Identity Theft Prevention and Resolution Services

Identity Theft has spawned an entire cottage industry, and many companies now offer Identity Theft "prevention" and resolution services for an upfront or ongoing monthly fee. As an informed consumer, the question that you need to consider is:  "Are they really worth it?"

As recently publicized events and data breaches make abundantly clear, it is impossible for any Identity Theft service to completely prevent or guarantee against Identity Theft. For instance, since February of 2005, well over 217 million American consumers have been exposed to significant risk of Identity Theft due to serious data breaches at major financial institutions, data warehouses, retailers, major corporations, colleges and universities. At best, you can take reasonable precautions within your own control to reduce or minimize your risks. However, in an information-based society where countless organizations and persons have access to your confidential personal and financial information, you may easily fall victim through no fault of your own, other than simply having been a consumer or transacting business with a particular organization.

Companies offering Identity Theft services charge fees to assist in performing the task of cleaning up credit report issues related to the incident on your behalf. The costs for these services typically range from $120 to over $300 per year, if you are enrolled before an incident happens. If you engage these services after falling victim, if even permitted at all, the costs typically range from $300 to $1800. Some companies even charge upfront fees of $50 to $100, or $10 to $20 per month, to perform simple tasks that you can easily do yourself - at no cost whatsoever - such as placing and renewing a fraud alert, opting out of mailing lists, and registering your telephone number with the National Do Not Call Registry. (Use the FRAUDFacts Public Knowledge Center to learn how to do all of these in minutes for free!)

One of the biggest problems that you face if you elect to enroll in such a service is that there is no standard of service. Many companies simply offer a private-labeled version of another company's services, repackaged and presented as a new offering, and use whatever terms to describe their service they believe will attract the most potential customers.

Other companies simply believe that there is money to be made, call themselves "experts", and throw together their own homegrown program to offer to anyone who will sign up. Regardless of whether the company claims to offer "prevention", "resolution", or other descriptor, read the fine print very carefully to learn the terms, conditions, level of service, and exclusions. In many cases, you will find that there are more exclusions to the service than there are actual services provided.

Some important considerations if you are considering such a service include:

• Avoid any company that makes claims to guarantee against or completely prevent Identity Theft. To be clear, it is absolutely impossible for any company or service to keep you from ever becoming a victim, regardless of what it might claim. A service might be able to provide some limited defenses against one or two simple types of Identity Theft, but there are countless ways that thieves can obtain and misuse your information.

• These services usually have substantial exceptions in the small print of the service agreement that specifically exclude certain types of Identity Theft, or types of incidents that represent a significant percentage of Identity Theft cases. Examples of common exclusions include: when a family member of the victim is the perpetrator, when the victim knew of the incident or had reason to suspect Identity Theft, incidents involving criminal impersonation, incidents involving children, incidents involving your small business, and virtually all non-financial Identity Theft matters.

• Though circumstances and the severity of cases vary, these services typically perform tasks that you, as an informed consumer, can generally do yourself, such as writing letters, making telephone calls, and disputing charges. In order to perform these services for you, these companies require you to execute a limited Power of Attorney in order to act on your behalf. Regardless, many creditors may still require communication directly with you, rather than through a third party. This means that in many cases, despite the fees involved, you must still perform many of these tasks yourself. It is also important to note that the key consumer protection laws that limit your liability for fraud and/or Identity Theft also include specific consumer responsibilities that you must meet in order to benefit from the protections. If the service fails to meet these responsibilities for you, whether through error or negligence, you may lose your liability protections and may be held fully liable for fraudulent losses.

• The vast majority of these services are limited strictly to matters of standard financial accounts or those that actually appear on your credit report, leaving you to struggle through the process of resolving liens and judgments, clearing erroneous criminal records, duplicate licenses, tax and benefits issues, and countless other non-financial account matters. Often, only a simple "victim kit" is provided, which consists of only a few generic form letters and a simple one page contact sheet.

• Many services provide some simple, basic guidance through phone consultations, but you may still spend many hours of work to clear your name despite the fees you paid.

• Many claim to offer "identity theft specialists" or "fraud specialists". Are these personnel really trained "specialists", or more likely low-paid call center personnel who are simply following a call sheet with basic canned responses and frequently asked questions? What are their credentials and actual level of training and experience, and why should you feel confident in trusting your well-being to them?

• Identity thieves do not simply use their victims' information and then discard it. Thieves frequently sell and trade this information with other thieves. This means that once the initial incident is resolved, victims can be, and often are, re-victimized in the future. A new incident means a new case and new fees for you.