Another reason to take a pass on credit monitoring

Heavily marketed credit monitoring services were dealt a serious blow by a federal judge who stopped one of the biggest of the firms from placing "fraud alerts" on behalf of their customers.

The credit reporting agency Experian sued the monitoring firm Lifelock, alleging its automated system of renewing thousands of fraud alerts was costing them millions. Experian contended the law that allows the placement of fraud alerts, which gives a consumer whose account is at risk of identity theft an added layer of protection, only permits an individual -- not a company -- to place them. U.S. District Judge Andrew J. Guilford agreed.

Lifelock Vice President Mike Prusinski said the company plans to appeal the ruling.

"We intend to challenge it at every level possible," he said. "We believe that the impact of this order is one that really limits a consumer's ability to be proactive against this growing crime (identity theft). Additionally, this lawsuit is far from over and we have faith that the court, in the end, will agree with our position because, among other things, we believe that it is in the best interest of the consumer."

While they do provide some bells and whistles, most of what credit protection companies do can be done by consumers themselves, such as placing fraud alerts. What the companies had to offer was a lazy person's option -- make one contact and they'll do the rest. Renewing fraud alerts after they expire every 90 days was one of the services you could argue had some value.

It can cost $100 or more a year to subscribe to one of the services, which typically offer a free credit report -- something consumers can get themselves, too. Once a year you are entitled to a free credit report from each of the big three credit reporting agencies by using the government-run If you requested one credit report every four months you would have a pretty good handle on changes to your credit reports and whether something suspicious had cropped up.

Paying for identity theft protection only makes sense for those who are interested in getting future credit and are at risk of identity theft. An example would be a person in their 30s going through a nasty divorce with a spouse who might spitefully try to damage their soon-to-be ex's credit.

The ruling already has had an effect on the industry.

Debix had offered the least expensive of these services at $2 a month. But in the wake of the court ruling, the company boosted its price more than five-fold to $10 a month.
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