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Is identity theft protection worth the money?

Mind-boggling identity theft statistics have nervous consumers looking for protection, and financial institutions scrambling for ways to provide it. But not all protection plans are created equal, and some consumer watchdogs say you should save your money.

The Federal Trade Commission says there were nearly 10 million identity theft victims in the United States in 2002. The losses cost businesses and financial institutions $48 billion and individual victims paid $5 billion in out-of-pocket expenses to correct the damage and prove they were victims, not culprits.

Most of the identity theft plans being offered by a growing number of financial institutions will reimburse customers for out-of-pocket expenses up to a certain dollar amount and help them through the process of contacting creditors, writing affidavits and filing reports.

Some companies, such as Washington Mutual, offer customers a basic plan for free and a souped-up version for a monthly fee. Spokeswoman Mary Kelley says company research showed that most customers were "extremely concerned" about identity theft.

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"We asked if they'd be interested in free ID theft services and a large majority said yes. But there was a smaller but significant number that said they'd be willing to pay for additional benefits."

Washington Mutual's free plan is offered to all customers who have a deposit account, but they must sign up. Included in the package is toll-free access to the bank's Identity Theft Resource Center if the customer becomes a victim of identity theft, free access to credit education specialists and $5,000 in insurance (no deductible) to offset recovery costs, including legal fees and lost wages.

The bank's paid plan costs $10 per month. It increases the insurance to $15,000 (no deductible), gives customers a copy of their credit report with information compiled from the three main credit-monitoring bureaus, monitors the customer's credit files at the three bureaus five days a week and notifies the customer daily of any changes.

Pittsburgh-based PNC Bank also offers two plans. One is free to customers who have multiple accounts with the bank; the second, called True Credit, is available to customers for $3.65 per month. Both plans provide insurance to cover expenses associated with identity theft, but there are deductibles. True Credit offers credit monitoring, but with only one of the bureaus.

"It's been very well received," says Laila Batz-Krause, executive vice president. "It covers the individual wherever the identity theft occurs. If I have an identity theft involving the motor vehicle department, this will cover my costs. It isn't just about our account -- we have a lot of safeguards -- it protects customers anywhere, which is where we think (identity theft) is more likely to happen."

Officials at National City, headquartered in Cleveland, are reviewing identity theft insurance plans and hope to offer a program to customers by the end of the year.

"Identity theft insurance isn't the only thing we're looking for," says Darla Mathy, a senior vice president.

"We want preventative-type measures. Insurance is a component but it's after the fact. We want to assist our customers in preventing identity theft. There are products out there that for relatively minimal fees allow customers to monitor their credit reports, and the companies can scan the reports. You're alerted on a daily basis if there's been any activity."

Some consumer activists view the insurance with a wary eye.

(continued on next page)
-- Posted: Aug. 4, 2004
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