Prevent Identity Theft

Identity theft -- a catch-all term for crimes involving illegal usage of another individual's identity -- is one of the fastest growing crimes in the United States and is now ranked as the fastest growing white-collar crime. Identity theft occurs when someone uses your personally identifying information, such as Social Security or credit card number, without your knowledge to fraudulently make purchases, obtain loans, or even to get a job, or worse, commit criminal acts in your name, leaving you responsible for the consequences.

Victims of identity theft don't just experience an inconvenience but often endure a range of serious life-disrupting consequences, including harassment by debt collectors, loss of credit and denial of loans, job loss, and even arrest for crimes committed by the identity thief. Unfortunately, it is the victim who is responsible for cleaning up the mess and reestablishing their good name and credit. According to a report by the CALPIRG Privacy Rights Clearinghouse, victims of identity theft spend, on average, 600 hours trying to clear damaged credit or criminal records caused by identity theft, and many victims never recover funds stolen from their bank accounts or other sources and fail to fully restore their good credit. Even as a victim of identity theft, your liability for charges can increase the longer the crime goes unreported. Yet the Federal Trade Commission reports that it takes identity theft victims an average of 12 months to notice a crime has occurred.

How do you know if you're the victim of identity theft?

There are a number of important clues, such as finding unexplained charges or withdrawls from your financial accounts, receiving credit cards you didn't apply for, being denied credit or receiving less favorable credit terms for no apparent reason, receiving calls and/or letters from debt collectors about merchandise or services you didn't buy, or being contacted by law enforcement agencies about a crime committed in your name.

How to protect against identity theft?

Protecting your identity goes beyond checking your credit report once per year, especially since reacting swiftly in the event of a problem is essential. Three basic steps are involved to protecting yourself:

1. Locking down your personal credit information
2. Frequent and careful monitoring of your credit and other personal information
3. Reacting quickly and thoroughly in the event of a breach

What Exactly Does an Identity Theft Protection Service Do?

An identity theft protection service serves as a one-stop center to help you protect against identity theft by applying the three steps mentioned above (1-locking down your personal information, 2-monitoring of credit and personal information and 3-reacting quickly if a breach occurs) and working on your behalf with the three major credit bureaus: Equifax, Experian and TransUnion.

Can't I do this myself? Yes. Consumers can work directly with the credit bureaus and do many of these tasks themselves, without the need of a service. But it can be a hassle. For example, you must remember to renew "Fraud Alerts" (see below) every 90 days. In addition to convenience, identity theft protection services also provide thorough 24/7 monitoring of information and email alerts in the case of suspected breaches, and provide the peace of mind that they will work with attorneys and other experts to restore your identity should the worst occur, with warranties of $1 or 2 million.

Identity theft protection services work with the three credit bureaus to place what is called a "fraud alert" in your credit file and renew it every 90 days. This means that creditors must contact you and/or take other reasonable steps to verify your identity and confirm that the credit application is not a result of identity theft. Placing a fraud alert on your credit profile also has the welcome benefit of reducing the amount of pre-approved credit offers that are sent to you in the mail. Such offers are a common source of identity theft as identity thieves steal them from mailboxes in well-to-do neighborhoods.

Once your credit records are secure, identity theft protection services monitor your personal information as early detection of a problem is critically important to minimizing the damage an identity thief can do. Some services monitor not only your credit information, but may also monitor specific accounts or suspicious information found on the Internet or in public records databases. Finally, should the worst occur, identity theft protection services will work with you to resolve the problem, including hiring attorneys and other experts if necessary, to make things right.

Recommendations

We compare the top identity theft protection services. We recommend all as each are well-established, provide excellent service and have enjoyed accolades from the media (see sidebar at left) and strong testimonials from their subscribers. But each provider offers something a bit different, so choose the one that best meets your needs.