What You Need to Know about Credit and Identify Theft Related Services

You can’t turn on the television, watch a sporting event, or surf the Internet without being hit up with advertisements trying to convince you to buy some sort of credit or identity theft protection related product. Freecreditreport.com, Lifelock, FreeScore.com, and Privacy Matters (aka FreeTripleScore.com) dominate the airwaves, web and overall marketing of these services. The problem with all of these services is that you can do much of what’s being advertised for free or the marketing is misleading.

Take for example FreeScore.com. This is the service being plugged by Ben Stein from Ferris Bueller’s Day Off fame. The problem is the advertising of their service pushes the bounds when it comes to truth in marketing. According to Stein if you ““wanna get a new job, you’re at the mercy of your credit score.” Of course this is not true as employers don’t have access to your credit scores as part of their employment screening processes. They do have access to your credit reports though.

Additionally Stein states that the service “gives me unlimited access to the 3 major credit reports and scores.” Now, I’m pretty sure anyone in the credit industry would recognize the FICO® score as being the “major” credit score used by the lending world. In fact, according to the FICO website 90% of the largest banks use your FICO score to make credit decisions. The score being sold by FreeScore.com (yes, you are signing up for a subscription service when you get your score so I don’t call it free) is likely your TransRisk Score or VantageScore. Neither of those scores are can be called your “major credit score.”

Next is LifeLock. This is the service hocked by Todd Davis, the company’s CEO, as he supposedly drives around the streets with his Social Security Number printed on the side of a truck. I wasn’t there and I didn’t see the truck so I’m calling bologna on that gimmick. LifeLock isn’t a credit monitoring service but they do market themselves as the “#1 Identity Theft Protection” service.

A description of how their service works is on their website. So, here’s a breakdown of some of what you get for $10 per month, and how you can get it for free.

- Monitoring of unregulated Internet and file sharing networks for your identity information. A free alternative would be setting up Google alerts with your name and address. You can do this here for free… http://www.google.com/alerts

- Sex offender records for your zip code. A free alternative can be found via a variety of websites. Google the term “sex offender registry” and be sure to add your city or state name at the end. For example, here’s Illinois’ list. http://www.isp.state.il.us/sor/sor.cfm

- Free annual credit reports. You can do this for free here… https://www.annualcreditreport.com/cra/index.jsp. In all fairness to LifeLock, they do say you can do this on your own for free.

- Reduction in preapproved credit offers. On one of their television commercials they state, “You’ll see a huge reduction in junk mail and preapproved offers.” You can do this for free here… https://www.optoutprescreen.com/?rf=t

- $1 million dollar service guarantee. On one of their television commercials they state, “If anything happens while you’re a client of LifeLock we will cover all losses and all expenses up to one million dollars.” But on their website they state they will NOT cover “lost wages or business profits, loss of business or lost opportunities and direct out-of-pocket expenses like postage stamps, gas or mileage to go to local authorities, or any notary public fees, etc. And they will not cover “any direct losses as a result of the theft.” That hardly sounds like ALL losses and ALL expenses. And the “etc” in the list of things they don’t cover leaves the door open for the list to be much larger.

Next is FreeCreditReport.com, which is owned by Experian. And, twice the Federal Trade Commission has sued them because of their marketing. The credit report being given away isn’t really free; it’s free only if you sign up for a trial period to a credit monitoring service. And if you don’t cancel the service during the trial period then you are billed on a monthly basis for the credit monitoring subscription.

In fact, on April 1, 2010 a new law goes into affect that will clean up how they market their conditionally free credit report. They, and any other service that uses a free credit report as a loss leader, must state the following…

THIS NOTICE IS REQUIRED BY LAW. Read more at FTC.GOV.
You have the right to a free credit report from AnnualCreditReport.com
or 877-322-8228, the ONLY authorized source under federal law.

And finally we end with FreeTripleScore.com also known as Privacy Matters 1-2-3. As with FreeScore.com the data being provided is coming from TransUnion, which means the scores being “given” away are either your TransRisk or VantageScore scores. And, despite their efforts to not disclose their ownership, it appears that the same company is behind FreeTripleScore and FreeScore. Nice try guys.

The new law requiring the more overt disclosure about free credit reports will help to clean up what many believe is a marketplace filled with out of control and deceptive marketing practices. And remember, before you choose to spend the money on any of the credit related products and services listed you should at the very least research free options.