Institute of Consumer Financial Education Cautions Consumers to Scrutinize Identity Theft Services Because They Are Not Always What You Thought You Paid For

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Large-scale data breaches and national media attention have increased consumer awareness and fueled concerns over identity theft. Many companies now aggressively promote services charging hefty fees for tasks an informed consumer can and should do themselves. Consumers should use caution, carefully read the fine print, and ignore marketing hype.

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) a 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 Sept. 1, 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 “Freezes.”

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 prevents 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 “freezes.”

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 “protection” and “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 particular organization.

-"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 theft incident.

  • 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 $1,800.

-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 and identity.

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 (http://www.idtheftcenter.org), The Privacy Rights Clearinghouse (http://www.privacyrights.org) and the Federal Trade Commission (http://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), founded in 1982 by the late Loren Dunton (creator of the “certified financial planner” (CFP) designation) and it is dedicated to helping consumers of all ages to improve their spending, increase savings and use credit more wisely. The ICFE trains and certifies Personal Finance Instructors for its own curriculum, “The Money Instruction Book.” It also trains and certifies Credit Report Reviewers and Identity Theft Risk Management Specialists. The ICFE became an official partner with the Department of Defense/Financial Readiness Campaign in June of 2004.

The ICFE is an award winning, non-profit consumer education organization which publishes the Do-It-Yourself Credit File correction Guide, now in its 18th printing and has distributed over one million “Credit/Debit Card Warning Labels” and “Credit/Debit Card Sleeves” worldwide.

Paul Richard, RFC (Registered Financial Consultant) - Executive Director

Institute of Consumer Financial Education (ICFE)

PO Box 34070

San Diego, CA 92163-4070

619-239-1401

Web site: http://www.icfe.info

About Global Fraud Solutions, LLC:

Global Fraud Solutions is an international leader in Identity Theft, computer security products, and privacy solutions for consumers, businesses, financial institutions, trade associations, and law enforcement agencies. GFS' revolutionary CasePlanner™ software, endorsed by the prestigious non-profit Institute of Consumer Financial Education (ICFE), is the most comprehensive self-help Identity Theft product available to educate and assist consumers in reducing their risk, and for documenting, reporting, and resolving their case without monthly fees or service requirements. CasePlanner is available at a special discount through the ICFE at http://www.icfe.info or directly through Global Fraud Solutions at http://www.CasePlanner.com using special promotion code ICFE.

For more information:

Michael Barnett

General Manager

Global Fraud Solutions, LLC

6905 South 1300 East; Suite 365

Midvale, Utah 84047

Toll Free: 877-230-1164

Website: http://www.globalfraudsolutions.com

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