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Never Pay Someone to Protect Your Identity

By , June 4th, 2008 | 30 Comments »

protect against identity theft

You’ve probably seen the ads for LifeLock, an identity theft protection service, where the CEO gives out his Social Security number and claims that he can do that because he has such confidence in his company’s ability to protect his identity. It turns out that his confidence may have been misplaced. In recent days, stories have surfaced that people have been able to receive driver’s licenses using the CEO’s SSN and one person has even succeeded in getting a payday loan using the pilfered SSN.

Now, anyone with a basic knowledge of credit reporting and identity theft probably realized that this guy was setting himself up for trouble. Under the best circumstances, LifeLock and other “identity protection” services can only prevent a few forms of identity theft. That’s because the protections they offer only operate at the credit bureau level, which reports on transactions related to credit cards, loans, mortgages, renter approval, certain utilities and some insurance. Things like obtaining fake driver’s licenses, receiving medical care under a false name, and giving a fake SSN to avoid arrest typically don’t go through the credit bureaus so they can’t be stopped by a service like LifeLock.

The problem with any sort of “identity protection” is that nothing is fool proof. Protecting yourself at the credit bureau level only works as long as the agency issuing the credit actually goes through the bureaus. If they don’t, they have no idea that you’ve put protective measures in place so they may go ahead and issue credit to an impostor.

That’s what happened to the LifeLock CEO. The payday loan company didn’t run the right checks and issued credit to the impostor. It’s almost impossible to protect yourself against driver’s license or medical fraud because most state agencies and healthcare providers run no checks at all, assuming that the information presented is legitimate. It’s also very easy for a thief to steal a credit card or bank account number and treat themselves to a shopping spree that you learn about only after the funds are gone. These types of transactions cannot be stopped by a protection service. Only constant vigilance and some proactive steps on your part can help to prevent identity theft, and even that isn’t 100% guaranteed.

So if it’s so hard to protect your identity, what can you do and should you pay someone else to do it for you? The answer to the second question is a definitive “No.” The things that companies like LifeLock claim to do can all be done on your own for free. You’ll get the same level of protection and have control over the process (and you won’t be giving out your personal information to yet another company, which puts you at risk if their database is ever compromised). As for what you can and should do, below are the four main protections that LifeLock employs and how to do them yourself. Then I have some ideas that go beyond their protection.

Set a fraud alert with the major credit bureaus

This is free to do. All you have to do is call one of the bureaus or visit their website and answer the questions. You don’t even have to speak to a person. The alert is then passed from the bureau you contacted to the other two — you don’t even have to contact the other two, it’s done for you. The alert is good for 90 days and lets credit issuers know that you may have been the victim of fraud and that they should request additional information or documentation before issuing credit. It doesn’t stop the issuance of credit but it does, if followed correctly by the issuer, cut down on incidents of identity theft. You can renew the alert every 90 days.

Remove your name from pre-approved credit card offers

Contact Opt-Out PrescreenDirect Marketer’s Association to be removed from many junk mailing lists. The DMA is the largest database used by solicitors, so opting out with the DMA greatly reduces junk mail. Read the privacy policies of companies you do business with and find out how to let them know that you don’t want your information shared. If you get junk mail with a prepaid mailer, you can stuff their materials into the envelope and write, “Remove me from your list” on the material. This usually works, although it may take awhile. Make certain when doing business online that you uncheck any boxes that say, “Contact me with future offers,” or similar. Many websites pre-check these for you in the hopes you won’t notice, leaving it to you to opt out of their crap.

Order your free credit reports and set up a monitoring cycle

You are entitled to one free credit report per year from each of the three major credit reporting agencies, Experian, TransUnion, and Equifax. You get these reports through AnnualCreditReport.com. Only use this site. Others that sound similar require you to pay. But don’t request them all at once. Since you can get one per year from each service, you can request one every four months to keep a constant eye on your credit. So, for example, if you request from Equifax in January, wait until May to request one from TransUnion. Then request one from Experian in September. Then, when January rolls around, you request from Equifax again and keep the cycle going. This means you’re seeing your credit report once every four months which lets you catch potential problems quicker than if you look at it only once a year or less often.

