Although the movie “Identity Thief” makes light of the issue of identity theft, in reality, it’s a situation that is never funny when it can potentially create financial havoc for years to come. With the spotlight on identity theft, banks are starting to tailor their accounts to minimize the risks of it happening to consumers.
With sensitive personal information, identity thieves can sign up for bank accounts, credit cards and loans, obtain medical services, apply for utilities, and create aliases under victims’ identity.
In 2012, roughly 12.6 million U.S. consumers were victims of identity fraud and more than $21 billion was stolen by fraudsters, according to a recent report by Javelin Strategy & Research. Identity theft continues to be the top complaint by consumers (for 13 consecutive years), according to another report by the Federal Trade Commission.
The mounting costs and rising occurrences of identity theft may have convinced banks to create accounts and programs that emphasis identity protection.
Last week, USAA launched a new checking account, which carries a $9.95 monthly fee, and offers various protections against identity theft. The account comes with a program that monitors customers’ credit reports, social security number and personal information. Through a partnership with Experian, one of the three big U.S. credit bureaus, account holders get up to $1 million in identity theft coverage to cover unauthorized fund transfers, private investigator fees and more.
BB&T markets a similar checking account that comes with quarterly credit reports and $10,000 in identity theft insurance for the monthly fee of $5.
Other banks, like Fifth Third Bank and Citizens Bank, will offer add-on identity theft protection plans (for a monthly fee) for any one of their accounts.
“Consumers and institutions are now starting to act as partners — detecting and stopping fraud faster than ever before,” said Jim Van Dyke, CEO of Javelin Strategy & Research, in a prepared statement. “Consumers must take data breach notifications more seriously and maintain vigilance to safeguard personal information, especially social security numbers.”
Compared to stand-alone identity protection programs, offerings by banks are less expensive.
The Identity Theft Protection plan directly from Experian (with the same features as those offered under USAA’s checking account) will cost $15.95 per month. A similar plan from AllClear ID, a company that offers fraud detection and identity protection, carries a monthly fee of $14.95.
The DIY approach
One way to reduce the risk of identity theft is to place a security freeze on one’s credit reports, but such an action comes with a fee and it becomes inconvenient when it comes time to apply for credit.
Otherwise, consumers can rely on other means to keep their personal information in check.
Everyone is eligible for a free credit report from each of the three major credit bureaus — Equifax, Experian and TransUnion — per year through AnnualCreditReport.com. Free credit monitoring services are available from companies like Credit Karma and Credit Sesame. AllClear ID offers a basic plan (free) that scours the Internet for unsecure exposure of personal data.
However, these free options do not offer identity theft insurance, which may drastically reduce the financial damage in the event that identity theft does occur.