NEW YORK – The advertisements are intentionally frightening: If someone steals your identity, you could lose your home, your job, even your life.
The ads are meant to scare you into buying identity-theft protection. And while the problem is real, insurance isn’t always the answer.
In fact, most consumers could better protect their identities if they guard their Social Security numbers, read their bank and credit card statements, request their free credit reports and enroll in state security freeze programs.
“If it hits, it could be quite destructive to your life for a long time,” said Linda Foley, co-director of the Identity Theft Resource Center in San Diego. “Identity theft is not a picnic, but it is repairable.”
Even though Foley’s former employer used Foley’s personal information to apply for credit cards and purchase a cell phone, Foley considers identity theft insurance “a personal choice item.”
Her advice: Buy it only if you have the money and you want the peace of mind.
In 2004, about half of the victims surveyed by the Identity Theft Resource Center spent under 100 hours repairing the damage. Sixty-six percent said the information was used to apply for new credit cards, and 28 percent said it was used to buy a new cell phone.
Identity-theft protection varies in cost and coverage, but it either reimburses you for expenses from the theft or monitors your credit or accounts for changes.
Some insurance companies provide it free or for about $25 a year with your home insurance policy. But, in recent years, financial institutions have rolled out an array of services for about $12 a month.
American Express Co., for example, is pitching free as well as paid services. Its no-cost Identity Theft Assistance is available to all cardholders.
The program provides round-the-clock counselors, who help customers navigate the identity theft maze. The company also has the typical fee-based services that monitor a customer’s accounts.
“These are things that people can do for themselves,” said Kim Forde, a spokeswoman for American Express. “But not everyone has the time.”
It’s also good, she said, for anyone who doesn’t know what to look for to identify problems in their credit report.
Before enrolling in any plan, read the fine print. Make sure the deductible isn’t higher than the costs you’ll likely incur for mailings, phone calls and missed work.
Policies also should cover restoration assistance, legal costs and loss of income for time spent repairing the damage.
Most don’t, but an ideal policy also should include medical expenses because identity theft is extremely stressful and could exacerbate an illness.
Daniel Solove, a privacy expert at George Washington University Law School, finds it inappropriate that people have to pay credit bureaus for services they’re legally bound to provide.
“Why should you pay for them to do their job better?” he said.
Instead, do it yourself. Consumers nationwide are, as of Sept. 1, entitled to get a free annual credit report. Stagger your requests among the three big firms, and you’ll see what’s happening every four months.
One warning: Consumers should call or write for the reports rather than click because there are hazards posed by impostor Web domains.
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