many cases, identity thieves do not simply use their
victims' information and then throw it away. Thieves sell
and trade this information with other thieves. This means
that once the initial incident is resolved the victim can
be, and often is, re-victimized in the future. A new
incident means a new case and new fees.
Identity Theft Risk Management
A scam artists' worst enemy is the informed consumer.
Consumer education and proactive risk management is the
best way to minimize risk of identity theft. Many
consumers have little idea just how incredibly simple and
easy it is for thieves to steal their credit information
Good record keeping and a commonsense approach to
destroying personal information before discarding will go
a long way. The preferred method of prevention, however,
is education combined with guided assistance in using the
appropriate risk management tool.
For its identity theft risk management tool, the ICFE
selected the CasePlanner' software, from Global Fraud
Solutions. The ICFE exclusively utilizes the CasePlanner™
software and has incorporated it into its Certified
Identity Theft Risk Management Specialist training
curriculum and its Certified Credit Report Reviewer
training program. CasePlanner software is a very
affordable and comprehensive program that empowers
consumers to manage their own risk and resolve their case
in the privacy of their own home - without monthly fees or
requirements to sign up for programs or services they do
not need. CasePlanner includes an expansive Identity Theft
Awareness and Prevention Guide that educates consumers
about a multitude of scams and methods by which thieves
attempt to steal their personal information and their
identities, and includes expert risk management advice, in
plain English, on how to dramatically reduce the risk
associated with each. CasePlanner also includes powerful
risk management tools, such as an encrypted and
password-protected Account Register and Personal ID
Inventory, which allow consumers to take immediate and
decisive action at the first hint of trouble. If they do
ever fall victim, CasePlanner includes a comprehensive
Identity Theft Resolution Case File System' that guides
them through organizing, documenting, reporting, and
resolving their case from start to finish. Law enforcement
agencies, non-profit advocacy groups, resolution
facilitators and consumers can produce detailed and
organized reports, and generate completed letters,
affidavits, and other required documentation.
Free Resources are available to assist in learning and
understanding of their rights, and in resolving their
incident. They include non-profit consumer organizations
such as the Identity Theft Resource Center (www.idtheftcenter.org),
The Privacy Rights Clearinghouse (www.privacyrights.org)
and the Federal Trade Commission (www.ftc.gov).
Conclusion: Informed consumers can reduce their own risk
and resolve their own Identity Theft incident without
incurring ongoing monthly fees or signing up for expensive
and limited convenience services.
About the ICFE:
The Institute of Consumer Financial Education (ICFE) was founded in 1982 by
the late Loren Dunton (creator of the Certified Financial Planner (CFP)
designation and founder of the College for Financial Planning in Denver, CO.)
The ICFE is dedicated to helping consumers of all ages to improve their spending
practices, increase savings and use credit more wisely.
The ICFE is an
award winning, nonprofit, consumer education organization that has helped
millions of people through its financial continuing education courses programs
and resources. In addition to eight Certification courses covering identity
theft, credit files, credit repair and credit scoring, among others, it also
publishes the Do-It-Yourself Credit File correction Guide, which is updated
annually. The ICFE has distributed over one million Credit/Debit Card Warning
Labels and Credit/Debit Card Sleeves world wide.
The ICFE is a partner
with the national Jump$tart Coalition for Financial Literacy and the California
Jump$tart chapter. The ICFE staff is also active with San Diego Saves and
Military Saves, both offshoots of America Saves.
The ICFE is also an
on-line help for consumers who spend too much. ICFE's spending help was featured
in PARADE Magazine in the Intelligence Report section. The money helps and tips
are from the ICFE's Money Instruction Book, our course in personal finance.
The ICFE helps consumers and students with mending spending, learning about
the proper use of credit, budget and expense guidelines, how to set up and
implement a spending-plan and also how to access financial education courses and
how to teach children about money. Other ICFE services include: Ask Mr. G
library, a free eNews service, and an online resource center for students,
parents and educators, plus financial education learning tools in the ICFE Book