Answers to Our Subscribers 5 Biggest Identity Theft Protection Questions

What’s new in identity theft protection: Internet ScamBusters #269

We’d again like to thank you — we got hundreds of terrific
questions from our survey — and we’re going to do our best to
answer them — starting today!

We also promised we’d share the survey results with you.

The three biggest areas of subscriber interest are identity
theft, reducing spam, and reporting scams and prosecuting
scammers.

These topics are followed by: online security and hardware
concerns; earning money from legitimate work-at-home programs
and work-at-home scams; Nigerian and lottery scams; viruses
and spyware; credit cards and consumer issues; urban legends;
phishing scams; and investment scams.

Naturally, many subscribers are interested in finding out
about new scams in these areas.

This sounds quite similar to what we’ve been writing about. ;-)

We’re really excited by all the terrific questions — your
questions will make ScamBusters even better.

Today, we’ll start answering five of your biggest questions
about identity theft
:

1. How big a problem is identity theft really and how long does
it typically take to recover?

2. Is identity theft protection right for me?

3. Can I do the things identity theft protection companies do
myself without paying for them?

4. Can you give us an update on LifeLock?

5. What do you think of TrustedID for identity theft protection
and how does it compare with LifeLock?

But first, we urge you to take a look at these top articles
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is anything but boring.

And now for the main feature…


Answers to Our Subscribers’ 5 Biggest Identity Theft Protection
Questions


1. How big a problem is identity theft really and how long does
it typically take to recover?

Identity theft tops the FTC’s annual list of consumer
complaints for the seventh year in a row, with victims’ losses
totaling about $1.1 billion a year. The Federal Trade
Commission (FTC) estimates that the average victim spends 170
to 300 hours trying to recover his identity and resolve
theft-related problems.

Further, since January 2007, more than 110 million people in
the US have received letters from branches of government,
corporations, universities, banks, credit unions, medical
professionals, nonprofit organizations and others informing
them that their personal information had either been lost or
stolen.

You can find more statistics at our href="http://www.scambusters.org/identitytheft.html">Identity Theft
Information Center.

Small wonder, then, that a number of companies are offering to
safeguard and (if need be) help to recover people’s identities
from the thieves.

2. Is identity theft protection right for you?

Many subscribers have asked us whether or not these companies’
products and services are really necessary.

Our answer might surprise you, especially since you can do much
of what these companies do for yourself.

However, the reality is that almost no one actually DOES these
things. (And as a subscriber to ScamBusters, we’ve been urging
you to do them for a long time.)

We believe that for about 98% of you who do not currently place
fraud alerts on your accounts yourself like clockwork every
ninety days (and have not already subscribed to LifeLock or one
of their competitors), you should spend the money and have it
done for you.

(Note: We will undoubtedly get feedback from some subscribers
admonishing us for suggesting people spend money for these
services. That’s OK: this is something we believe VERY
strongly. And it’s something we do for ourselves and for our
families.)

You might be wondering: How do we know almost no one actually
does these things? We decided to find out by conducting a
simple survey, and we asked people this question:

“Placing fraud alerts or security freezes with the three major
credit bureaus can help prevent identity theft. We want to get
a sense of whether people actually do this. Do you consistently
request fraud alerts or security freezes every 90 days?”

The results were fascinating. 19% of our respondents said that
they used a company such as LifeLock to perform these services
for them. (Good for you!)

Here’s the most interesting result: 83% of the remaining
respondents said they NEVER place a fraud alert or security
freeze on their accounts
, although most recognize how important
it is to do so. Only about 2% actually place alerts
consistently
! The rest do it occasionally or rarely (which is,
at best, marginally useful).

So, why does almost no one actually place these alerts for
themselves? The reasons mentioned included that it was too
difficult, things came up, and they were just too busy.

Frankly, we suspected we’d get these types of results, but we
were surprised at how extreme they were. And this makes this
issue of ScamBusters even more important.

So, in response to many reader requests for more information
about the two most popular identity theft protection firms —
LifeLock and TrustedID — the rest of this issue focuses on
whether this protection is right for you. What’s more, we’ll
also look at which services you’ll receive from each firm, and
for how much.

3. Can I do the things identity theft protection companies do
myself without paying for them?

As LifeLock CEO Todd Davis said in a 2007 interview with
ScamBusters, every consumer can follow the same identity
protection steps that his Arizona-based company undertakes for
its customers.

For example, consumers can request copies of their credit
reports, have the credit bureaus place fraud alerts on their
behalf, and get their credit cards and important documents
replaced if their wallets are lost or stolen.

Given time and effort, individuals can also get their names
removed from pre-approved credit card and junk mailing lists,
since “statistics show that this is one of the most common ways
that thieves hijack identities,” according to Davis.

