[Madeleine Brand:] Look at the contents of your wallet. You'll see your credit cards, your driver's license and quite possibly something with your Social Security number on it. Take that out immediately and leave it at home. Otherwise, if you lose your wallet, your identity could be up for grabs. That advice from us is free, but plenty of paid services offer help in avoiding identity theft. NPR's Mike Pesca reports on whether their advice is worth the cost.
[Mike Pesca Reporting:] Bob Sullivan has done everything possible to build a cocoon of protection around himself to ward off identity theft. As the author of "Your Evil Twin: Behind the Identity Theft Epidemic," Sullivan shreds check statements and never answers e-mail solicitations. And then a few months ago, his identity was stolen. Another victim: Deborah Platt Majoras. She's the head of the Federal Trade Commission, the government agency charged with combatting identity theft. We can only hope the Deborah Platt Majoras who testified before Congress that identity theft has cost businesses and consumers over $53 billion a year is the real Deborah Platt Majoras. To get your head around that $53 billion figure, by the way, consider this: ExxonMobil, America's most profitable corporation, didn't even take home half that amount last year. $53 billion is a windfall for thieves, but it's also an opportunity in the eyes of Pre-Paid Legal Services, a company which sells access to lawyers like an HMO sells access to doctors.
[Unidentified Man:] ...market trends that are creating an...
[Pesca:] This is from an online conference call touting one of their plans.
[Unidentified Man:] But, ladies and gentlemen, when you attach that identity theft shield to our company's Pre-Paid Legal plan, we're actually going to reduce that price down to $9.95 a month. Ladies and gentlemen, the reason that's so important is because every article you read on identity theft, they say the first thing you should do is hire an attorney.
[Pesca:] No, they don't. And the FTC doesn't say, as the conference call claims, that the average loss for an ID theft victim is $1,500. They say it's about $500 and that most people don't pay at all. ID theft expert Bob Sullivan lumps Pre-Paid Legal in with many other identity theft protection services when he says...
[Mr. Bob Sullivan:] I know of no identity theft protection service that I would recommend to people that they pay for. The only thing you can do is shorten the amount of pain you suffer as a result of it, but right now, there's nothing that will stop it from happening to you.
[Pesca:] Sullivan thinks that credit monitoring might be useful, though is very uneasy paying for the service. Mari McQueen of Consumer Reports says for most people, it's no better than carefully reading statements, because the monitoring services don't prevent fraud.
[Ms. Mari Mc Queen:] They do detect it early enough for maybe you to limit the damage. We find that to be superfluous in most cases.
[Pesca:] McQueen calls Social Security numbers the keys to the kingdom when it comes to ID theft, and the truth is that Social Security numbers have become nearly impossible to protect. Businesses, schools and the workplace all use Social Security numbers as forms of ID, as do charities. Take the case of David, a financial professional from New York who's doing a good deed and had no idea he was opening himself up to swindlers.
[David:] I donated blood at a corporate blood drive and it was the only time I'd used that address with my Social Security number. So a week later when I started getting phone numbers from merchants and credit card companies that-asking me about charges, it was pretty easy to track back and figure out where they had gotten my Social Security number from. It had been from the blood drive.
[Pesca:] In this environment, caveat emptor isn't sufficient. Some states have opted for freeze laws, which allow victims to issue what amount to desist orders, so no potential lender could read credit reports. No one will be extending you any credit under these circumstances, and no one will be extending any credit to your impostor, either. Texas, California, Louisiana and Vermont now all have freeze laws. Vermont's attorney general, William Sorrell, says whenever a state proposes this type of law, it's zestily opposed by businesses who see credit as their lifeblood.
[Mr. William Sorrell:] They're saying this is really bad for consumers. Consumers don't know that they're not going to be able to just go right in and take out a new car loan just, you know, in 10 minutes or a new department store charge account. And what we're saying is, `Hey, how paternalistic is that?'
[Pesca:] The National Retail Federation, the American Bankers Association and the credit reporting agencies oppose the freeze laws, saying they're overkill. The FTC does cite some evidence showing that identity theft has leveled off. It's just that our awareness of security breaches is growing. More good news: By September, everyone in the US will be able to access three free credit reports a year, one from each reporting agency. So space them out, read them carefully and when you're done, for God's sake, shred them, burn the remains and bury them in your back yard. Mike Pesca, NPR News, New York.
[Madeleine Brand:] More coming up on DAY TO DAY from NPR News.