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A Credit-able Service?
In protecting yourself from identity theft, credit monitoring promises to keep you safe - for a small fee, of course
By Jason Newman
Published: Dec 01, 2007
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DEL.ICIO.US
YAHOOLinda Goldman-Foley and her husband Jay knew something was strange as soon as the call came in.
“Hi,” said the voice on the other end, “This is CitiBank. We recently noticed a new address on your credit report and just wanted to see if we should start forwarding bills to that address?”
“My wife’s response to that,” said Foley, “was ‘What new address?’”
Instantly, Goldman-Foley joined 10 million identity theft victims nationwide who assumed it always happens to someone else.
In an effort to combat this rapidly growing problem—costing $53 billion annually, the Department of Justice now lists identity theft ahead of drug trafficking as the single-biggest crime in the country—many credit card companies now offer credit monitoring services that detect instances of fraud and identity theft. Today, roughly 1/3 of all credit card users subscribe to these services from their respective institution. For a monthly fee, of course.
And that’s where it gets tricky. 2003’s Fair & Accurate Credit Transactions (FACT) Act allows you to receive a free annual credit report from each of the three major credit reporting agencies. So why bother paying extra?
“Some of the services provide more than you can get from a credit report,” says Anne Wallace, Executive Director of Identity Theft Assistance Center, a program founded in 2004 by numerous financial services companies. “If you look closely at these services, they will monitor public records that don’t show up in your credit report.” In addition, the services, if offering daily monitoring, may be helpful for early detection of suspicious activity and with identity theft insurance (though details vary with each company’s services).
“Do you remember the TV series M.A.S.H.?,” counters Foley, who is now Executive Director of Identity Theft Resource Center, a non-profit started in 1997 after his wife’s ordeal. “There was one episode where they didn’t have any morphine so they made up a placebo. Everybody thinks they’re secure because they’re getting this service, when in fact, it’s a placebo or darn close to it.”
While many of these services ostensibly monitor your credit on a regular basis, Foley is skeptical. “We’ve had multiple people who’ve gotten the services, called [us] up and said, ‘Wait a second. Something’s wrong here. I’m getting collection notices for an account that I know nothing about, yet I never got any warning from the company that monitors my credit.’”
Indeed, many people interviewed for this article echoed this “false sense of security” argument.
Denise Richardson should know. A board member of American Consumer Credit Education and author of Give Me Back My Credit!, Richardson spent 15 years straightening out her credit report after various mortgage payments were misapplied or were not credited. “I got notices in the mail that told me everything was okay,” she explains. “It would be a great service for consumers if it actually did prevent identity theft, and I don’t think anything on its own can actually prevent identity theft, but I think credit monitoring services are more a reactive type of service than proactive.”
Richardson is more adamant about the monthly charges, which range from $7 to $15 depending on the issuing bank. “Identity theft is scary enough and for us to pay to have our data monitored and protected I feel should be part of [the credit card companies’] cost of doing business. They found a hook to lie their hat on so they could say, ‘Hey, now there’s another way to make more money.’ What are they selling? They’re selling us. We’re their product.”
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