You don't have to pay big for identity-theft protection

Identity theft is turning into big business.

And not just for the thieves.

Credit bureaus, credit card companies, banks, insurance companies and identity-restoration companies are all offering a line of products with widely varying prices to protect people from identity theft.

The protection programs, which range in the services offered and cost from less than $2 a month to more than $1,000, come at a time when Americans are becoming more aware -- and more nervous -- about the security of their identity information.

Indeed, the statistics are enough for some consumers to jump to their checkbooks:

The U.S. attorney general says identity theft is the nation's fastest-growing white-collar crime, costing businesses and consumers $60 billion in the past five years. The Federal Trade Commission estimates that 27 million Americans, almost 13 percent of the population, have been victims in the past five years.

And the total out-of-pocket expense to a victim can range from $160 to $1,180.

But the numbers, often used to sell such insurance and monitoring products, don't always tell the whole story, said Naomi Lefkovitz, an attorney in the FTC's identity-theft program.

"There's certainly no need to panic and run out and throw a lot of money out of their pockets for these products," she said. "Don't buy them out of panic."

The credit-monitoring systems offered by credit bureaus and banks may be able to detect when a new account is opened up by a criminal in your name, but it won't catch activity on your cards or accounts, the usual form of identity theft, Lefkovitz said. Consumers need to read their monthly bills carefully for that activity and report problems promptly.

And although most insurance products that cover identity-theft losses are inexpensive (Allstate now sells coverage for about $30 a year), most identity-theft cases do not involve attorney fees and loss of wages, Lefkovitz said.

Consumer advocates echo the FTC's cautions.

"For the most part, these products are a rip-off for consumers," said Shelley Curran, policy analyst for Consumers Union.

Linda Foley, executive director of the Identity Theft Resource Center in San Diego, said most identity-theft products are not very useful.

Instead of signing up for a monitoring system, Foley suggests checking your credit report regularly yourself. Starting in June, Texans will have free access once a year to each of their credit bureau reports. By staggering the free reports throughout the year, consumers can get the same service for free, she said.

Another option available to Texans since 2002 has been the credit report freeze, which enables an identity-theft victim to deny access to credit reports by credit issuers who may be unknowingly opening a fraudulent account, Foley said. The cost of a freeze is just $8, and "thawing" your report temporarily to open up new accounts is free.

If you do choose to purchase a credit-monitoring system, Fair Isaac has one of the cheapest. The credit-scoring company will sell you a monitoring service for $1.95 a month. The product also includes a $25,000 insurance policy to cover out-of-pocket expenses such as lost wages and legal fees, although it does not include monitoring your credit bureau reports.

Upgraded versions of the product are also available. For details, visit www.myfico.com.

Several programs are also available to help identity-theft victims restore their correct credit history.

Those with Allstate coverage can get identity-restoration services from Kroll for free, said Troy Allen, vice president for fraud solutions at Kroll.

Tips for buying ID theft insurance

If you're interested in insurance coverage for identity theft losses, the Identity Theft Resource Center suggests consumers make sure:

� There is no deductible.

� It covers most major costs incurred from the identity theft, including lost wages and time, travel, legal expenses, postage, photocopying, telephone costs and medical or psychological treatment.

There is a lot of free information online to help identity-theft victims do what is necessary to clear their records on their own. Web sites to look for include the Federal Trade Commission at www.ftc.gov and the Identity Theft Resource Center at www.idtheftcenter.org.

Get Identity Theft Protection   Watch the Identity Theft Commericals