Both companies are literally banking their money on the back of the Fair and Accurate Credit Transactions Act, (FACTA) which was an amendment to the Fair Credit Reporting Act (FCRA).
15 U.S.C. § 1681
§ 605A. Identity theft prevention; fraud alerts and active duty alerts
(a)One-call Fraud Alerts
(1)Initial alerts. Upon the direct request of a consumer, or an individual acting on behalf of or as a personal representative of a consumer, who asserts in good faith a suspicion that the consumer has been or is about to become a victim of fraud or related crime, including identity theft, a consumer reporting agency described in section 603(p) that maintains a file on the consumer and has received appropriate proof of the identity of the requester shall--
(A)include a fraud alert in the file of that consumer, and also provide that alert along with any credit score generated in using that file, for a period of not less than 90 days, beginning on the date of such request, unless the consumer or such representative requests that such fraud alert be removed before the end of such period, and the agency has received appropriate proof of the identity of the requester for such purpose; and
(B)refer the information regarding the fraud alert under this paragraph to each of the other consumer reporting agencies described in section 603(p), in accordance with procedures developed under section 621(f).
The credit repositories, Equifax, Trans Union, and Experian are required by federal law to place a "fraud alert" on a consumer's credit file for no less than 90 days for free for as long as the consumer wishes to retain them. The fraud alert is placed by calling one of the credit bureaus at:
Equifax
888-766-0008
Experian
888-397-3742
TransUnion
800-680-7289
For most people, one call is enough to activate the alerts at all three credit bureaus. Exceptions would be people who have moved recently, have changed a piece of identity recently, (name or SSN) or alternate between a PO Box and other address.
The only catch is for the consumer to call every 90 days to renew the alerts. In addition to the alert statement being placed on the credit report, the alerts entitle a consumer to a free credit report. Reports are limited to two every 12 months. However, a carefully planned credit screening schedule could be arranged so that the consumer requests one report every two months. Add to this the annual credit report disclosure which gives a consumer one free report per 12 months from each bureau and a consumer can have up to nine (9) free credit reports per year! A schedule such as this, while not perfect is pretty effective to determine whether or not an identity theft attack is underway. Credit monitoring would be the best way to watch the credit reports but most effective when it is triple bureau monitoring.
Having said all that, new account related identity theft is only between 25%-30% of all identity theft, with utility and telecommunication based identity theft picking up a sizable amount of the difference. Medical, employment and criminal identity theft also add to the total. Most of these types of fraud are not prevented by the presence of fraud alerts on a credit report. Both of the above companies stake their business on managing the fraud alert process for consumers and therefore a consumer should not go to bed at night thinking that Lifelock or TrustedID will keep the ID Theft monster out of their nightmares.
As far as the opt out process advertised by TrustedID, a consumer can use the available internet resources here assembled by the Privacy Rights Clearinghouse.
Credit Freezes
TrustedID sells a product called "IDFreeze". The company claims for $7.95 a month, the consumer can let TrustedID intervene in freezing and thawing their credit report in the states where credit reports are available. However, recent changes in operating procedures at the big three bureau now makes credit freezes available to all US consumers even in the states where credit freeze laws have not been passed. The bottom line, the consumer is again paying for a manager not a magician. Freezes can be implemented by the consumer simply by going online to the bureaus websites and following the instructions to mail in a written request, id documents and a check, voila - a credit freeze until the consumer wishes to thaw it. APRPEH wrote about the new credit freeze option in November.
See a list of state specific identity and credit related laws here.
My name is Todd Davis
My social security number is 457-55-5462
I'm Todd Davis, CEO of LifeLock, and yes, that’s my real social security number*. Identity theft is one of the fastest growing crimes in America, victimizing over 10 million people a year and costing billions of dollars. So why publish my social security number? Because I’m absolutely confident LifeLock is protecting my good name and personal information, just like it will yours. And we guarantee our service up to $1 million dollars."
As for Lifelock, the article's writer left out a few notes of interest. He mentioned CEO Todd Davis had become a victim of identity theft. This is true. What he failed to mention is that Lifelock found out who the perpetrator was and seeking to capitalize on the publicity of how the crime took place, botched the police investigation which was subsequently dropped. Hurray for law and order. The writer failed to mention entirely that the co-founder of Lifelock, Robert Maynard was forced to step down due to ethical and legal problems related to his previous business in the credit world. APRPEH discussed this back in June of 2007.
As far as insurance goes, one could suppose it's not such a bad thing. The average consumer that resolves their own identity theft matter spends less than $500 out of pocket. This is the amount that could be claimed under the insurance policy. The consumer must weigh the cost of the premium for the insurance versus the likelihood of 1) needing the insurance and 2) spending more than the expected average in the event of an identity theft problem. Probably not a good idea.
The best bet for a consumer who wants id theft protection is to keep alerts on their credit file, subscribe to triple bureau monitoring and possibly subscribing to one of the services that offers real protection for a consumer in the event that an identity theft event should happen. Don't shop for an advisor or advocate but for someone who will actually work your id theft matter for you in the way an accountant does your taxes for you. For many consumers, no services are necessary. Contrary to what is normally printed, it is not that hard to re-establish your identity with a police report and early discovery. Shop carefully.
Companies should've been prohibited from trafficking in my personal information decades ago.
And the US government from top down is guilty of not pursuing identity theft charges against millions of illegal immigrants.
It is the GOVERNMENT's job to protect my identity. If the government is not going to do the basics, they should close shop.
Just read your old post about credit freeze/monitoring. Want to do something preventative but am getting mixed messages on the internet. Got any updates or more info about Freeze or Monitoring as the safest preventative measure? Thanks.