You can see the full interview at href="http://www.scambusters.org/preventidentitytheft.html">How to
Proactively Prevent Identity Theft: An Interview With LifeLock CEO
Todd Davis.

The question, says Todd Davis and many others, is not whether
the services provided by identity theft protection firms are
NECESSARY — but whether they’re a more desirable, more
efficient, and more foolproof way of protecting your identity.

And more importantly as we said above, will you actually DO
what’s necessary every ninety days, like clockwork? If not, we
highly recommend you use one of the identity theft protection
companies.

4. Can you give us an update on LifeLock?

UPDATED – The LifeLock FTC Settlement

LifeLock settled a lawsuit with the Federal Trade Commission. Here is our position on these events.


Many subscribers have asked us to do an update on LifeLock. As
long-time subscribers know, we continue to personally use
LifeLock and so do our families.

Since we last wrote about the company, founder Robert Maynard
(who had been the subject of controversy) has left the company,
and LifeLock has received another $25 million in equity
investments, this time from a group led by Goldman Sachs.
They’ve also introduced WalletLock, a nice, new additional
benefit which we describe below.

The price for LifeLock has remained unchanged (see below).

5. What do you think of TrustedID for identity theft protection
and how does it compare with LifeLock?

To answer this question, we’ll review both company offerings,
and explain their advantages and disadvantages. We believe
both companies offer very good solutions.

Many of LifeLock and TrustedID services are nearly identical,
though the companies sometimes take different approaches to
accomplish the same tasks.

Here’s where their services overlap:

— Fraud alerts. Both companies contact the major credit
bureaus to ensure that fraud alerts are placed and renewed
every 90 days.

— LifeLock has offered a $1 million iron-clad guarantee for
quite awhile, and TrustedID has now matched this. This means
that while subscribing to either firm’s services, if your
identity is stolen, each company will reimburse you for any
losses, and pay any specialists (attorneys, private detectives,
case managers) needed to remedy the situation — up to $1
million.

— Both forward your credit reports from the three credit
bureaus once a year.

— Both remove your name from databases for pre-approved credit
card offers.

— Both offer ID theft recovery assistance, as well as $1
million in theft insurance.

Here’s where they differ:

— TrustedID offers daily monitoring of your personal
information, and sends email alerts about any changes.
Specifically, they monitor criminal databases and chat rooms to
see if your personal information is being offered for sale.
This is a nice additional feature that LifeLock does not
currently offer.

— For an additional fee (which depends on which state you live
in), TrustedID offers a service called CreditLock, which forces
third parties to get your permission before they can view
certain types of information (which you specify) in your credit
report. When you grant permission, however, you’ll need to
unlock your credit report for another additional fee.

— TrustedID also offers services designed to assess risk and
remedy identity theft and data breaches suffered by
organizations (for-profit and not-for-profit) — a market
LifeLock is not involved in.

— LifeLock offers a new free feature to subscribers called
WalletLock. If your wallet is lost or stolen, you can call the
company from anywhere in the world, and it will contact “every
credit card, bank or document-issuing company, cancel your
affected accounts and complete the paperwork and steps
necessary to replace your lost documents, including your
credit/debit cards, driver’s license, Social Security card,
insurance cards,” etc. This is a nice feature that TrustedID
does not currently offer.

— To us, by far the biggest benefit of LifeLock over all of
its competitors (including TrustedID) is in saving you time if
your identity is stolen. During their interview, Audri asked
Todd Davis of LifeLock:

Audri: In addition to paying for losses, in the event of your
clients’ identities being stolen, how much time would be
required from them to fix the problem, and how much would your
company do?

Todd: We would do it all.

In our opinion, this is a key benefit of LifeLock over
TrustedID. (TrustedID also does do some of this for you, but
according to our discussion with TrustedID, not nearly as much
as LifeLock.)

— LifeLock is less expensive. LifeLock charges $9 per month
(or $99 per year if you choose the annual plan) and offers a
30-day free trial (as long as you use the ScamBusters special
code below).

TrustedID charges $12.95 a month (or $109.95 per year if you
choose the annual plan), with no free trial.

Although you could, in theory, do all of this for yourself,
given the dangers posed by identity theft — the potential for
financial losses directly related to a theft, and especially
the hours spent clearing your good name — we believe you
should consider one of these services.

Which company is best for you? That depends on your
evaluation of the benefits described above, as well as your
budget.

To discover more about identity theft and how to prevent and
resolve it, visit the ScamBusters href="http://www.scambusters.org/identitytheft.html">Identity Theft Information
Center.

That’s all we have for today, but we’ll be back next week with
another issue. See you then!