Identity Protection

If you're thinking of buying some identity protection, be sure to read Cardholders Buy Peace of Mind if not Security in the Wall St Journal. 

As the number of data breaches rises, there's a growing cottage industry of companies selling protection to consumers. The companies can help monitor and prevent outright identity theft for those who lack the time and technical know-how to keep a constant eye on their credit reports or monitor the Internet to make sure their personal information, such as their Social Security number, hasn't been stolen. But they won't stop a more common crime: preventing a thief from using your credit-card number to make fraudulent purchases.
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The number of reported data breaches of all kinds in the U.S. climbed to 656 last year from 446 in 2007, according to the Identity Theft Resource Center, a nonprofit organization based in San Diego that helps identity-theft victims. These breaches affected some 36 million records -- including Social Security numbers, credit-card accounts and other personal data.

Overall, more than 250 million records containing personal information have been lost or stolen since 2005, according to the Privacy Rights Clearinghouse -- and that's driving more consumers to companies that say they can prevent theft.

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The services, which usually cost less than $100 a year, typically place an alert on a customer's credit report, which requires the person to approve over the phone any attempts to access the file or open a new account. In the event that a fraud takes place, they say they help customers fill out the right forms, and help them reach out to credit bureaus, banks and other institutions.

Statistically speaking, the risk to any individual from data breaches is small. Fewer than 1% of breach victims ever suffer credit-card fraud or identity theft, according to Javelin Strategy & Research, a research company focused on the payment industry.
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But Amy Rosen prefers having someone else looking out for her. The marketing professional from Chicago signed up for a service from TrustedID last year after twice having cellphone accounts opened in her name in 2004 and 2007. While the service hasn't yet stopped any new fraud attempts, it has given her peace of mind. "This is the one thing that makes me feel like I'm protected and that someone else is looking out for me," says Ms. Rosen.