Fraud Alerts Don't Hurt Credit Score, NY Times Reports; LifeLock's Critics Made Claim in Lawsuit

Does setting a fraud alert on your credit file every three months hurt your credit score?

Critics of a Tempe-based identity-theft "protection" company, LifeLock, claimed in lawsuits that it does — a fact that we noted in this month's feature story about the truth-challenged firm.

But a blog post in the New York Times on May 25, 2010, that mentions the New Times article quotes one of the main lawyers who sued LifeLock, and it sounds like he's changing his story:

David S. Paris, a lawyer who originally filed the suit and similar suits in five other states, said he had included the allegation after talking with people in the credit industry and consumers who "for some reason or another, once a fraud alert was placed, had a difficult time obtaining new credit."

Now, after talking with more people, Mr. Paris said, "The more accurate and prevalent theory is that an alert can delay or prohibit you from getting new credit, but it's not going to affect your score per se."

Fraud alerts, for the non-security-savvy, are like tags placed on your files at the credit bureaus. If a fraud alert is on your file and someone tries to open a new credit account in your name, the company offering the credit should notice the alert and take action to prevent an identity crime.

Fraud alerts can be placed on your account for free by calling one of the credit bureaus' hotlines. We give details in our 2007 story, "Money for Nothing."

Our latest feature article about LifeLock focused more on the company's empty promise of "real protection" against identity theft than the issue of fraud alerts, which LifeLock used to set for its customers until its practice was ruled illegal.

The big news of our article was that Todd Davis, LifeLock's CEO, had been a victim of identity theft far more times than reported previously. Davis refused to talk to New Times for our article.

But the Times post by Jennifer Saranow Schultz contains new, e-mailed quotes from Davis, who admits — now that he's been caught — that "there have been 13 successful uses of my information over the past five years."

It's difficult to believe Davis, though, when he adds that, "we are not aware of any new incidents in more than a year."

All we know for sure is that Davis hasn't reported any more incidents to the Chandler police department.


*Call one of the three credit bureaus: Experian (888) 397-3742, TransUnion (800) 916-8800, or Equifax (800) 525-6285 and follow the instructions. Click on the links to access each credit bureau's page for initial, one-year fraud alerts, which is what you want.

A word of caution, though — Experian's fraud alert hotline gives a long-winded ad about its own "protection" service called protectmyid.com. We advise against signing up for this or any other paid service, like LifeLock, that purports to protect against identity theft. Experts say they simply aren't worth the money

* Set the alert online. As with the phone lines, don't make the mistake of signing up for anything that costs money. Setting the fraud alert is free and only takes minutes. If you sign up for a "free" 30-day trial of one of the credit bureaus' services, they'll start charging your credit card when the trial is over — you don't want that.

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