Credit Protection: Rip-off Or Reality?
Monday, March 21, 2005SUSIE GHARIB:There are growing concerns these days about the growing threat of identity theft. It comes as security breeches at ChoicePoint, Lexis-Nexis and Bank of America have left hundreds of thousands of consumers` personal information in the wrong hands. Names, addresses, Social Security numbers, credit card accounts and credit scores are all at stake. As Stephanie Woods reports, you can buy protection from the very same companies selling it to others.
STEPHANIE WOODS, NBR CORRESPONDENT: Companies in the credit business are marketing protection. For a fee, they will alert consumers to activity on their credit report. Privacy advocates see irony in these credit monitoring services.
EVAN HENDRICKS, AUTHOR, "CREDIT SCORES & CREDIT REPORTS": They are getting you to pay them more to make sure that they don`t disclose your information to an identity thief. And that`s good work if you can get it.
WOODS: Equifax, Experian, Cendant and others sell credit monitoring packages for between $50 and $150 a year. These include daily or weekly e- mail alerts to consumers who have had activity in their credit accounts. The packages also give subscribers greater access to their credit reports and identity theft insurance. The companies say credit monitoring isn`t a protection racket, since most identity theft isn`t from internal security breeches.
VINCENT CORICA, EQUIFAX: Almost 90 percent of identity theft goes on from our mail boxes, or our trash, or the back offices of places where we do business. A lot of the focus lately has been on the high-tech instances of identity theft, but the fact is nearly 90 percent of it occurs in a very low-tech environment.
WOODS: The Federal Trade Commission warns consumers not to have a false sense of security from credit monitoring services.
BETSY BRODER, BUREAU OF CONSUMER PROTECTION: It`s not protection. That is, it`s not going to prevent identity theft. It`s not -- having a monitoring system on your credit report or your existing accounts will not prevent someone necessarily from misusing them.
WOODS: But credit monitoring can provide an early warning, which can reduce the headache and cost of identity theft. Some of what companies are selling you can get for free. A new law requires that by September 1st, consumers have free access to one credit report a year, although that doesn`t give the same immediacy as the monitoring services. And the FTC warns that thieves have made a scam of offering credit monitoring to dupe people into divulging personal information.
BRODER: If you get an unsolicited e-mail or a telephone call offering you a credit monitoring system product or some kind of identity theft protection, I would recommend that you don`t respond to it, don`t give them any information about yourself.
WOODS: Privacy experts advise reading the fine print of credit monitoring agreements. Unless consumers opt out, they may receive a flood of unsolicited offerings for other products. And beware of arbitration clauses, which means consumers give up their right to go to court if something goes wrong. Stephanie Woods, Nightly Business Report, Washington.
