Consumers who sign up for identity-theft monitoring services may be getting a lot less protection against some common types of fraud than they assume they are, according to an online guide released Monday by the Privacy Rights Clearinghouse (PRC).
What's more, many of the services offered by identity-theft monitoring vendors can often be obtained for free, the San Diego-based privacy advocacy group claimed.
The PRC's guide doesn't mention any vendors by name and notes that the available monitoring services "vary tremendously" in what they offer. Even so, many of them are overpriced and don't provide anything close to full protection against identity theft or credit fraud, said Paul Stephens, the PRC's director of policy and advocacy and the author of the guide, which offers tips on selecting monitoring services.
"There is no correlation between the price you pay and the services you get," Stephens said. People who think they need monitoring services should first make sure that there are no free or lower-cost alternatives that they can take advantage of, he added.
Monitoring services are most useful, Stephens said, in helping individuals detect new-account fraud resulting from someone using their name, Social Security number and other personal information to open credit-card, mobile phone or other accounts. Often, such fraud is hard to spot until after the fact, according to Stephens. He said that credit monitoring services can quickly alert victims, although the protections can be inadequate if vendors don't monitor credit reports at all three of the major credit-reporting bureaus.
In general, monitoring services fail to protect against a variety of other kinds of fraud, Stephens said. For example, they seldom catch the misuse of existing accounts, such as making fraudulent purchases with an existing credit card. Similarly, the services aren't of much use against debit and check card fraud, or in situations where an imposter might use another individual's Social Security number to obtain employment, he claimed.
In addition, they offer no protection against the fraudulent use of personal information for purposes such as obtaining a driver's license or making false claims for medical goods or services, Stephens said.
He also noted that individuals can get some of the protections offered by monitoring services for less than the fees they charge, or for nothing at all. As a case in point, consumers can place free fraud alerts on their credit reports with each of the major reporting bureaus -- Equifax, Experian and TransUnion -- for up to 90 days at a time. Stephens said that many identity-theft monitoring services charge up to US$10 per month to place such alerts on behalf of their customers.
For a US$30 fee payable to the credit-reporting bureaus, he added, people can also place a lifetime freeze on their credit records -- thus requiring credit providers to verify their identities whenever a new account is opened or a credit inquiry is made in their name.
It also pays to fully understand the implications of certain actions offered by identity-theft monitoring services, Stephens said. For example, while a credit freeze can provide fairly strong protections against fraud, it also makes it harder for people to quickly obtain credit.
More than a dozen companies, including each of the credit-reporting bureaus, currently offer monitoring services. One of the biggest of them, LifeLock, was hit earlier this year with class-action lawsuits in three states, charging the company and CEO Todd Davis with false advertising and deceptive trade practices.
Several of the issues raised in the lawsuits are similar to the ones mentioned in the PRC's guide. The legal filings basically accuse LifeLock of overstating the capabilities of its identity-theft monitoring and protection service and misleading people about the guarantees that it makes to customers.
In an interview Tuesday, Davis said that LifeLock, which charges US$110 for a one-year subscription to its service, makes no attempt to conceal the fact that some of the things it offers to do for customers can be done for free by individuals. For example, a core component of LifeLock's service consists of placing and renewing fraud alerts on behalf of consumers.
But Davis said that in addition to placing such alerts, LifeLock also monitors Internet chat rooms and underground sites for signs that personal data belonging to its customers may have been compromised. The company also works on behalf of its customers to contact credit-card companies, credit bureaus, banks and other businesses in the event that their personal data is compromised.
"If you become a victim, we will use our expertise to correct the problem and do everything that the law allows us to do to restore your good name," Davis said.