No crime seems to be gripping the public today more than the claim of identity theft and along with it has come a surge of advertisements from companies offering identity theft protection programs. There are various forms of consumer protection available and consumers should be alert to the contents and costs of these offerings.
LifeLock An advertisement frequently seen on television depicts a LifeLock executive driving down a busy downtown street with a Social Security number clearly visible on a mobile billboard. The number is also touted in radio commercials. He boasts 'that's my real Social Security number' and dares identity thieves to defraud him. What does LifeLock do to secure your identity?
For a monthly fee, LifeLock will place a fraud alert with the three national credit reporting agencies and contact the Direct Marketing Association to prevent the consumer from receiving pre-approved credit offers. Consumers may subscribe directly with one of the national credit reporting agencies and the cost may be cheaper than subscribing to Lifelock. The Federal Fair Credit Reporting Act states that consumers who make a good faith assertion that they suspect they are or about to become a victim of identity theft have a right to file fraud alerts with these agencies on their own at no cost. There is no charge by the Direct Marketing Association to remove your name from mailing lists and prevent the receipt of pre-approved credit offers.
What about LifeLock's guarantees against losses and expenses a client incurs up to $1 million? According to the March 2008 issue of Consumer Reports, the customer agreement doesn't actually bind LifeLock to much of what is promised and is vague about reimbursing stolen money. Their guarantee hinges on 'the failure or defect in our service,' which their contract defines 'as initiating requests with credit bureaus and the Direct Marketing Association.' The contract will also be breached if there is a reckless display of a Social Security number similar to the action of the LifeLock executive touting his number and taunting identity thieves in their advertising.
According to Consumer Reports, Experian one of the three national credit reporting bureaus, recently filed a lawsuit in California to prevent LifeLock from selling a service that puts temporary fraud alerts on consumer credit reports and automatically renews them every 90 days. LifeLock charges $10 per month or $110 a year for this service. LifeLock continues to advertise extensively on TV, radio and in the newspapers.
FreeCreditReport.com. The national credit report company, Experian is the owner of FreeCreditReport.com, which has been involved in a major marketing campaign. According to the August 4, 2008 issue of The New York Times in an article entitled "The High Cost of a Free Credit Report", FreeCreditReport.com reportedly spent over $70 million on major media advertising in 2007 running the radio and television ads, which ran over 90,000 times and increased its membership by 20 percent. The ads on YouTube have been viewed more than 3 million times.
Its ads are aimed at a younger audience and are performed by a group of young trendy entertainers who wryly complained to be 'living in their in-laws basement' or 'dressing up as pirates to wait on tables because they neglected to check their credit scores.' According to The New York Times, the Federal Trade Commission criticized FreeCreditReport.com saying that its advertisement and website did not have adequate disclosure and the service was not free. Experian paid the FTC $950,000 and had to offer refunds to certain consumers. On its web \site, the FTC cautions consumers about such advertising noting that in some cases, the free product comes with strings attached. As the date of the Times report, the Florida attorney general was conducting an investigation into FreeCreditReport.com.
A review of FreeCreditReport.com's website has an important caution on the left-hand side of their homepage advising consumers that, if they don't cancel the membership within the seven-day trial, they would be billed $14.95 each month the membership is continued. Just below the caution is an advisory that under federal law consumesr are entitled to receive a free copy of their credit report once every 12 months from each of the three nationwide consumer reporting companies. To request a free annual report, consumers are advised to go to annualcreditreport.com.
Annualcreditreport.com While these credit reports sound very similar, free credit report and annual credit report are two very distinct entities. You may request an annual credit report by going online, telephone or through the mail. An annual credit report request made online is viewable immediately upon the authentication of identity and reports requested by phone or mail will be processed within 15 days of the receipt of the request. The annual credit report is sponsored jointly by the three national credit reporting agencies. When applying for the report you'll probably be solicited to subscribe to a credit monitoring program offered by each company. You have the option of bypassing the ads and going directly to the free credit report.
When visiting annualcreditreport.com online, consumers are advised to type 'https:\\www.annualcreditreport.com' directly into the address bar on your browser. It further cautions that you will never receive an unsolicited email directly from the annual credit report request service. In preparing a request online, consumers will be asked for basic information such as name, address, date of birth and Social Security number. As an added matter of security you are able to check a box on the form if you only want the last four digits of your Social Security number printed on your credit report. After submitting the form, you'll be asked to select one of the three national credit reporting agencies to obtain your free report. Each agency may ask you for additional proof of identity prior to issuance of you report.
To summarize, consumers have at least three options in shopping for a method to try to prevent identity theft. The options are 1) availing themselves of the free annual free credit reports as required by the Fair Credit Practices Act, 2) subscribing directly with one of the three national credit reporting agencies or 3) paying a monthly fee to a company such as LifeLock, which will do these things for you for a monthly fee. There are other companies beside those mentioned in this article, who could also provide these services. As with any other shopping need, it pays to shop around.
Pending Legislation The September issue of AARP reported that beginning January 1, 2009, New Yorkers would be able to freeze their credit reports by phone or Internet. In 2010 national credit reporting agencies will be required to place a credit freeze within 24 hours or cancel it within 15 minutes of receiving a consumer request. Additional measures have been passed to ensure that employers will do better in protecting workers' Social Security numbers. Legislation under consideration includes a protection for safety net income, such as Social Security benefits, if a creditor places a lien on a consumer's bank account or other assets.
(Editor's note: This is the final in a series of articles on Identity Theft and You.)