Credit Monitoring Just One Component of ID-Theft Protection
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Mark Pribish, Special for The Arizona Republic, June 26, 2014, used by permission of the author

Wearing a helmet on a motorcycle protects the head but leaves the rest of body unprotected. Those who sell helmets only promise protection for the head — and we expect no more.

But with credit monitoring, it seems the industry's marketing messages too often lull consumers into a false sense of security, believing that credit monitoring will fully protect them from ID theft. It won't.

Data breaches at Target, eBay, AT&T and most recently PF Chang's – along with the fear of identity theft — have dramatically increased demand for credit monitoring. Yet, mounds of research and complaints make it clear that credit monitoring is just one component of a comprehensive ID-theft product solution.

With a false sense of security, consumers may let their guard down or never look at other very critical and vulnerable ID-theft risks. The Federal Trade Commission Consumer Sentinel report says that nearly 80 percent — a whopping four of five identity-theft claims — would not have been prevented and/or the consumer alerted by credit monitoring.

Credit monitoring services offer alerts about potential fraudulent actions with debit and credit cards, loans and similar financial activities — after the fact. Monitoring alerts are beneficial, but like motorcycle helmets, are very limited in protection. The stealing of passports, driver's licenses, employee IDs, health-insurance numbers, government benefits, e-mail addresses, login, passwords and other personal information won't be prevented or helped by credit monitoring.

Consumers do need to be aware of fraudulent financial events, and credit-monitoring services can help ensure timely awareness and a quick response by the potential ID-theft victim. All credit monitoring is not created equal. For example, some monitoring services provide single- bureau monitoring; others provide three-bureau monitoring. Each bureau's reports are different.

Evidence that credit monitoring is overwhelmingly reactive and extremely limited at prevention is well documented. ID-theft is at an all time high even as purchases of credit monitoring are also at an all-time high. There were a record 13.1 million identity-theft victims in 2013. That's up from 12.5 million in 2012, according to Javelin's 2014 Strategy and Research Identity Fraud Report. If credit monitoring works as "advertised," why are there more victims of identity-theft than ever?

Over the past three years the Consumer Financial Protection Bureau has fined banks and credit-card companies $2 billion, including big names such as American Express, Bank of America, Capitol One, Chase Bank, Citigroup and Wells Fargo. The CFPB determined that their selling practices of pressuring cardholders to buy expensive "protective" products such as credit monitoring were dishonest and illegal. This enforcement has resulted in marketing changes that aren't as likely to fool or coerce consumers into buying the very limited benefits of credit monitoring.

Mark's most important: Buyer beware. Make your decision about purchasing credit-monitoring services based on facts, not questionable advertising or fear tactics.

Mark Pribish is vice president and ID-theft practice leader at Merchants Information Solutions Inc., a national ID-theft and background-screening provider based in Phoenix.