Fact Sheet 132
What are Identity Theft Products?

This fact sheet covers:

• Credit Monitoring Services
• Identity Theft Insurance
• Fraud Alert Products
• Credit Freeze Products
• Data Sweep Services

The Identity Theft Resource Center receives numerous inquiries from consumers regarding identity theft products available for purchase.  While ITRC does not endorse any specific product, this document has been created to help consumers understand various products, their benefits and limitations, and what services each product should have to be helpful to the consumer.
ITRC would also like to state that no company can fully PROTECT you from identity theft and that any advertisement stating a complete protection program is misleading and fraudulent.  There is no silver bullet or product that will protect you from all aspects of identity theft. 

Credit Monitoring Services
Credit Monitoring is a product which allows consumers to either be advised about changes on their credit reports, or to view a summary of their credit report upon request. This information is provided by the three credit reporting agencies (Experian, Equifax and TransUnion). The information  is then resold by these credit reporting agencies (CRAs), one of their subsidiaries, or an indepentent third party.

The Federal Trade Commission and consumer groups do not recommend credit monitoring services.   If you wish to sign up for one, however, you should know that many of the credit monitoring services have limitations.

• Credit monitoring products only address new financial accounts and will not stop account takeover or the misuse of an existing credit cards.   In addition, new bank accounts, utility accounts, and some other types of financial accounts can still be opened in spite of credit monitoring.
• As of this date, monitoring products only help in a limited area of financial identity theft, and not the other forms of identity theft, such as criminal, governmental services, etc.
• The credit monitoring information may not be current; as credit issuers may not provide new credit application information to the three credit reporting agencies in real time.
• Credit monitoring is dependent upon credit issuers providing new application information to the CRAs.   The reality is that not all credit issuers report to the CRAs.
• A monitoring report that only has information from one of the three CRAs is incomplete. It must be a tri-report from all three CRAs.  Otherwise, it may not show all the pending applications and open accounts.
• FTC statistics show that only a small percentage of consumers were alerted by a credit monitoring product to potential identity theft activity.
• Credit monitoring is a reactive process, not a proactive process.

The reality is, consumers are allowed by law to request one free credit report per CRA a year.   We recommend that consumers stagger these requests so that they receive a credit report from one CRA every 4 months.   Often times, the early awareness of an identity theft crime that has already occurred still leads to the same amount of work if the consumer finds out about it several months later.

Identity Theft Insurance:  

These are insurance programs, or add-ons to existing policies, that help replace real expenses incurred by the victims of identity theft.  It should only be purchased if you have the budget to do so.

Look for the following items:

• Low cost premiums - $25-$50 annually is typical.
• A low deductible amount.   If the deductible amount is too large, your expenses may not be enough to justify a claim.
• Should include lost wages.   This should include salaried employees and those who are self-employed. It should not require that you use any earned sick or vacation time first.   It should reimburse you for sick or vacation time you have to use for your case.
• Includes legitimate legal expenses directly related to recovering your good name
• Includes out-of-pocket expenses including travel, child-care, and even clerical time if you are unable to write or type letters
• Pre-existing situation clause – Look for a policy that will cover any identity theft case that you did NOT know about but was going on when you purchased the policy.
• Verification that any claims on the identity theft insurance do not affect any other policies you have with the same company. This is very important since some identity theft policies are add-ons on homeowner’s insurance.   If a claim on the identity theft policy raises your rates for a related home-owners or other policy, it may not be cost effective.

The ITRC has not spoken with identity theft victims who have had identity theft insurance in force, and have filed a claim, so we cannot attest to the ease in getting your money should you become a victim of identity theft.

Fraud Alert Products:

There are two processes you can use to help protect your credit.  The least invasive is a “fraud alert” or security alert.   This is a consumer statement added to your credit report requesting issuers to check with you prior to issuing credit.   Unfortunately, at this time, while there is a law that requires issuers to verify your identity, some credit issuers do not comply, or do not make phone calls to you.   Other credit issuers don’t use credit reports, so they are not aware of the fraud alert.   We find fraud alerts work most of the time.   Consumers can place a fraud alert for free.   It lasts for 90 days, and is renewable.   However, if you are a victim of identity theft and have submitted a police report to the Credit Reporting Agencies, it can be extended to seven years.  

Currently there are several companies offering products to assist consumers with fraud alerts.     Since fraud alerts expire every 90 days (unless you have placed a 7 year alert), these companies will automatically extend the fraud alert for you for a fee.  In addition, these companies will take over the task of contacting you once a credit issuer has initiated a confirmation call.   Unfortunately, some credit issuers only place one call.   With some of these fee-based products, the fraud alert company should continue to make attempts at contacting you until you have either confirmed the new credit application, or declared it fraudulent.   Fraud alert products are proactive in nature.

Look for the following items:

• Reasonable cost - $10-$15 monthly is typical.
• The company’s reputation.
• Is the cancellation policy reasonable?
• What is the method of contacting you when a new credit application is started?
• Is a “live person” readily available by phone if you have questions?
• Are operating hours convenient?
• Will they discuss their failure rate?
• What help is provided if you find you are an identity theft victim due to a failed fraud alert?
• Do they make overreaching claims, such as “our product can prevent identity theft?”

Note:   Experts agree that identity theft cannot be prevented, but the risk of it happening to you can be minimized.   There are thousands of ways to steal an identity, and some of these are beyond your control, and certainly beyond the control of a single product.

