Thousands of Americans are victims of identity (ID) theft each
year. The sad part is, most ID theft victims do not know how or when
their identity was stolen. They often find out when an irate creditor
or collection agency calls or a credit card is declined. To help
consumers protect their identity, a number of credit monitoring and
insurance protection programs are being offered by some companies. But,
are these products right for you?
Most experts recommend that you obtain a copy of your
credit report at least once a year from each of the three major credit
bureaus (Equifax, Experian and TransUnion) to ensure accuracy and to
look for signs of ID theft. But, if you find that you do not have the
time to do this, you may want to subscribe to a "monitoring service."
Credit bureaus or other companies usually offer this service for about
$30 to $150 a year, depending on what is included.
According to the Federal Deposit Insurance Commission (FDIC),
a monitoring service may provide, for example, an automatic copy of
your credit report from one credit bureau or all three major companies,
on a quarterly or monthly basis. You also may be able to obtain e-mail
notices of any changes in a credit report, sometimes within 24 hours.
The most important alert is one telling you that an account has been
opened in your name. If you do not recognize it as your account, you
can take immediate action to get the account closed.
Should you order your credit report on your own or pay extra
for a special service? The answer depends on how closely you want to
monitor your credit reports and how much you are willing to pay for
convenience and other extras.
If an ID thief uses your name to commit fraud you are likely
to incur expenses trying to correct your files or otherwise defending
yourself. That is why some insurance and credit card companies now sell
"ID theft insurance." These types of policies typically cover expenses
such as lost wages; fees associated with reapplying for loans you were
denied; and the costs of mailings and phone calls to creditors, credit
bureaus and law enforcement agencies. The policies may also cover
certain legal fees. The policies do not, however, cover losses for
which you are liable by law or that are otherwise not reimbursed by a
financial institution or merchant. It does not fix your credit standing
nor clean up a criminal record acquired in your name by the thief.
Some consumers may already have this insurance at no extra
charge through their homeowner's insurance or their credit card. If
not, you may be able to purchase the coverage separately for about $25
per year or more. A deductible is usually included and can run anywhere
from $100 to $500 per claim.
If you are thinking about purchasing a policy, be sure to
compare the annual insurance costs with the amount you would probably
recover if you were to become an ID theft vicitm. Also, you may want to
get the opinion of someone knowledgeable, like a financial planner or
an insurance professional you trust.
The BBB, along with the FDIC, warn consumers to beware of
telephone or e-mail scams promoting credit monitoring services, "free"
credit reports or ID theft insurance. Fraudulent companies often use
false or misleading statements to get you to send money or divulge
personal information. Always check out a company with the BBB before
making a purchasing decision.