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Scared of ID theft? Pay us $10!

By Claes Bell · Bankrate.com
Thursday, February 3, 2011
Posted: 12 pm ET

The Wall Street Journal had an interesting article last week exploring the ID theft protection services banks offer to checking account customers:

Citibank, Fifth Third, Wells Fargo and BofA say their products help protect customers from identity theft by detecting problems earlier—and that being enrolled in its services means faster recovery of a stolen identity.

But consumer advocates and identity-theft experts say such services can't protect from data breaches, criminal fraud, medical identity theft or fraudulent Social Security number use—among the most common forms of identity theft.

"There's no such thing as immunity to identity theft," says David Lincicum, a staff attorney for the Federal Trade Commission's division of privacy and identity protection.

Consumers can take steps on their own for little or no cost to protect themselves from—or at least quickly detect—attempts to steal their identity. Federal law permits consumers to access credit reports for free once a year from the national credit bureaus, Equifax, Experian and TransUnion, and some states mandate more frequent access.

As the WSJ points out, most of what these services can do can be accomplished in a few minutes using annualcreditreport.com to pull a copy of your credit report every few months. That's why this stat from the WSJ article really blew me away:

For consumers who entrust their daily financial lives to their bank already, a pitch to protect their identity can be powerful. At Fifth Third, which has 2.5 million checking-account customers, nearly a third of its new customers enroll in the bank's Identity Alert service for up to $9.95 a month within the first 90 days of opening an account, says a bank spokesman.

I'm not saying ID theft isn't a big problem. From 2000 to 2009, the FTC received over 2 million complaints of ID theft from consumers. But even if all 2 million people who reported a crime were actually victimized by ID theft, that still leaves over 300 million Americans who weren't.

I think this gives us a clue to these services' popularity: Because, if you do the math with the numbers above, less than 1 percent of Americans are affected by ID theft, the vast majority of people who purchase ID theft protection presumably don't get their ID stolen. To them, the fee they paid for ID protection was money well spent, because they didn't have their ID stolen.

In that spirit, I'm starting a similar product called the Claes Bell Nuclear Attack Prevention Service. For just $9.95 a month, I'll monitor international news and diplomatic chatter released from Wikileaks to prevent you from being the victim of a nuclear attack. Of course, the service I'll be offering will be worthless, but as long as there's no nuclear attack, all my customers will think I am providing a great value -- imagine, only $10 a month to prevent nuclear annihilation! Of course, in the event of a nuclear war, I'll be happy to cancel service for unhappy customers, but I'll have already collected a bunch of money for essentially doing nothing. Slogan: "Don't lose sleep over nuclear risks, take NAPS instead!"

What do you think? Are ID theft prevention services a good deal? Are you paying for such a service right now?

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3 Comments
Jon
February 04, 2011 at 9:46 pm

Reminds me of an old joke. Billy went to Texas and purchased from a farmer a donkey, for the price of $100.

The farmer agreed to deliver the donkey the next day.

The next day the farmer told Billy "Sorry, but I have bad news, the donkey died".

Billy replied: "No problem, give back my money".

The farmer said: "I can't return your money, because I have spent it already".

Billy said: "OK, just leave me the donkey".

A month later the farmer ran into Billy and asked him: "What happened with the dead donkey?"

Billy replied: "I held the lottery for the donkey and sold 500 tickets at $2 each and I made a profit of $998".

The farmer asked "Nobody complained?"

Billy said: "Only the guy that won. So I gave him his $2 back".

Debra James
February 04, 2011 at 5:52 pm

I agree with much of what you said. That $10 security blanket is made out of the Emperor's clothes, and no one is willing to speak up to say there's really nothing there. I know my bank and credit card companies are very proactive in contacting me when there is suspicious activity on my account. They contact me via phone, email, and stop authorizing transactions until they hear from me. I don't pay anything extra for that service or level of security.

I am curious about the guarantee that is provided with these types of services. They probably just give you a refund if your ID is stolen, and pay for any costs that aren't written off by the banks and credit card companies. What I would prefer for my money though is that they provide a person that make all of the calls needs to get my life back in order; the banks, credit card companies, DMV, Social Security, job, hospital, schools I've attended, the military (if applicable), county registrar, IRS, library, utility companies, landlord, etc. The amount of time is immeasurable that a person has to spend contacting, explaining, holding, being transferred, re-explaining, holding again, re-explaining, dialing in after the call was dropped, faxing, mailing, and waiting for the correction or new stuff. If for $10 a month they would take care of all of that for me then it would still be a bargain to me even if it took more than 20 years before I had to actually use the service.

pulekha
February 04, 2011 at 5:50 pm

Identity theft has become a major, major problem! And living without protection is like living in a crime infested neighborhood and not having protection on your home. You would probably at least have a really good guard dog and a fence right? Well, not protecting your identity today is the equivalent of living in that neighborhood and refusing to even lock your door. It’s so sad that it’s come to this, but there are always tradeoffs in life. Because we want better medical coverage and a nicer car we pay more to protect and insure them.
Likewise, with something as amazing as the World Wide Web there come tradeoffs also. One tradeoff for us having access to almost everything is that others have access to almost everything about us, our information. And that includes our personal information like social security numbers, banking information and even your medical and criminal history.
Luckily there is a lot of information out to help us understand and protect ourselves from these heartless criminals.