Keep Important Records

Keep records of your credit card numbers, bank accounts, insurance cards, and driver’s license information (and contact information for each agency) separate from your wallet or purse. Make photocopies of sensitive items that you carry and keep them in a secure location separate from your wallet. If your wallet or purse is stolen, you can quickly contact each bank and card issuer and notify them of the theft so they can shut down your accounts and open new ones.

If you want to go beyond these services (and you should), here are more steps you can take to help secure your identity.

Use a cross-cut shredder

Shred anything with your SSN, bank account numbers, address, or other personal information. Be especially sure to shred pre-approved credit card offers and balance transfer checks. Get a cross-cut shredder or “confetti” shredder because these reduce your papers to tiny bits that are almost impossible to put back together. Some shredders make strips which are too easy for a thief to put back together.

Freeze your credit

This isn’t free, but the peace of mind is worth it. It is similar to a fraud alert except that it cannot be ignored by a lender. A fraud alert merely tells a lender that you may have been a victim of fraud and that they should request proper identification and verification before issuing credit. However, a freeze locks your credit file so that it cannot be viewed at all unless you “unfreeze” it. There is a fee to freeze your credit and another fee when you want to unfreeze it, so if you’re actively pursuing loans this option isn’t for you. Freezing your credit also means that you can’t be spontaneous about getting credit. If you’re shopping and see a great same as cash deal or want a store credit card, you’ll have to wait because you’ll have to unfreeze your credit before you can apply. Freezing and unfreezing aren’t instant — there are a few days of processing time — so be prepared to wait if you need credit in a hurry.

Don’t let your credit or debit cards out of your sight

It is common for restaurants to take your card away and run the payment at a register out of your sight. Unfortunately, some servers are dishonest and run your card through a “skimmer” that captures the card’s information so a new one can be made. Bring cash to restaurants that you know will take your card away. Also don’t let a clerk in a store take your card out of your sight. Some dishonest clerks will say they have to get manager approval of your transaction, then go to a back room and skim your card.

Be wary of ATM’s that look altered

Thieves will attach skimmers to ATM slots to capture card information and PIN’s. You may notice that the slot looks lumpy or not firmly attached to the machine, or as if there is another piece of hardware attached to the front. If it looks fishy, don’t use it. This is less likely to happen at bank ATM’s since they are more aware of the problem and may be more religious in checking their machines. However, it can happen anywhere so be vigilant.

Protect your PIN

When at an ATM, cover the keypad with your hand and do the same as you tap in the information on pads in stores. In a store you can avoid entering your PIN altogether by running the transaction as “credit” rather than “debit.” It doesn’t change anything about how your money is withdrawn, only that you don’t have to enter your PIN.

Don’t get caught by phishing scams or phone scams

You hear it all the time, but it bears repeating: Never give personal information out over the phone unless you initiate the call and never enter information into a form you reached by a link in an email. Always type the website directly into your browser and navigate from there. If in doubt, call the company that sent the email or made the phone call and ask if it’s legitimate.

Spring for an unlisted phone number

Having an unlisted phone number cuts down on the number of phone solicitations you receive and cuts down on people just pulling a phone number and address out of the book and giving it as their own. It also cuts down on some junk mail solicitors that compile their lists from phone listings.

Don’t give out your SSN unless you have no other choice

Many places that ask for your SSN (except banks or those issuing credit) will accept another identifier if you ask. Many are aware of the problems of identity theft and may be willing to work with you. If asked for your SSN, ask why they need it and if there is an alternative and, if you’re not satisfied with the answer, consider whether or not you’re willing to take the risk.

