CBS4 Tests Credit Protection Companies

DENVER (CBS4) ^ | Feb 26, 2008 | Jim Benemann

[APRPEH]

(CBS4) ― For the eighth straight year, the Federal Trade Commission reports that identity theft is the No. 1 consumer complaint it receives. According to the FTC, nearly 23,000 people become victims of identity theft every day.

Now consumers can sign up with several different companies that all promise to help protect their identity.

How well do they work? CBS4 found out, when it picked three popular companies and put them to the test.

The first company is LifeLock. The CEO of LifeLock actually publishes his social security number to promote his company's ability to protect a person's identity.

The second company was Loudsiren/Debix. It calls itself "... the next generation of consumer protection ...."

The third company, Trusted ID, says it provides "... the strongest proactive total identity protection ..."

For $95 to $120 per year, the companies will place and renew fraud alerts on personal credit bureau accounts. And each company promises consumers will get a phone call if anyone tries to apply for credit using their personal information.

CBS4 asked some of its own employees to help test the companies by signing up. Tom signed up for Loudsiren/Debix.

When he signed up he asked this direct question: "If someone has my social security number and they apply for a credit card, can you walk me through the process of what happens?"

The Loudsiren/Debix sales person answered: "We issue you a Debix safe phone number ... and whenever any kind of credit is being opened in your name, the creditor will contact you at that number."

CBS4 employee No. 2, Jillian, applied for Trusted ID. She asked essentially the same question:

"So if somebody has my social security number and applies for a credit card, what exactly will happen?"

Trusted ID answered, "The lender is required to contact you directly ..."

Kristine, CBS4 employee No. 3, signed up for LifeLock and asked the question this way:

"Let's say somebody wanted to apply for a credit card for me. What happens?"

The LifeLock answer: "They would actually have to talk to you before credit could be issued in your name."

Kristine followed up by asking "Is it LifeLock that calls me?"

"No," replied the LifeLock representative. "It would be the creditors."

CBS4 then moved on to the actual test. With their permission, CBS4's Jim Benemann took all of Tom, Jillian and Kristine's personal information including their social security numbers and dates of birth. Using that information, Benemann applied for the same major credit card in each of their names.

The only little thing he changed was the address. Benemann asked for those credit cards to be mailed to his home address. Essentially, he stole Kristine's, Tom's and Jillian's identities.

The three testers weren't worried. They all figured they would get that phone call telling them that someone was applying for credit in their name and they would put a stop to it immediately.

Tom waited, Jillian waited and Kristine waited close to their phones. They waited 24 hours, then 48 hours and then a week. Not one of them got a phone call from any creditor even though they had paid companies for credit protection.

While waiting, CBS4 asked Greg Sadar, Agent-In-Charge of the ID Theft/Fraud Unit at the Colorado Bureau of Investigation whether he thought it was worth paying for credit protection.

"It's completely up to you," Sadar said.

But then he went on to point out, "The majority of the key services that these companies provide are things you can do yourself for free, but it does require some time and effort. So if you want to pay these companies for the convenience of doing it for you, it might be worth your while. "

Finally, after a week, Benemann received letters from the creditor -- the credit card company -- asking him to verify some information before they mailed any credit cards for Jillian and Tom. It wasn't information he had (like a copy of their social security cards), so clearly the credit fraud alerts worked. Benemann couldn't get any further.

But without any phone calls, Tom and Jillian had no way of knowing Benemann was trying to steal their identities.

And remember Kristine who signed up with LifeLock?

A little more than a week after Benemann applied for a credit card in her name, that card arrived, mailed to him, at his home address.

And that had Kristine all the more interested in finding out about LifeLock's $1 million guarantee.

CBS4 asked all three companies to respond to the test.

Here is what LifeLock had to say:

The credit card companies have a contract with the credit bureaus that say they must honor fraud alerts. The fact that they chose not to is proof that the fraud alerts are not bulletproof. The good news is that this is where the LifeLock $1 million guarantee is most effective. LifeLock is not a credit monitoring service but a protection service in the event a fraud alert proves to be ineffective.

Here is what Loudsiren/Debix had to say:

Placing a call to the consumer's Debix Safe Number provides a proven, multi-factor authentication of the consumer for the creditor. Unfortunately, not all creditors take advantage of this opportunity. We believe that as creditors experience the speed and security of the Debix network, we expect fewer of them to mail letters.

Here is what Trusted ID had to say:

The most important fact is that the TrustedID customer's identity was clearly protected from an attempted theft. The experience by this customer was an exception, not the rule. Lenders make every effort to contact individuals to confirm their identity, and a majority of the time a customer is contacted by phone to verify their information.

Additional Resources:

To obtain a copy of your free credit report from one of the three major credit reporting bureaus: http://www.annualcreditreport.com

For information about freezing your credit reports if you live in the state of Colorado: http://www.denverda.org/Prosecution_Units/ECU/consumer_alerts.htm

For information about placing a credit fraud alert on your credit reports:

http://www.equifax.com/cs/Satellite/EFX_Content_C1/1165203975795/5-1/5-1_Layout.htm

http://www.transunion.com/corporate/personal/fraudIdentityTheft.page

http://www.experian.com/customer_service/mail.html

[APRPEH]

Credit monitoring is a useful tool, but clearly does not guarantee any protection against identity theft. The Fair Credit Reporting Act, simply says that a creditor must have "reasonable policies and procedures" to verify the identity of a consumer when a fraud alert is found on the credit file. FTC

A service that provided hands-on restoration of your identity is by far the best buy.

[Slapshot68]

Clark Howard mentioned that the best way to protect yourself is to put a freeze on your credit.

[ChiefJayStrongbow]

What steps do you take to put a freeze on your credit?

[Niteranger68]

LifeLock seems like a good company. They advertise via Rush, Outdoor Channel, American Rifleman. All reasonably conservative outlets. Todd also goes to local colleges and speaks to students about identity theft.

[Slapshot68]

I think you have to go to each credit bureau individually. I’m sure you can find the steps necessary on www.clarkhoward.com

[APRPEH]

the credit freeze is ONLY affective where a credit report is needed to approve an account. Identity theft victims though are more frequently hit by utility fraud, telecommunications fraud, medical fraud, criminal fraud and other types of synthetic id theft where a credit report probably will not be accessed. without the credit report being accessed, the credit freeze is useless.

[CurlyDave]

LifeLock seems like a good company. They advertise via Rush, Outdoor Channel, American Rifleman. All reasonably conservative outlets.

That does not mean their service is effective. All it really means is that conservatives tend to trust conservative media and they are playing on that trust.

[Slapshot68]

In order to establish accounts with telecommunications and utility companies, they will perform credit checks.

As for medical fraud, you are correct...freezing credit will do nothing.

[ops33]

So what is the best steps a person can do to protect themselves from identify theft?

[APRPEH]

that is not always the case with telecommunications and almost never the case with utilities. most of these accounts only involve credit reports if they end in collections. included in that category is satellite television/radio, cable, etc.

[APRPEH]

the most important step to preventing identity theft is just being a smart consumer. Look at your credit reports regularly, (even though as shown above, the credit report/monitoring/freezing is only somewhat useful), watch the balances on your accounts carefully, minimize the use of your personal identifying information to the extent possible, get a locking mailbox, watch your mail and track your billing cycles, consider a sweep type product which looks at various databases and scans the internet for your identifiers (see card cops for an example)(also use your FCRA right to disclosure by ordering Choicepoint reports for free) and as stated above, if you do not have the time and money to spend restoring your good name in the event of a case of identity theft, consider buying coverage from a company that provides hands on identity restoration.

[SES1066]

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