Identity theft insurance
but do you really need it?
15, 2000 -- Peace of mind -- for a price.
A slew of credit monitoring and
protection products already promise to look over your shoulder and
make sure no one has swiped your credit card number or applied for
credit in your name.
And now Travelers
Property Casualty Corp. has launched identity
fraud protection should the worst happen and a thief steals
your identity. In identity theft, an impostor buys cars, charges
up credit cards, rents apartments in your name and then vanishes.
papers, ruined credit
Somehow, somewhere, a thief snatched your Social Security number,
credit card numbers, date of birth, and other personal information
and has been posing as you ever since. Your credit is ruined.
Most identity theft victims never find out how
it happened. They learn of the crime when an angry creditor calls
or a credit card is declined. Experts estimate that at least 400,000
Americans are victims of identity theft each year.
Consumer activists, credit bureaus and federal
agencies are meeting in Washington D.C., this week to discuss ways
of clamping down on identity theft. The U.S. Treasury is hosting
the summit at the request of President Clinton.
"The crime is definitely on the increase
and it shows no sign of stopping," says Linda Sherry, editorial
director at Consumer
Action, a San Francisco-based consumer advocacy organization.
"It's a frightening thing."
up the pieces
Identity theft victims are not responsible for the debts
incurred by their impostors, but they are stuck cleaning up the
credit mess. Restoring your credit and your name is a slow, painstaking
process. It means countless phone calls, letters and time away from
The aim of Travelers' identity fraud coverage
is to help victims cope with the cleanup.
"With identity theft, once you find out
about this, it's just the beginning," says Bob Nighan, vice
president at Travelers. "There are a lot of out-of-pocket expenses
that people incur in the cleanup process."
Identity Fraud Expense coverage can be added
to any Travelers homeowners or rental policy for an additional $25
a year. It provides $15,000 worth of coverage and has a $100 deductible.
It is currently available in 20 states.
The coverage includes:
- Lost wages as a result of time taken off
from work to deal with fraud, with coverage of as much as $500
per week for four weeks.
- Notary and certified mailing costs for completing
and delivering fraud affidavits.
- Fees for reapplying for loans that were declined
due to erroneous credit information.
- Phone charges for calling merchants, financial
institutions and law enforcement agents to discuss the fraud.
- Some attorney fees.
Beth Givens, director of the Privacy
Rights Clearinghouse in San Diego, says the strongest component
of Travelers' insurance coverage is its coverage for lost wages.
"If you're self-employed or paid an hourly
wage, I think the coverage is quite valuable because a certain amount
of your salary is recouped," Givens says.
She says there is no telling just how long it
will take an identity theft victim to restore his or her good name.
"I've heard of people who are sorting things
out for months or even years," she says. "You might spend
anywhere from six months to two years recovering from identity theft."
Lengthy forms, letters and long-distance phone
calls eat up vacation days. Worse yet, some identity theft victims
are forced to take unpaid time away from work.
"The most common complaint of identity
theft victims is they have to take time off work," Givens says.
"I can't tell you how many people have called and said 'I had
to take a week off work.' "
Mari Frank, an identity theft victim and attorney
who has written The
Identity Theft Survival Kit, also cited the compensation
for lost wages as the strongest aspect of Travelers' protection.
"This is helpful -- for time off work --
but probably not enough," Frank says.
Frank estimated that she spent 500 hours cleaning
up her credit nightmare. Her out-of-pocket expenses were about $10,000.
The other aspects of Travelers' identity theft protection are
a mixed bag. Coverage for certified mailing and phone costs is appropriate
and helpful. Coverage for attorney fees is less so. Few identity
theft victims need the services of an attorney.
"Most cases can be handled by yourself,"
And, as Ed Mierzwinski, consumer program director
of the U.S. Public Interest
Research Group, points out, nothing in the Travelers coverage
can lessen the emotional toll or speed up the recovery process for
"The big cost is the emotional trauma,"
But if it helps folks to know that some of their
wages will be covered if an identity thief strikes, consumer experts
say go ahead and sign on for the coverage.
"If it's worth some peace of mind for some
people, for $25 a year, I'm not going to tell you not to do it,"
Indeed, $25 a year seems quite a bargain when compared with
the costs of other credit protection and monitoring products on
the market. These products, which promise to keep a close eye on
your credit report and alert you of any suspicious activity, can
cost anywhere from $50 to $100 a year. Chances are, you've received
an offer for one of these products wrapped around a credit card
bill or in an evening phone call from a telemarketer.
Holders of Citibank credit cards may enroll
in CreditNotifySM, a credit bureau monitoring service that sends
out a monthly report detailing credit activity. The cost is $8.99
per month, which adds up to $107.88 a year.
from Cendant delivers
quarterly reports from a credit bureau, driving records, medical
records and Social Security data for a price of $59.95 per year.
Sentinel Credit Monitoring service from Equifax
provides quarterly updates of your credit profile and lets you view
your profile online. The price? $49.95.
"There's not anything being done here that
a consumer can't do themselves," says Beth Grossman, identity
theft program manager at the Federal Trade Commission.
"We encourage consumers to check their
credit reports themselves."
Our basics section on credit
reports can help you do that.
that credit report
These commercial products, while pricey, may appeal to identity
theft victims who continue to watch their credit closely. Consumer
experts urge victims to check their credit report every three months.
"In those situations, being a member of
a service or plan that sends you reports could be a convenience,"
Givens says. "The problem with that is it's going to cost you
$60 to $70 a year.
"If you're a busy person and you don't
want to put the burden on yourself to call every three months and
you have the money, these services could be a convenience and a
Of course, no product can replace the importance
of playing it safe when it comes to giving out personal information.
- Avoid carrying your Social Security number
and driver's license together in your wallet.
- Tear up pre-approved credit card offers,
bills and documents with other personal information before throwing
- Drop paid bills directly into U.S. Postal
Service mailboxes. Avoid putting outgoing mail in your home mailbox.
Folks who are nervous about identity theft may
want to consider putting a fraud alert on their credit files. With
a fraud alert, a credit bureau must contact you before any new credit
can be approved. An identity theft victim puts fraud alerts on credit
files to prevent an impostor from applying for and receiving even
more credit in the victim's name.
price of protection: convenience
The downside of a fraud alert is you give up the convenience
of "instant credit." So you can forget about signing up
for a new credit card and going shopping with it three minutes later.
The upside is the knowledge that no new credit can be granted in
your name without your knowledge and approval.
For more information about the putting a fraud
alert on your credit file, contact the credit
"If you've got your house, got your car,
got your two credit cards and you know there's no other credit that
you'll be getting in the near future and you're very, very, very
concerned about identity theft, take advantage of the fraud alert,"
Regardless of what precautions you take or don't
take, everyone is at risk when it comes to identity theft.
"Ultimately, you cannot prevent identity
theft from happening to you," Givens says. "You can only
reduce your chances."
-- Posted: March 15, 2000