Is Credit Card Protection Enough Identity Protection?

If you’ve ever had a credit card number stolen, you know that credit card companies will promptly and politely cancel your card along with any fraudulent charges. The process is pretty simple. All you have to do is report the bogus charges, and they’ll fix it. There’s just the slight inconvenience of waiting for a replacement. All of this begs the question, if your credit cards are automatically protected, why do you need to buy identity protection for yourself?

It’s a good question, and there are several good answers.

1. First, according to the National Criminal Justice Reference Service, credit card fraud makes up only 17 percent of identity fraud. The other 80-plus percent includes government and medical benefits fraud, bank and loan fraud, utilities or rental fraud, employment-related fraud, and more.
   
2. Second, credit card fraud is often the first sign of a much bigger identity theft problem, meaning there could be additional fraud across these other, more complex types of identity fraud.
   
3. Third, and most important, while the law limits your liability for credit card fraud, you don’t have the same legal protection against these other forms of fraud, and the organizations involved will not always handle your problem as smoothly and pleasantly as banks handle a credit card issue.

­­­In fact, many identity theft victims report feeling treated as if they were the criminal, even as they are dealing with the stress of trying to recover their identities. In a powerful Forbes article, identity theft victim Amy Krebs describes feeling “like someone had taken over my life.” She talks about the research, phone calls, paperwork, and overwhelming stress of dealing with over 50 fraudulent accounts that a single identity thief had taken out in her name in just a few months. Using the victim’s maiden name, a 10-year-old address, and a Social Security number this woman had been able to open accounts for utilities and cable service, open store accounts, and get medical services. Krebs had been careful to guard her personal information, but the thief was able to steal it from somewhere else, perhaps a school or doctor’s office.

And on top of the financial and personal damage caused by the identity theft, Krebs reports being treated with suspicion instead of compassion: “When you are a victim of identity theft, you are put in the position of having to prove who you are to a greater extent than the criminal had to get goods and services. You’re treated like you’re trying to get out of paying for something.”

According to the FTC, identity recovery takes an average of 18 months when a victim attempts to resolve it on their own. The victim will put in around 200 hours of work and spends around $500 out of pocket. In contrast, identity protection costs a fraction of the out of pocket costs of recovery, and if you have a good protection plan and your identity is stolen, you can quickly hand your problems over to an identity recovery expert who will work on your behalf with banks and finance companies, utilities, medical providers and others to return your identity to its original state while you get on with your life. And unlike Amy Krebs’ experience, the recovery advocate will treat you like the good person you are.