Do You Need LIFE LOCK Service?

You have seen the ads on TV and heard them on the radio. Some executive gives out his Social Security number and challenges someone to steal his identity. Yes, that is a real Social Security Number. It belongs to Todd Davis, CEO of LifeLock. He is plastering this number all over the radio, TV, NASCAR racing and talk shows. The company (for a fee of $10 per month) will help you with protecting your identity.

On the website at www.lifelock.com, they correctly say that most of what they do, you could do on your own and save the fees. He dares identity thieves to break into his credit files and open up new accounts. Well in December someone got a $500 quick loan by using his social security number. In a recent Today Show episode, Matt Lauer grilled Davis and his monthly service by saying "Can't the average person do what you charge $10 per month for?" His answer was confusing but consumer advocates say YES!

Basically what the company does is place a Fraud Alert on your behalf with the Big 3 credit bureaus. What a fraud alert does... It alerts anyone seeking to do something with your credit (like give you a new credit card, increase credit lines, apply for insurance, leases, cell phones, cars, houses) that you are concerned that your identity may have been stolen. (See HOMEACTIONS Article)The bank or other credit grantor is then supposed to take extra care to positively identify you and make sure that the transaction is valid. They normally do this by calling you at the number on file.

Again, you can do this yourself by visiting http://www.fightidentitytheft.com/flag.html but Lifelock makes sure your requests are updated every 90 days. This benefit may be worth the monthly fee if you are not so inclined to remember the details. According to Consumer Reports' analysis, an examination of monitoring services "shows that as currently designed, such services are often overrated, oversold, and overpriced."

Credit reporting bureaus don't always flag fraudulent use of your Social Security number. If enough new data come in with an SSN that matches the thief's name and address, the credit bureaus can establish the new identity as legitimate and sell the new data to prospective creditors. As long as your file and your identity thief's file are separate, a monitoring service will not pick that up.

In an assessment of 16 credit monitoring services, eight monitored the credit reports at only one of the three major credit bureaus. Consumers should know that creditors don't always report to all three bureaus. Some services don't alert you to sudden activity in dormant accounts, unexpected increases in balance levels, changes in existing accounts or the appearance of a negative record.

Built-in delays and deficiencies in how credit information is reported mean that it may take a creditor 60 days or more to report a new fraudulent account. If you believe you can't live without a credit monitoring service, check first to make sure how the products deal with these security gaps, consumer advocates say.

If you forgo the extra expense, but you're still worried about identity theft, your best course of action might be to sign up for a credit freeze. Placing a freeze prevents a credit reporting bureau from releasing information about your credit history. If a creditor can't check your credit history, it's unlikely they'd extend new credit to you or anyone else trying to open accounts in your name.

The freeze lessens your chances of becoming a victim.  Keep in mind that putting a freeze in place will make it harder for you to get instant credit. So if you're shopping for a car or have the bad habit of signing up for new credit cards often, you might want to hold off on putting a freeze on your reports. You can lift the freeze, of course, but you'll have to pay each time you ask to lift it.