ID Theft Protection

2007-01-07

With online credit card fraud being rampant, and personal identity information being circulated, it pays to watch out for ID theft. You can get protection; but like most financial products, the competing offers from different sources can leave you confused about what you need and what its worth. Do you need credit analysis, or fraud insurance, or credit rating information?

Here’s a simple guide to help you out. Most credit cards provide for fraud reporting and chargebacks; you have to report within a stipulated period of receiving your statement if you are disputing any of the charges. While you may not explicitly have fraud protection, in practice the card vendor usually reverses the charge on your account. Some providers try to provide fraud protection “insurance” for a fee.

Another good way is to avoid using credit cards extensively on the Web; if you need to, earmark one card for this, or see if you can use a prepaid card. Several gift cards / prepaid cards are available, and don’t require your personal information to use these. Many vendors also accept services like Paypal; that way, you don’t need to reveal your card details, and you get an email confirmation whenever your Paypal account is charged.

There’s more to this, however. Identity theft usually has someone signing up on your name for a new card or other services, with a fraudulent address; by the time you find out, the damage can be done.

One way to prevent this is to monitor your credit rating. You can get your credit rating report from the three national bureaus – Experian, Equifax, and Transunion – at least once a year for free; some states have laws that require more, or at mandated rates. Check if your state has similar laws.

Various third parties, as well as the credit bureaus offer credit monitoring services – typically, these feature quarterly credit score reports, weekly fraud watch, alerts in case of a request for credit data or any new account signup, and Identity Theft insurance. Some of these cover all three credit bureaus; others, like TransUnion’s subsidiary TrueCredit, offer single bureau coverage. Costs for 3 bureau coverage run around $12 a month, while single bureau coverage is around $40 per year.

You could make do with the single bureau monitoring; all three bureaus exchange information with each other on new account signups or any adverse credit data. Typically, you would know about any extra activity within the week. Three bureau coverage would give you daily alerts to any suspicious activity; if you feel you need that level of coverage, or have seen high levels of fraud around you, this makes sense.

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