Money for Nothing

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The company did help its CEO — by hiring another company to aid in solving Davis' problem.

But the same thing wouldn't happen to you, because LifeLock's terms of agreement state that you can't be a customer if you publish your Social Security number.

If anyone in this state knows what to do about identity theft, it's Bob Hartle.

Hartle lives with his wife, JoAnn, in the residence where he grew up in south Phoenix. The place is filled with the hides and heads of animals he and JoAnn hunted when they lived in Alaska. In 1994, the Hartles were living in Iowa when they found out that a thief had destroyed Bob Hartle's good name ("Bob Hartle's Identity Crisis," April 24, 1997).

The incident spurred Hartle to become an expert on the subject, and he became personally responsible for the state's first anti-identity-theft law, signed by Governor Fife Symington in 1996. Before then, no specific felony statute made it a crime to take someone's data and use it wrongfully.

Hartle's a retired Honeywell employee who now works as a security officer for a tech firm. He and JoAnn educate the public and help identity-theft victims in their spare time. Their Web site address is www.idfraud.org.

At seminars, Hartle says not to spend money on anti-identity-theft services. He says they are a waste of time. That's also the message of Consumer Reports and other watchdogs that have analyzed the services.

The fact is, you can do most everything the services do for no cost.

If you become a victim — a possibility even if you buy the services — odds are the crime will cost you no money and take relatively little time to resolve.

To understand the criticism by Hartle and others, you first have to know what the identity-theft companies are selling: credit-report monitoring, fraud alerts, insurance, and help for victims.

Most of the companies offer several of the services at once.

All three major credit bureaus — Equifax, Experian and TransUnion — offer credit-report monitoring in a way that could almost be called a protection racket.

The credit bureaus make money by collecting financial data on people and then selling it. They are the keepers of your credit report and credit score. When you apply for a loan, they're the ones who tell credit card companies, mortgage firms, and car dealerships who you are and whether you're likely to make timely payments.

The credit bureaus charge the lenders for that information. Then they charge you as much as $14.95 a month to monitor your credit report, simply shooting you an e-mail if someone opens a credit account in your name.

In other words, you pay the bureaus to let you know when they help someone commit fraud in your name.

You can choose not to buy the bureaus' services, but you can't choose to ignore the bureaus if their info on you is misused — not if you ever want to buy something on credit again.

Even if you pony up the monthly fee, there's no protection from identity theft.

And if you get victimized, you still have work to do. The bureaus can't interpret your credit report. Only you know which of your credit accounts are legitimate and which aren't. If you think a thief has opened a line of credit in your name, you still have to contact the credit bureau — just as you would do if you learned about the crime because a collection agency called you.

Then there are companies like TrustedID, Debix and LifeLock, which take advantage of a three-year-old federal law that allows people to put fraud alerts on their credit reports. If a fraud alert is on your report, lenders are supposed to call you before issuing credit in your name.

Most of the companies offer some kind of insurance for customers, but the majority of identity theft victims would never need it. Financial losses are typically covered by the bank, merchant, or credit card company that gave credit to the wrong person.

So-called resolution services, which offer to help victims cut through the red tape after a theft occurs, seem like a good idea in complicated cases. But those services are outrageously expensive. One company, Kroll Fraud Solutions, charges between $1,000 and $2,000 to deal with a fairly simple new-account fraud case.

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Ray Stern has worked as a newspaper reporter in Arizona for more than two decades. He's won numerous awards for his reporting, including the Arizona Press Club's Don Bolles Award for Investigative Journalism.