MORE ON PAYING TO PROTECT YOUR IDENTITY

In the last post, we talked about ID fraud protection services and whether or not you should pay for one. Almost everyone—that is, except for the services themselves—agrees it is a waste of money since you can do what most of them do, and it’s free. Lifelock was discussed at length because it has the most visibility due to all the press over lawsuits, but there are others. They have literally come out of the woodwork much as other “would be helping hands” have when disaster hits.

In the MSN Money article quoted yesterday, Paul Stevens, director of public policy at Privacy Rights Clearinghouse, considers these companies a “concierge” service, so if you’d be willing to pay someone to shop for you, this kind of ID theft protection is for you. Even Todd Davis, CEO of Lifelock, doesn’t disagree with that analogy. His company will also assist you when applying for credit, check for the sale of your private information on the black market, stop junk mail, provide a credit report, and, of course, the $1 million guarantee. All of this, except for the guarantee, can be done by the individual and at no cost. Todd soaks you $10.00 every month.

According to two of the class-action lawsuits, “…Lifelock’s $1 million guarantee is not a guarantee at all but just a ‘promise’ that the company is not actually obligated to fulfill.” Further, the terms of the guarantee are structured in such a way “…so there's really no way to get up into the million dollars." Basic coverage is for a “defect in product,” like accidentally forgetting a fraud alert or spelling your name wrong. Davis answers this by saying that this kind of wording is necessary to keep Lifelock from becoming an insurance company, controlled by state insurance commissioners.

One of the class-action attorneys makes a bold statement: “…that although the company is fulfilling its promise now, if there is ever a serious data breach and many of its customers are defrauded, the company may not fulfill its promise.” Examples given were insurance companies that failed to honor their flood clause in the wake of the Katrina disaster. Both attorneys and privacy advocates caution consumers that the $ 1 Million guarantee by Lifelock, regardless of its wording, is no guarantee to “ward off fraud or identity theft.” If you don’t take anything else away from this post, please believe this statement, and not just re. Lifelock, but for all ID theft protection services.

Many of you won’t listen to reason simply because you want to believe that you are covered, insuring that it wouldn’t happen to you. In a Morning Call post by Gregory Karp, quoting Consumer Federation of America who indicated most Americans won’t be in those 9 million annual identity theft victims, still says no ID theft service is foolproof. I can vouch for the fact that the crooks will always find a way around the latest technology. But CFA is impressed with a couple of companies: ID Watchdog and ID Theft Assist. So, if you must.