Don’t carry your SNN with you

Don’t carry anything with your SSN in your wallet or purse unless you are going to need it that day. If your wallet or purse is stolen it’s a pain to cancel and reissue credit cards and bank accounts, but it’s so much worse if the thief gets your SSN in the bargain. While you’re at it, purge your wallet of any credit cards, insurance cards, or other identifying information you don’t use on a regular basis to cut down on the items a thief has access to.

Protect your computer

Install antivirus and anit-spyware protection on your computer to prevent anyone from installing malicious software that can capture your personal information or transmit it to another party. Make certain websites are secure before entering personal information (look for “https” in the web address and/or a lock icon in the browser window). Don’t enter personal information when using public computers at schools, universities, libraries, coffee shops, etc. You don’t know what kind of protection, if any, they have in place.

Leave information off your checks

Don’t put your SSN, phone number, or driver’s license number on your checks. In the old days the advice was to put this information on checks to speed processing and verification. But now this is just more information that can be used against you if your check goes awry. Only put your name and address on a check. If the person taking the check requests additional information, you can give it if you feel comfortable (but don’t give the SSN — they don’t need that), but otherwise don’t give it out.

Monitor your accounts online

Many banks and credit cards now offer online access to your accounts. Take advantage of this and monitor your accounts daily or every other day to check for suspicious activity. This gives you a chance to quickly catch a thief before too much damage is done. If you only wait for the monthly statement, you may be too late.

Sign up for e-billing and e-statements

Receiving bills and account statements electronically cuts down on the chances of someone intercepting your information in the mail, either through intentional theft or because your mail was delivered to the wrong place.

Buy a safe

Keep sensitive documents (tax returns, bank statements, passports, Social Security cards, etc.) in a safe. If your home is broken into, a safe may keep your information out of the wrong hands. Alternatively, you can rent a safe deposit box at your bank but this can be inconvenient if you need the documents and the bank is closed. And don’t keep documents any longer than necessary. Shred or burn statements, tax returns and old bills when they are no longer needed.

Be careful with your mail

Opting out of junk mail and signing up for e-billing and e-statements where possible will greatly cut down your risk of mail-related identity theft, but you can go further. Don’t leave sensitive outgoing mail in your mailbox for pickup. It can easily be stolen while you’re not looking. Take it to the post office. If you’re going to be out of town, either have your mail held at the post office or have a trusted friend pick it up. Don’t let it pile up in the box where thieves can get to it. Retrieve your mail as soon as possible. If you aren’t home when the mail comes, get it out of the box as soon as you get home. Don’t leave it there overnight. You might also consider a locking mailbox. These are designed so that they can be opened and closed once for the mail delivery, but after that they must be opened with a combination or a key and then reset for the next day’s delivery.

Don’t leave personal information out in the open

More and more you’re hearing stories about people who had their identity stolen by contractors or delivery people who came to their home. Maybe they left their checkbook out in the open, or an old bank statement, or an insurance claim with their SSN on it. However it happened, the contractor picked up the information or copied it while the homeowner wasn’t looking and then stole their identity. If you’re having work done or deliveries made, make certain that any compromising information is out of sight and preferably locked up. And be sure to keep an eye on the people who are in your home.

Yes, you can pay a service to do some of these things for you, but if the protection you’re paying for is no better, or possibly worse, than what you can do yourself for free, why pay for it? Taking some simple steps and using some common sense can go a long way toward protecting your identity. However, nothing can be guaranteed, even for the CEO of a company that charges you for protection. If you’re the victim of a particularly savvy or determined thief you may still have your identity stolen. However, if you are proactive about protecting yourself, the related problems are likely to be more confined and more quickly identified than if you do nothing.

(Photo courtesy of B Rosen)

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  • ricky says:

    It’s all pretty much common sense. Just pretend that anything with your name on it is a love letter that you wouldn’t want you spouse to see and take the same precautions in destroying it as you would the love letter and you should be fine.

