By David Bruerd, CITRMS
Pandora’s box has opened and will never close in our lifetime. Identity Theft is rapidly evolving and is quickly becoming a socio economic inevitability. In the last 2 years we have gone from worrying about Joe ‘Dumpster Diver’ to feeling we have no control due to ‘Corporate Data Theft.’
With all the media attention surrounding identity theft lately I have also witnessed a lot of the identity theft protection service providers coming under fire from the media as well. Making statements like… “is it all hype?” or “are these products really worth the money?” and “Should you really have to pay for identity theft protection?”
Pandora’s box has opened and will never close in our lifetime. Identity Theft is rapidly evolving and is quickly becoming a socio economic inevitability. In the last 2 years we have gone from worrying about Joe ‘Dumpster Diver’ to feeling we have no control due to ‘Corporate Data Theft.’
With all the media attention surrounding identity theft lately I have also witnessed a lot of the identity theft protection service providers coming under fire from the media as well. Making statements like… “is it all hype?” or “are these products really worth the money?” and “Should you really have to pay for identity theft protection?”
It would seem that the media makes a valid point.
But then again I remember when TV was FREE and in the not so distant future our kids will be questioning if radio was ever free. Ten years ago I would have told you you were crazy if you told me I would someday pay $2 for a bottle of water.
Most consumers know how to shop for auto, life, health and home owners insurances because they are second and third generation of most of those outsourced risk products. But identiy theft is a fairly new discipline, and in my line of work I hear many consumers say…. “I think I have something through my… (home owners policy, bank etc.)”
You know when someone says “I think I have something through my (home owners policy, credit card, bank etc.)…” it means they have NO clue what they just enrolled in what the fine print might take away. It just seemed like a good idea at the time.
Identity Theft Products and Services are not created equal.
Most of the hundreds of services I have personally evaluated are NOT comprehensive in nature by themselves… and offer little in restoring the WHOLE YOU.
The identity theft protection service industry is fairly simple and for the most part is comprised of 4 basic components.
Reimbursement Policies (also called ID Theft INSURANCE because hey are offered by Property &Casualty Carriers)
They are very inexpensive - Typically $25-$50 per year as an add-on to your home owners policy. In fact I saw a $20K policy the other day that was bundled in for FREE as a ‘value added bonus’ when you purchased an inexpensive computer software security program… which makes you wonder just how helpful it would be in the aftermath of identity theft… the actuarial numbers just don’t add up.
The downside may be Deductibles - like most P&C policies. In this case they could be $300-$500
As the name implies it is a reimbursement policy. You do the work of restoration yourself, ONLY to be ‘reimbursed’ for specifically defined out of pocket expenses as defined in the fine print of the master policy that you didn’t get around to reading before you enrolled. And trust me the insurance agent that sold it to you doesn’t do the work of recovery for you. Identity theft insurance does not cover direct monetary losses.
REIMBURSEMENT means that you will be out of pocket first to be reimbursed later after your claim has gone through the CLAIMS process.
Some of the REIMBURSED Expenses may include:
Lost WAGES – but check to see if lost wages is defined as… AFTER you have exhausted all of your ‘PAID TIME OFF” before you have technically lost any wages.
Legal Fees up to… If the policy covers legal fees, verify what limits apply and if legal work needs to be pre-approved by the insurer. (who determines reasonable and customary)
In these types of policies there are NOT any Credit Monitoring which serves as early detection to catch potential fraudulent dollar losses during the ‘Inquiry Phase vs. the MAXED out credit card phase… and the law holds the consumer partially responsible after 48 hours.
Credit Monitoring (Popular with Financial Institutions)
This is the monitoring of your SSN through one of 3 major repositories to look for credit activity before they turn to opened accounts and losses.
I am a fan of credit monitoring because it is the ONLY system in place to proactively and methodically monitor against this often unavoidable crime. Identity theft is like a poison gas -- nearly undetectable until after the debilitating affects have begun to take place. But Credit Monitoring only does one thing…. it can serve as an early warning system. But as a stand alone service it is like a band-aid on a broken leg. Much like a smoke detector it ONLY warns you that your nightmare may just beginning… it does NOT put out the fire.
Resolution Services are becoming popular as a form of help guidance or assistance in the aftermath of identity theft because they are relatively easy to deliver. They are typically outsourced call centers with Customer Service Reps answering the telephones and letting the victims know what they will need to do to make themselves whole again. I find this to be much like going out to the parking lot and finding your transmission lying on the ground under your car and and dialing a toll-free number on your cell phone to have someone send you a do-it-yourself manual or explain how you will need to crawl under your car with a bag of tools and put that sucker back together to get back on the road of life. I don’t know about you, but I am not much of a do-it-yourselfer.
The most important component in recovering from identity theft is Restoration Services:
Ask any victim of true identity theft about the process and they will tell you the act of becoming a victim is not the horrific part. It is the NEXT 2 years of making themselves whole again. In my weekly workshops I ask “who in attendance has been a victim of ID Theft.” Then the $64,000 question for those that did not raise their hand. How do you know you are NOT a victim right now? Unlike tradtional crimes it would ONLY take the blink of an eye to figure out we were being mugged in the parking lot but according to the FTC, the average amount of time that lapses from the date id theft occurs to the date that it is noticed by the victim is 14 months.
Since identities are stolen by professionals… it ONLY makes since to have it restored by professionals? Restoration is the single most important component of identity theft protection yet it is the hardest to deliver by service providers because it means having an infrastructure of licensed investigators and attorneys on staff. Many services will disguise this by using fancy terms like ‘Recovery Advocate’ to make you believe they will actually do the 'heavy lifting.' Usually a little further into the sentence\paragraph they will use nebulous terms like help, guidance or assistance. Which may mean they only provide a ‘HOTLINE’ for you to call when you are a victim and you are greeted by someone in an outsourced 3rd world call center that offers you ‘Do-It-Yourself’ information you could have downloaded on the net for FREE.