Credit Freeze Products:

A credit or security freeze is a stronger measure.   It literally locks your credit report from viewing for the purpose of new lines of credit, and for some employment and tenancy.   Potential creditors, insurance companies, landlords and some employers doing financial background checks may be told that your report is unavailable for viewing.   The price varies from state to state and is usually free for victims of identity theft who have obtained a police report. Please see our  State and Local Resource Map  for your states freeze law.  
Each time you wish to qualify for a loan, credit card, tenancy or a job, you will need to “thaw” the report.    This takes about 3 days.    It will interfere with a rapid need for your report.    This is an important consideration to keep in mind.    However, it will also stop thieves from opening accounts.    When obtaining credit, you can ask the business which credit agency they use and just thaw that one agency’s report.    If they don’t know, you will need to thaw all 3 reports.    Reports can be thawed for a period of time or for a specific company to see.    A credit freeze will not affect your credit score, but it will prevent you from getting “instant” credit.    That is the trade-off for higher levels of information security.
In ITRC’s opinion a freeze is the best form of financial identity theft protection currently available, but it is by no means a guarantee of safety.
For example, companies can, and will, issue credit without looking at a report.    However, if that occurs, you have a very strong argument as to the fraudulent nature of that account.    Also, a credit freeze will not stop or fix an ongoing identity theft.    However, for many of us, the freeze not only brings peace of mind but gives us some measure of control of our financial security, especially with an unstoppable identity thief in your life.
Companies that will be able to view your report even with a freeze include:

• Ones that you already have an existing business relationship with or a collection agency acting on behalf of the existing account, for purposes of reviewing (account maintenance, monitoring, credit line increases, and account upgrades and enhancements) or collecting the account.
• A consumer’s information may be used for the purposes of prescreening as provided for by the federal Fair Credit Reporting Act, even if a security freeze is on the report.

The companies that offer freeze assistance actually write the letters to the three CRAs for you and assist in lifting or thawing your freeze to allow someone to view your credit report.   There is a charge for this service above the cost of the actual freeze.
Look for the following items:

• Reasonable cost
• The company’s reputation.
• Is the cancellation policy reasonable?
• Will the credit freeze product provider contact you at the time of credit application?
• How long does it take this product provider to activate your freeze?
• Is a “live person” readily available by phone if you have questions?
• Are operating hours convenient?
• Will they discuss their failure rate?
• What help is provided if you find you are an identity theft victim due to a failure to observe a freeze?
• Do they make overreaching claims, such as “our product can prevent identity theft?”

Note:   Experts agree that identity theft cannot be prevented, but the risk of it happening to you can be minimized.   There are thousands of ways to steal an identity, and some of these are beyond your control, and certainly beyond the control of a single product.

Victim Resolution or Restitution Products:

Victim resolution or restitution is the process by which a victim clears all fraudulent records created by an identity thief.  

There are many state and non-profit organizations that will assist victims WITHOUT charge. These organizations will guide victims through the process, step by step, and will even provide letter forms to use.   ITRC is a strong believer in having victims do the recovery process themselves.   We feel the process is empowering and also healing.

However, some victims of identity theft feel overwhelmed by the process of repairing their good name and prefer to have someone do it for them.   There are companies that will do all the restoration work for you.
Ask about the following items:

• What are the fees?   What services are provided?
• Do they cover all types of identity theft? Financial, criminal, governmental services, etc. 
• Do you need to sign a power of attorney? 
• Do you need to provide your Social Security numbers and financial account numbers to this company?
• What is the process they use to restore your good name?
• What type of training do their investigators undergo?
• What is their reputation for getting the job done completely and effectively?
• What is their guarantee?   Is there a refund policy?

Note:   These companies range from exceptional to very lacking in skill.   ITRC cannot stress enough the need for victims to do their homework, get references, check out the company they choose with their state Attorney General and the Federal Trade Commission as part of your “buyer beware” due diligence.

Data Sweep Services:
This type of company checks the Internet for listings of your personal identifying information.  While names, Social Security numbers and financial records are critical to identity theft, other pieces of information, such as your email address, exposes you to spammers.   This is a proactive measure you may choose to take.
Questions to ask these companies include:

•   What is the price? It probably should not be more than about $15 a month. What other products does it include or can you buy it as a stand-alone product?
• What information do they search for? Does it include all or just some of these items: name, Social Security Number, email address, telephone number, financial records, and home address?
•   How frequently do they do a sweep? “Real time” is preferable.   (If a company only sweeps every two weeks or so, it is not enough.)
• How quickly do they notify you of any listing and how do they notify you?
• How persistent are they in making sure you received their notification?
• Do they allow a trial period for you to decide if you want to continue with this product? A legitimate company will allow you at least a one-month trial period.
•   What is their background and expertise in data sweeping? Do they interact with law enforcement agencies? That is a plus.

For further information visit the following links :
Fact Sheet 124 - Credit Freezes and Fraud Alerts
Fact Sheet 125 - Federal Annual Free Credit Report
State and Local Resources

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This fact sheet should not be used in lieu of legal advice. Any requests to reproduce this material, other than by individual victims or their own use, should be directed to ITRC.
Fact Sheet 132, Copyright February 2008, Identity Theft Resource Center ®
Created by ITRC staff

This project was supported by Grant No. 2007-VF-GX-K038 awarded by the Office for Victims of Crime, Office of Justice Programs, U.S. Department of Justice.   Points of view in this document are those of the ITRC and do not necessarily represent the official position or policies of the U.S. Department of Justice