Consumer Reports Weighs in on ID Theft Products

According to a recent on-line article posted on The Consumer Reports website, the typically free protections still provide the most effective avenues to identity theft protection.

Banks and credit-card companies are the largest providers of identity protection services, a market with $3.5 billion in revenues for 2011, according to a recent report by Javelin Strategy and Research, a California financial services industry consulting firm. Other major providers include the credit reporting bureaus—Equifax, Experian, and TransUnion—and independent vendors such as Debix, LifeLock, and Trusted ID.

Consumer Reports generally doesn’t put much stock in identity theft protection services, because they tend to focus on new-account fraud, when 86 percent of ID fraud involves something else—existing accounts. And these services can cost you $120 to $300 a year for many protective measures that you can take yourself for free.

But Javelin found evidence that ID protection and credit-monitoring services are effective at reducing the amount of fraud losses. Among 439 victims of ID fraud surveyed by Javelin in an annual survey, the average amount stolen was $4,607. But victims who learned of the crime through their subscriptions to ID protection or credit monitoring services saw only $3,363 filched.

Still, the Javelin survey also found that other—typically free—protections were even more effective:

Bank safeguards. Victims who discovered the crime when their bank or credit card provider notified them of suspicious activity saw only $2,861 stolen.

Electronic self-monitoring. Victims who found the theft through their own self-monitoring of accounts via the Internet and ATMs, saw losses of $2,791.

Checking paper account statements. And people who uncovered the fraud by simply reviewing their old-fashioned paper account statements saw only $2,195 taken.

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by HV Shred