ID Theft Protection Services Create False Sense of Security
If you are one of those consumers paying for and depending on an identity theft-protection service – especially where credit-bureau monitoring is the core product offer that will “prevent you from becoming an identity-theft victim” – you need to know the following:
According to Consumer Reports magazine, about 50 million U.S. consumers pay $120 to $300 annually or nearly $3.5 billion annually to buy products that are claimed to protect their identity. At the same time, Consumer Reports states that the marketing of these identity-theft products can be deceptive.
Since 2012, the Federal Trade Commission and Consumer Financial Protection Bureau – the two federal regulators that have taken a leading role in the oversight of the identity theft protection services marketplace — have levied fines and penalties to numerous identity-theft protection service companies and their clients totaling over $3 billion.
The primary regulator complaint has been how identity-theft services using credit monitoring as the core product offer falls short in protecting consumers from identity theft. Another regulator complaint is “alleged deceptive marketing practices, such as not adequately disclosing automatic sign-up after “free” trials and promising to prevent ID theft, even though the services don’t actually do that.”
And according to the 2015 FTC Consumer Sentinel Network Data Book, only 30 percent of identity-theft victims’ issues were related to a financial event, such as those involving a credit/debit card, checking/savings account or loan ( auto,home or personal).
This means that 70 percent of identity-theft victims’ issues were related to a non-financial event. Examples of non-financial identity theft include:
- Taxpayer identity theft and refund fraud.
- Medical identity theft.
- Credential identity theft such as your driver’s license, passport, employee ID, or student ID.
“Unfortunately, the current marketing and advertising practices of identity-theft protection service companies are giving consumers a false sense of security,” according to Jim McCabe, senior vice president of identity theft services at Scottsdale- based Vero LLC.
McCabe said, “There are no credit monitoring, report or score services, along with other identity- and Internet-monitoring services, that will prevent an ID theft or fraud event from happening. These services function primarily as a smoke alarm to indicate that your identity has already been compromised.”
If identity theft-protection services are working so well, why are there more victims of identity theft than ever before? It’s because no one company can prevent any individual from ever becoming an identity-theft victim.
So what can you do? Consumers can take some responsibility and action in protecting their personally Identifiable information by being careful of giving out information, using strong password management, updating computer security software and shredding sensitive documents.
If you believe you need to subscribe to an identity-theft service, read and understand the terms and conditions of the identity-theft program, as many programs include numerous exclusions that eliminate the very benefits that you really need.
Mark’s most important: Make sure that your ID-theft solution contains a managed recovery component to protect you from the 70 percent of ID-theft problems that standard credit monitoring does not detect.
Mark Pribish is vice president and ID-theft practice leader at Merchants Information Solutions Inc., an ID theft-background screening company based in Phoenix. Contact him at firstname.lastname@example.org.