The identity theft protection service industry is fairly simple and for the most part is comprised of 4 basic components.
Reimbursement Policies (also called ID Theft INSURANCE because hey are offered by Property &Casualty Carriers)
They are very inexpensive - Typically $25-$50 per year as an add-on to your home owners policy. In fact I saw a $20K policy the other day that was bundled in for FREE as a ‘value added bonus’ when you purchased an inexpensive computer software security program… which makes you wonder just how helpful it would be in the aftermath of identity theft… the actuarial numbers just don’t add up.
The downside may be Deductibles - like most P&C policies. In this case they could be $300-$500
As the name implies it is a reimbursement policy. You do the work of restoration yourself, ONLY to be ‘reimbursed’ for specifically defined out of pocket expenses as defined in the fine print of the master policy that you didn’t get around to reading before you enrolled. And trust me the insurance agent that sold it to you doesn’t do the work of recovery for you. Identity theft insurance does not cover direct monetary losses.
REIMBURSEMENT means that you will be out of pocket first to be reimbursed later after your claim has gone through the CLAIMS process.
Some of the REIMBURSED Expenses may include:
Lost WAGES – but check to see if lost wages is defined as… AFTER you have exhausted all of your ‘PAID TIME OFF” before you have technically lost any wages.
Legal Fees up to… If the policy covers legal fees, verify what limits apply and if legal work needs to be pre-approved by the insurer. (who determines reasonable and customary)
In these types of policies there are NOT any Credit Monitoring which serves as early detection to catch potential fraudulent dollar losses during the ‘Inquiry Phase vs. the MAXED out credit card phase… and the law holds the consumer partially responsible after 48 hours.
Credit Monitoring (Popular with Financial Institutions)
This is the monitoring of your SSN through one of 3 major repositories to look for credit activity before they turn to opened accounts and losses.
I am a fan of credit monitoring because it is the ONLY system in place to proactively and methodically monitor against this often unavoidable crime. Identity theft is like a poison gas -- nearly undetectable until after the debilitating affects have begun to take place. But Credit Monitoring only does one thing…. it can serve as an early warning system. But as a stand alone service it is like a band-aid on a broken leg. Much like a smoke detector it ONLY warns you that your nightmare may just beginning… it does NOT put out the fire.
Resolution Services are becoming popular as a form of help guidance or assistance in the aftermath of identity theft because they are relatively easy to deliver. They are typically outsourced call centers with Customer Service Reps answering the telephones and letting the victims know what they will need to do to make themselves whole again. I find this to be much like going out to the parking lot and finding your transmission lying on the ground under your car and and dialing a toll-free number on your cell phone to have someone send you a do-it-yourself manual or explain how you will need to crawl under your car with a bag of tools and put that sucker back together to get back on the road of life. I don’t know about you, but I am not much of a do-it-yourselfer.
The most important component in recovering from identity theft is Restoration Services:
Ask any victim of true identity theft about the process and they will tell you the act of becoming a victim is not the horrific part. It is the NEXT 2 years of making themselves whole again. In my weekly workshops I ask “who in attendance has been a victim of ID Theft.” Then the $64,000 question for those that did not raise their hand. How do you know you are NOT a victim right now? Unlike tradtional crimes it would ONLY take the blink of an eye to figure out we were being mugged in the parking lot but according to the FTC, the average amount of time that lapses from the date id theft occurs to the date that it is noticed by the victim is 14 months.
Since identities are stolen by professionals… it ONLY makes since to have it restored by professionals? Restoration is the single most important component of identity theft protection yet it is the hardest to deliver by service providers because it means having an infrastructure of licensed investigators and attorneys on staff. Many services will disguise this by using fancy terms like ‘Recovery Advocate’ to make you believe they will actually do the 'heavy lifting.' Usually a little further into the sentence\paragraph they will use nebulous terms like help, guidance or assistance. Which may mean they only provide a ‘HOTLINE’ for you to call when you are a victim and you are greeted by someone in an outsourced 3rd world call center that offers you ‘Do-It-Yourself’ information you could have downloaded on the net for FREE.
What I advise clients to look for in restoration coverage, is the term ‘Limited Power of Attorney.’ This means the service providers licensed investigator can actually act on the victims behalf and get the work done with the least amount of involvement from the victim. Most consumers are NOT trained in the protocols of identity theft restoration and there are few if any community college offering classes in ‘Identity Theft Restoration 101.’
As a former victim myself and currently a victims advocate, I had a hard time suggesting consumers should even consider buying one more form of outsourced-risk coverage when most of us already feel ‘insurance poor’. But as I looked at the statistical probability of being a victim of identity theft and utilizing my id theft coverage over all other outsourced-risk coverage (combined) it all came down to mathematics.
Considering that even the MOST comprehensive forms of ID Theft protection available are relatively inexpensive comparatively. I had to ask myself…
What is my time worth?
About David Bruerd and the Identity Theft Awareness Group™ (iTAG):
Because of his early efforts as an identity theft advocate, David Bruerd became the nations very first ‘Certified Identity Theft Risk Management Specialist’ and is considered Oregon’s foremost authority on the subject of identity theft. After becoming a victim himself in 2001 he founded the Identity Theft Awareness Group™ (iTAG). iTAG has grown to become a national identity theft education and protection organization. iTAG conducts computerized Risk Assessments and provides onsite Privacy Trainings to help businesses create an ‘Affirmative Defense’ against the often unavoidable data loss or breach. This helps businesses comply with current and proposed identity theft legislation and to help ensure their Benefit Programs accommodate for current and evolving trends in identity theft.
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