The practice of implementing and renewing fraud alerts by several companies selling identity theft prevention/recovery products may stop.

Fraud alerts can be put in place at one of the three major credit bureaus (which automatically notifies the other two bureaus) when an individual believes that they are a victim of identity theft or have reason to believe that may become a victim of identity theft.  The initial fraud alert lasts 90 days and then must be renewed or it drops off the individual’s credit file.

An entire identity theft prevention industry has come into existence primarily based upon a service which renews a fraud alert for individuals automatically every 90 days.

A court case involving identity theft protection service LifeLock and credit bureau Experian ended in LifeLock being ordered to stop implementing fraud alerts on behalf of third parties (Lifelock’s customers) at Experian.

Debix- another identity theft protection service - announced that they will discontinue the use of fraud alerts due to the opinion issued by the U.S. Federal District Court in the Experian v. LifeLock case.

Regardless of the court’s opinion and the impact on commercial identity services, individuals would be wise to consider a security credit freeze as a more powerful alternative to a fraud alert.  The security credit freeze offers better protection against new credit lines being opened because it blocks the credit bureaus from providing a frozen credit file to potential creditors rather than just the “note” a fraud alert places on a credit file.  While there is a fee each time an individual orders a freeze or thaw on their a credit file, the added security may be worthwhile for many consumers.

For example, if an identity thief applies for a new credit card in your name the card issuing company will attempt to pull your credit report to see if you qualify.  When a credit freeze is in place, the card company will not be able to access your credit report at all.  Therefore, the card company will not issue a new credit card to the impostor.

If the security credit freeze is not attractive to victims of identity theft, there is also the option of a seven year extended fraud alert.  Identity theft victims must provide an identity theft report in order to qualify for the extended alert.

[youtube]http://www.youtube.com/watch?v=9Gb2eelqhCA[/youtube]

As we have received several private messages regarding the identity theft of children and what to do about it, we would like to take this opportunity to ask our readers to consider implementing a credit freeze for their children.

We think the credit freeze is currently the most effective tool available to deter identity thieves.

Please watch the above video and link to it, embed it and share it with your friends with children.

More information is also available on our web sites credit freeze page.

Credit-Monitoring Services: A False Sense of Security:

With the ink barely dry on headlines about what could be the biggest security breach in history (identity thieves hacked into payment processor Heartland Payment Services, possibly gaining access to the credit-card information of millions of consumers) signing up for a credit-monitoring service may have jumped a few notches on your to-do list.

After all, paying $12 or so a month seems like a small price to pay for the peace of mind that — through regular alerts about activity on your credit reports and other monitoring services — you’ll be protected from identity theft. Right? Think again.

“For most consumers, these services are a waste of money,” says Paul Stephens, director of policy and advocacy at the Privacy Rights Clearinghouse, a nonprofit consumer information organization in San Diego. They don’t do anything that consumers can’t do themselves, are laden with loopholes and, in some cases, use questionable marketing methods to get consumers to sign on.

Nevertheless, the credit-monitoring business is booming. Last year, 33 million people, or 22% of the U.S. adult population, used such services, according to Javelin Strategy & Research, a financial-services research firm. And the firm expects the market to grow at double-digit rates over the next several years.

Consumers, however, need to understand what it is they’re actually buying.

See the full story at SmartMoney.

If Your Data’s Been Stolen Don’t Panic:

So-called breach letters — news that your personal data has been compromised — are a dime a dozen now. Should they go straight into the circular file? Every adult should expect to get a letter if they haven’t already. I’ve received three. Indications are that the situation is getting worse, but we don’t know whether that’s because there are more reports or because there are more breaches.

Don’t ignore a breach letter if you receive one. Read it carefully. If the breach involves an existing account, I recommend that people simply monitor their monthly statements. It’s more serious if your Social Security number has been compromised.

How so?  Your Social Security number is the key piece of data that identity thieves need to open new accounts in your name. That’s more difficult to recover from, and it takes more time. We still tell people not to panic — there’s not a lot of evidence that connects the dots between data breaches and ID theft. There’s little likelihood that you’ll become a victim because of a security breach. Even so, you should take steps to protect yourself.

For the full report see The Washington Post.

by Rob Douglas

Today, I was a guest on CyberHood Watch Radio hosted by Dave Ballard and Bill Wardell of CyberHood Watch. We discussed identity theft with a focus on the increasing threat to families and children.  You can listen to an archived recording of the show at It’s Your Identity Defend It – If Not Yours – Your Children.

Dave is the senior editor, creator and developer of New Internet Security.  Bill is also a sought after speaker and the co-host of CyberHood Watch Radio.  Dave’s interest in Internet safety was born of his love for his wife and five kids.  Dave says:

“From early on I engaged the kids in computers telling them, “This is your future.” What I failed to foresee was the nefarious, pervasive, and pandemic scourge unleashed by the underworld. The Internet is too valuable a resource, for “good”, to allow it to be perverted by organized crime and sick-minded individuals. That’s why Bill and I have partnered together, to arm you with knowledge and to keep you and your family out of harms-way. The Internet is here to stay, join us in preserving this valuable resource and by doing so we’ll create a safer Internet for all our families and their children.”

Bill is the senior editor, creator and developer of Online Security Authority, the author of “Don’t Take Candy From Strangers” and an Authority Site Center certified coach.  Bill is also a sought after speaker, national radio guest, co-host of CyberHood Watch Radio, publisher and researcher.

Bill is a husband and father of three.  Bill says:

“The love for his family has been the driving force behind his success over the last few years, and he has been actively been pursuing his passion of becoming a online entrepreneur. His main focus has been working and dealing with the security issues of the day, such as ID theft, online predators, MySpace, teen and children security issues when it comes to Internet safety.”

I hope you’ll take the time to listen to the show on CyberHood Watch Radio for a great discussion about children and identity theft.  If you have any questions please feel free to email me at rob @insideidtheft.info