The private sector is promoting new products to help people detect identity theft or cover certain losses. But are these products right for you? FDIC Consumer News can't endorse or recommend a particular product, but we can give you information to help you decide for yourself. Here we focus on two common products being marketed.

Update: New Law to Make It Easier to Obtain and Correct Your Credit Reports In an important development, Congress in November 2003 passed a new law that can help you ensure the accuracy of your credit information and monitor your credit files for signs you may be a victim of identity theft. The law will enable you to obtain a free copy of your credit report once a year from each of the three major credit bureaus; this provision will take effect over a period of nine months, beginning December 1, 2004, in western states and moving east with completion scheduled for September 1, 2005. Nationwide as of December 1, 2004, you’ll have the right to learn your credit scores, which are designed to help predict how likely you are to repay a loan or make payments on time. As of that same date, merchants also must notify you if they plan to report negative information about you to a credit bureau. The Federal Trade Commission (www.ftc.gov) and the Federal Reserve Board (www.federalreserve.gov) have issued rules to put the new law into effect.

CREDIT REPORT MONITORING

As we noted on "Ten Simple Things You Can Do to Fight Fraud" of this issue of FDIC Consumer News and in our special report on credit records in the Winter 2002/2003 edition, most experts recommend that you get a copy of your credit report at least once a year from each of the three major credit bureaus (Equifax, Experian and TransUnion) to ensure the report's accuracy and to look for signs of ID theft (such as a credit card account opened or requested by a con artist using your name). You can order a copy of your credit report directly from each major credit bureau for a maximum charge of $9 per report (free in some states or situations). But consumers also can subscribe to a monitoring service offered by credit bureaus or other companies for about $30 to $150 a year, depending on what's included.

A monitoring service may provide, for example, an automatic copy of your credit report from one credit bureau or all three major companies, perhaps on a quarterly or monthly basis. You also may be able to get e-mail notices of any changes in a credit report, even within 24 hours. "The most important alert is one telling you that an account has been opened in your name," says Robert Patrick, an FDIC attorney. "If you do not recognize it as your account, you can take immediate action to get the account closed. Otherwise, you may not hear about accounts opened by an identity thief for months."

Should you order credit reports on your own or pay more for a special service? The answer depends on how closely you want to monitor your credit reports and how much you are willing to pay for convenience or other extras. Some consumer advocates and other observers say that most people would be adequately protected if they order their own credit reports from the three major credit bureaus at least once a year and save money over the cost of a professional monitoring service. The nonprofit Identity Theft Resource Center in San Diego offers this strategy: stagger your requests throughout the year—"for example, Experian in the beginning of January, TransUnion in April, Equifax in August."

If you want to stay on top of your credit history but don't have the time or desire to submit periodic requests on your own (even once a year), you may want to consider paying a monitoring service, preferably one covering all three major credit bureaus.

IDENTITY THEFT INSURANCE

If an ID thief uses your name to commit fraud you are likely to incur expenses— sometimes hundreds or thousands of dollars—in correcting your credit files or otherwise defending yourself. That's why some insurance companies now sell ID theft insurance, and other companies, including some credit card issuers, will be offering the protection soon. The policies typically cover expenses such as lost wages while you take time off from work to fix problems; fees associated with reapplying for loans you were denied; and the costs of mailings and phone calls to creditors, credit bureaus and law enforcement agencies. The policies also may cover certain legal fees, which can be significant. The policies do not, however, cover losses for which you are liable by law or that are otherwise not reimbursed by a financial institution or merchant.

You may already have this insurance at no extra charge through your homeowner's insurance or your credit card. Or you may be able to buy the coverage separately for about $25 a year or more. The insurance generally includes a deductible (cost to you) of $100 to $250 per claim. If you're thinking about buying a policy, consider the annual insurance costs vs. the amount you'd probably recover if you were to become an ID theft victim. Also get an opinion from someone knowledgeable, perhaps your financial planner or an insurance professional you trust.

Important: Beware of telephone or Internet scams promoting credit monitoring services, "free" credit reports, or credit card or ID theft insurance. These frauds typically use false or misleading statements to get you to send money or divulge personal information, including credit card or bank account numbers. Protect yourself by following our tips in "Ten Simple Things You Can Do to Fight Fraud" about how to avoid fraudulent offers.