MARILYN Thompson of Annapolis figured her problems were over two years ago once the credit-card companies were notified that her wallet had been stolen and she was issued new plastic.
But six months later, a credit-monitoring service warned her of some unusual activity on her credit report. That tipped Thompson off that someone had stolen her identity and racked up bills in her name.
The lobbyist for a Washington law firm said the $80 a year she pays American Express to monitor her reports with the three major credit agencies monthly is worth the price.
"A credit-monitoring service is absolutely essential," said Thompson, adding the identity theft otherwisewould have gone undetected for a longer time.
An estimated 700,000 Americans last year were victims of identity theft, and it's the fastest-growing nonviolent crime, experts said. Authorities reported the largest ID fraud case in U.S. history in November when three men were accused of stealing the financial information of more than 30,000 people.
The increase has fueled the growth of identify theft insurance and credit monitoring services - products that get mixed reviews from consumer advocates. Insurance is a good idea, they said, provided it's cheap. But credit-monitoring services can be expensive, and consumers might be better off reviewing their credit reports themselves, advocates said.
Identity theft insurance usually covers the costs incurred in clearing a credit record, such as long-distance calls, copies of police reports, lawyers' fees and lost wages if victims must take off work.
Costs average $1,000, excluding lost wages and lawyers' fees, said Linda Foley, executive director of the Identity Theft Resource Center in San Diego.
Travelers Property Casualty claims to be the first to offer ID theft insurance in 1999, adding $15,000 of coverage to its homeowner policies for $25 a year with a $100 deductible. It also sells individual policies of $5,000 to $30,000 in coverage for $57 to $195 a year.
Chubb Group of Insurance Cos. has added $25,000 of identity theft insurance with a $500 deductible to its homeowner policies at no additional cost. And Encompass Insurance Co., part of Allstate, will add $15,000 to $20,000 of coverage with a $100 deductible for $25 a year.
Joanna Crane, manager of the Federal Trade Commission's ID theft program, said insurance is worth having if you must hire a lawyer because a thief's actions has led to a lawsuit against you. "That can be a horrendous expense for people," she said.
A credit-monitoring service reviews credit reports and alerts consumers to inquiries about their credit or unusual activity.
All three major credit-reporting agencies offer the service and include copies of credit reports. Each agency monitors only its own reports. Experian charges $79.95 a year and Equifax $69.95 to email consumers within 24 hours of activity on their credit report. TransUnion charges $10.95 a quarter for weekly e-mail updates.
Other companies offer the service, too. American Express, for example, has two monitoring programs that review the three major agencies' reports on a monthly basis for $79.95 a year or daily for $99.95 a year.
Some consumer advocates balk at the idea of consumers having to pay $70 or $80 or more for information collected about them, particularly if only one credit report is being monitored.
"I don't think you should have to pay anything," Foley said.
Experian spokesman Don Girard said the price is fair given the work entailed to regularly update credit files. "There is a lot of technology involved in maintaining a database of that size," he said.
It's probably unnecessary to go to the expense of a credit monitoring service unless you've been the victim of ID theft or the fear of that is keeping you up at night, Crane said.
Consumers should check their credit reports from the three major agencies once a year, experts said.
Generally, the cost is $9 per report, although the three agencies must provide a free copy once a year to residents of several states, including Maryland.
Foley suggested that consumers in these states can do their own monitoring for free by getting a report every four months from a different agency.
To get reports, contact Experian at 888-397-3742, Equifax at 800-685-1111 and TransUnion at 800-888-4213.
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