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Thursday, May 17, 2007


My wife just received an offer from American Express for ID theft insurance in conjunction with her credit card. The cost is $71.40 yearly, and the protection coverage goes “up to” $15,000. This includes “up to” $5,000 for attorney fees, “up to” $2,000 for lost wages, and “up to” $2,500 reimbursement of fraudulent withdrawals. What they don’t explain is what constitutes the “up to.” Amex is there to help, after a $100 deductible for each occurrence, except in the case of an act of war (does that include 9/11 or Iraq?), or in the case of a criminal act by you or your authorized representative (does that involve family members who steal your identity which accounts for 50% of the cases?). Many people rush to judgment based on the trust of a famous company name or because the offer comes from their homeowner insurance company. If you Google “identity theft insurance,” you get 5.4 million hits. Some are articles, but many are offers for this new fad I like to compare with cancer insurance, which is simply a scare tactic for the uninformed. Chuck Jaffe of does an article, “Stupid Investment of the Week” regularly in which he covered ID theft insurance in December 2006. The title speaks for itself. Jaffee says the typical policy costs between $25 and $100, but the problem is the coverage. In the worst case scenario, identity theft insurance isn’t going to reverse a ruined credit record. It’s simply a crutch that would be rendered unnecessary if the average consumer would take the necessary steps to protect their personal data. It would be a slam dunk if you had control over your name and private information.

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