  • Lisa says:

    Thanks for the optout address, I didn’t even finish the article before signing up. I’ve been meaning to do that for a long time.

  • Alexandria says:

    Good Article.

    I had my identity stolen last year, and 2 things come to mind.

    First, in past times the horror stories were that it took months/years to clean up these messes. These days it is so common that most credit companies have a theft department and work to resolve these things quickly. Thus, I think a lot of these services are sold on the scare factor. Personally I don’t really trust them and didn’t find it took that much time or money. Likewise, if you keep an eye on your credit report and catch things early, the difference will be night and day from finding something years down the road.

    Of course I had to have a large amount of notarized documents (something like 7 cards open in my name, and I had to file a notarized form with each company). If my firm did not provide this complimentary, this kind of stuff can get expensive. So I would argue that it is not free (point #3 I guess). But then again, probably cheaper than Lifelock – I’ll give you that.

    The other point I had is I have never been able to trace the security breach. I have to assume it was a rogue employee at the university I went to or one of the many investment houses I invest with. I will probably never know. But I think Americans are completely unaware of how much of their data is out there in the open. When I think of the places that “have” to have my social security # & personal info – the list is endless. I haven’t ruled out the IRS or state taxing agency either, for leaking my info. I have a list a mile long of where the security breach might have occurred. I did everything right to protect my data, but unfortunately I can’t say the same for everyone I entrust my personal data with. It is very frustrating.

  • The real Danny Lents says:

    Good article.

    You can also order free “specialty” reports like employment and tenant history reports to make sure your name is not associated with other’s activity.

  • vsjhoc says:

    Keep in mind that you cannot place a fraud alert on your credit reports just because you want to.

    Under the law, you have to have a “good faith suspicion” that you have been or about to become a victim of fraud.

  • Hilary says:

    Security freezes are free in my state (Indiana), although I think only a couple of other states have that same advantage. I froze my files after someone applied for a credit card in my name (but got denied, thankfully).

    One must remember that all the frenzy about credit scores and reports is created, in part, by the credit bureaus. Just something to keep in mind.

  • wealthman says:

    Not only is it true that you should never pay to have someone else protect your identity, it’s important to know that the credit card companies actually like identity theft. It is something that brings fear to consumers and has turned into a billion dollar money making business for credit companies that say they can “protect” you. Therefore you will hear terrifying stories of what identity theft can do to help build this business more. It’s important to understand that the companies that are promoting protection love identity theft because it makes them more money when people fear it.

  • greg says:

    The important thing to remember is that the services can’t protect you from identity theft. They can only help or alert you earlier when something may have happened. It’s up to you to take the precaution to prevent it as best you can.

  • Carol says:

    Great article. I went to annualcredit report to pull my credit report. It’s something I hadn’t done in years since my purse got stolen.

    Also, I plan to pull my kid’s reports too. I hear of so much ID theft that involves kid’s SSN that is never discovered until the child is older and needs credit.

  • Ken says:

    Virtual credit card numbers.

    Some time ago I used my credit card in a major airport to acquire wifi service. My number was stolen. Now I use a “virtual credit card number” for most on-line purchases especially when traveling. It’s offered by my credit card company. I can set up several at a time and delete them anytime. They usually have a limited life, 1-2 months. However, I usually cancel one after a week or so or at the end of a trip (after valid charges have cleared).

  • Cynthia Lay says:

    I really appreciate this article — I’ve been teaching identity theft classes at a credit union for several years. People are always so worried about getting their identity stolen, yet they won’t take even the bare-minimum steps to protect themselves.

    I always try to emphasize that there’s NO need to get paranoid (as many people do) — rather, they need to just PAY ATTENTION. The tips in your article are very helpful and I plan to share them. Thanks for the wisdom!

  • thiefhunter says:

    Point #6 is most troublesome: “Don

  • Jeroen says:

    Please remember that the word “Identity Theft” is a semantic trick played by financial institutions to turn the blame for their sloppy practices on customers. It used to be called “fraud” before. Your identity cannot be stolen, your name can be misused, and it should be up to the financial institutions thus defrauded to proof that it was really you who got a credit.

  • Cathy Sykes says:

    I stood beside a lady at the checkout counter at our local supermarket the other day. It was very easy for me to see her SS# on her check, so after she’d finished writing it, I said hello, then recited her number to her. She said it was more convenient to put her DL, SS and phone number on her check and seemed stunned when I told her how easily someone with her SS# or DL# could steal her identity. Even these days, with all that’s been written and broadcast about identity theft, some people are still clueless.

    Cathryn Sykes
    Publisher and Editor

  • Arthur says:

    One that you missed, which offers some protection, but less than you might expect – DON’T sign your credit cards! Instead with a permanent marker, write “Request Photo / Signature ID” in the signature space.

    This obviously can’t do anything to prevent telephone or on line abuse, but it should make it harder to abuse your card in person, and “live sales” are the harder abuse to trace*. The downside is that amazingly few clerks actually ask for the ID in my experience…

    *In person abuse is harder to trace because the abuser doesn’t have to supply a useful address – just pick up the merchandise and leave. Telephone or online sales require an address to ship the merchandise to, which has to be accessible to the abuser in some way, and is therefore traceable.


  • bossman1982 says:

    OK, There is a lot of extremely important and relevant information here. There is one very important ingredient missing in protecting your identity. I am amazed how often this is overlooked in everything I read from blogs to USPS literature.

    A cross-cut shredder is by far the best. But if somebody takes your mail before you can shred it, the shredder is useless. With a regular mailbox you may not even know you are missing mail. With a “locking mailbox” you may at least know somebody has taken your mail. What everybody really needs is a true security locking mailbox. One that you cannot just walk by and pop it open with a screw driver or reach down in and grab the mail. There are only a couple out there that fit the bill. I, of course, prefer the Mail Boss security locking mailbox. I can sleep at night knowing my shredder will get to chew on some trash the next day.

  • Carmille says:

    I was a victim of Identity Theft and I believe the criminal obtain alot of personal information from the peoplesearch online services that sell private citizens information. I think there should be a civil lawsuit against companies like intellius, zabasearch, ussearch, peoplefinder etc.
    Our name are private intellectual property and we did not authorize the selling of our name. They put us at risk and we do not even get a royalty fee for it.!!! sue I say!

  • Jeremy Duffy says:

    @ Carmille:

    AMEN! The credit reporting companies have been regulated up the wazoo, but still caused us problems until we got credit freezes. We need something like a freeze for these data brokers too and FAST.

  • James says:

    It also helps to conceal home address completely from all who search databases.

  • Anna says:

    Very good article! In reference to #1 (use a cross cut shredder), there are documents that you may not want to necessarily shred, so I bought an Identity Theft Protection stamp to block out personal information on documents to make my social security #, address, and other personal information unreadable.

  • ashley kenedy says:

    I was wondering if anyone had any suggestions on what I could do? I lived with a previous friend and when I moved out I forgot my binder with all my important information. It had banking statements, my ssn card and my birth certificate in it. I stopped my bank account and set up a new one. I don’t know what i can do about my SSN card and birth certificate. I heard throu the grape vine she’s been using them. I was told i would have to go to small claims court but I cannot aforrd that.

  • Jimmie says:

    The LL products were not developed in a jail cell in 2003. The nefarious origin was developed in the back of a taxi cab in March 2005, in less than 35 minutes with the help of a taxi driver named “Jimmie” who came up with the information on fraud alerts, because of his misfortune in Id Theft in 2002, and learning of placing credit fraud alerts by then Gov. Janet Napolitano in Arizona in September 2003 for 2 yrs. originally, then changed to every 3 months in February 2005, and the Original intellectual idea for “Lost Wallet” and “True Credit Address” & “Red Alerts”, a self replicating software product came from “Jimmie”. Also marketing channels of advertising were discussed. You should have seen Mr. Maynard after learning of the fraud alert system and product ideas, he lost his mind repeating”oh my God”, “oh my God” ( a light bulb turned on!) on a business idea. The 2003 jail story and a taxi drivers bank ID theft was used together as a marketing idea. A Phoenix New Times reporter was standing outside the cab in March 2005 when a 1% handshake deal on all “Liflock” profits was discussed mutually between “Jimmie” and Mr. Maynard as he exited the vehicle on Mill Ave in Tempe, down the street from the now, new offices of LL. I’d say be careful with the company, as the thing the taxi driver got was “LL” idea theft, no recognition or $$ for the product ideas in 9 years… http://www.consumer.ftc.gov/articles/pdf-0009-taking-charge.pdf

  • Debbie says:

    Both my daughter and my husband have had our info. stolen and luckily the IRS caught my daughters (the return was for a lot of money) and the bank/credit card company caught ours. I know they still have our info. and may try again. I can only hope that they toss it after they know you are on to them, and then again they may sell it to someone else. They are obviously working harder at taking our money and identity than we are at stopping them. I am going to advise my daughter to go to your website, the credit bureau told my daughter there was nothing they could do and could not put a fraud alert on her account. They had just done ours a couple of days before so I knew they lied to her. Maybe that person is sending out info. that people try to protect and she/he gets fist dibs??? Scammers also have jobs and they do not just work at McDonalds, after all you do not need a college degree or be brilliant to scam. I am not suggesting people who work at McDonalds are stupid at all. More and more and more i am faced with or come across things done in the favor of thieves.Yesterday one of the men in the meat market at my local Krogers told me someone came in filled their basket with boxes of King Crab and took off out the door calmly and slowly with the manager following him. Two days later someone came in and did the same thing with frozen bagged shrimp. Walmart is taken every day with 10s of thousands, maybe even 100s of thousands of dollars in theft. Many grown educated people do not realize EVERY thing we buy we pay for all that and then IF a thief is arrested we pay for all that to. Stores let it go all to often and I understand no one wants to die trying to stop a thief but we HAVE TO do something. Our justice system SUCKS BIG TIME. Unfortunately our children see and learn this very young. I am 59 years old and it saddens me to think of the world we all have a part in deteriorate slowly from the very core of human behavior. Sorry I am so negative, but when my husband cannot go to a store without worrying that some obese person is going to bump into him while someone coming from a different angle nips his wallet out of back pocket, and you are apologizing to this person in case somehow it was your fault the two of you collided, the other guy is long gone. Now, should you carry your wallet sticking out your back pocket, NOT ANYMORE, but you should have that right without worry. This is America and I know in my heart our fore fathers are turning over in their grave. I love my country but I am not very proud of it anymore.


  • Monroe on a Budget » Saving Advice: Never pay someone to protect your identity says:

    […] Jennifer Derrick at Saving Advice has this article: Never pay someone to protect your identity. […]

  • The Pros and Cons of LifeLock | President-Obama.com says:

    […] one of its competitors if you prefer. But remember that you can do most of what these companies do yourself. You can put a fraud alert on your own account, but you have to remember to renew it every three […]

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    […] one of its competitors if you prefer. But remember that you can do most of what these companies do yourself. You can put a fraud alert on your own account, but you have to remember to renew it every three […]

  • […] point where everyone is in agreement is that the services are not worth it from a purely financial point of view. Most of the actions taken on behalf of subscribers by the […]

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    […] theft protection companies. Turns out you can easily do everything they do, for a lot less money: Never Pay Someone to Protect Your Identity. A credit lock is also cheap, easy, and reversible — not to mention a good safeguard against […]

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