Personal Finance 

LifeLock CEO on the Today Show

LifeLockThis morning the CEO of LifeLock, Todd Davis, was on the Today Show with Matt Lauer to defend his company’s service. He was there to answer a few pending lawsuits about how the LifeLock service doesn’t work and that its claims to protect and prevent identity theft are fraudulent claims. Lauer really hammered Davis (as hard hitting as the Today Show can possibly be) but there were some pretty interesting statistics Davis brought up:

  • Only a 105 out of a million customers have been victims of identity theft.
  • Todd Davis, advertising his SSN for the last two years, has had 87 attempts with only one successful hit in Texas where someone was able to get $500.

My opinion of LifeLock has always been that the $10 you pay each month is essentially insurance on your time. Becoming a victim of identity theft, even if you are diligent in every single possible way, is like winning the lottery (a small firehouse charity one).

Just to give you a basis for comparison, the Privacy Clearinghouse 2007 Identity Fraud Survey reported that there were 8.4M cases of identity fraud in 2007. If there are 304M potential targets (that’s the census estimate and it does include children and babies, but they can be victims too) and a 2.73% chance of becoming a victim. With LifeLock’s measures (many of which you can implement yourself such as opting out of junk mail and freezing your credit reports), you have a 0.01% chance of becoming a victim.

So, going back to the Privacy Clearinghouse’s data, the mean fraud amount was $5720 in 2007 and the mean resolution time was 25 hours per victim; so your $10 a month is buying you insurance against that < 2.73% chance (that's if you did the average to protect yourself) of losing 25 hours. To calculate what that's worth, you look at how valuable you think your time is and whether the $10 a month is worth it. LifeLock shouldn't be considered bullet proof protection against identity theft, it should be considered time insurance against dealing with it.

 Your Take 

Your Take: Would Biometrics for Authentication Bother You?

Biometrics, loosely defined as the process of using a person’s physical characteristics for identification, is slowly gaining popularity and their use may soon extend to credit cards. Privacy is always a hot button concern in the US, just think back to when AOL released all that search data, and the collection and storage of your physical characters, one of the most personal of things, is something that probably would both a lot of people. So I’m curious, if biometric data were required, would it bother you? If it was optional, would you elect it?

I have mixed feelings on this. I’m not a gung-ho privacy advocate in some aspects and conservative in others. For example, I’m comfortable with people being able to see the websites I surf but I don’t want my information stored somewhere if it’s not absolutely necessary. I can see the value of using biometrics as a means of authentication and so would definitely elect to “activate” any biometric-related security features. It’s easy to fake a signature, it’s much harder to fake a fingerprint or retina scan.

As you probably suspected, one of the places where biometric authentication has become pretty popular is Japan (they get all the cool gadgets and gizmos before we do!). One of the reasons is because in Japan you can generally withdraw from the ATM the equivalent of thousands of dollars each day, so the higher security measures are required. Granted, this is the bank, which knows all your financial information anyway, but it’s an example of how biometrics have been rolled out and accepted.

So, what are your thoughts?


Promotion: Try Citi IdentityMonitor Trial, Get $25 Cash Back

I was reviewing my Citi credit cards this morning when I saw this banner offer: Get a $25 cash back certificate just for signing up for a thirty day trial of their IdentityMonitor product. What does the offer include?

  • 3-in-1 Credit Report—Access to your 3-in-1-credit report, 3 credit scores, monitoring and analysis at no additional cost
  • Credit Monitoring—Keeps track of your credit file activity every business day
  • Notify Express SM—Alerts that can warn you of potential fraud
  • Toll-free access to Fraud and Credit Education Specialists—They’re available to assist you with your concerns
  • Credit Analyzer and Online Tools—Credit tips and tools to help you understand your credit rating

If you just want a copy of your credit report, I’d recommend avoiding this song and dance and going to, where you can request a copy of your report for free once a year as mandated by federal law. You don’t have to cancel any memberships to any programs by going that route (but the bureaus will try to upsell you on their products as you request your report).

If you really want identity monitoring services like this, I’d skip this $12.95 service and go with one that offers you a little more hands on service if you ever do have your identity stolen and some insurance as well. I’m not advocating identity theft insurance, read my thoughts and the opinions of others on identity theft insurance, but there are better options out there than this offer. IdentityMonitor seems to only alert you of when a theft may occur, doesn’t seem to do much afterwards (I don’t have the service so I don’t know, but none of the bullet points mention it).

The only thing that would concern me about this promotional offer is that there’s no mention of the $25 outside of the graphic on the left of the landing page (nothing in the IdentityMonitor terms and conditions, no mention on the sign up page), so if you do this or have done this offer, please let us know if there are any hiccups we should be aware of.

(Also, if the above link doesn’t work, please let me know… I reached it through a link in my account so it might not be public)


Beware On-Campus Credit Card Application Booths

My first credit card was an AT&T Universal card that I received after filling out an application outside of Doherty Hall on the campus of the esteemed Carnegie Mellon University. I applied because the guy was giving away t-shirts with funny slogans and I thought it was a great way to get a funny t-shirt right? Luckily for me the whole setup was 100% legitimate, since it’s now been eight years and my identity wasn’t stolen; but how many of those similarly setup operations aren’t legitimate? It’s a fantastic way to capture a ton of information in a short period of time from unsuspecting victims who likely aren’t even aware that identity theft happens.

Let’s say that the person accepting applications is entirely legitimate and he personally won’t run off with your information. What’s to say someone doesn’t mug him on his way home or break into his car and steals all that information from him? If you think of all the recent data breaches involving credit card numbers being stolen, they didn’t break into the store or the credit card company databases, they broke into the processor’s databases. Thieves aren’t dumb, they go for the weak link and a guy walking around with a backpack full of identities is a much better target (in terms of return on investment) than a credit card company or you personally.

Now, abstracting away the fact that your identity could be stolen, the fact of the matter is that you aren’t being compensated enough to use the card. There are a ton of credit cards that will give you $100 statement credits upon first purchase, there are a ton of cards that have much better fee structures and interest rates, and there are a ton of cards that give you more cashback rewards than the ones offered on campus. So, even if you aren’t going to have your identity lifted from you, the cards that you can find on your own, especially with the internet, are better than any on campus – plus $100 beats a t-shirt no matter how funny it is.

 Personal Finance 

5 Ways Paperless Personal Finance Saves You Money

I don’t know how JD comes up with the topics he does but practically every single one resonates with me and this one about pursuing paperless personal finance hit spot on. I only started truly dealing with personal finance issues such as bills, credit cards, and banking within the last four years and I’m pretty much as minimalist in terms of paper as you can probably. I’m so trusting of going paperless because many of the all-electronic processes had proven themselves in the last four years (in terms of earning user trust on their safety and reliability) so I just rolled into it. I think going paperless as much as possible is the way to go.

There are two reasons why you should go paperless: it’s good for the environment and it will save you money. Since most people are interested primarily with saving money and I like it when people try to save the environment, I’ll try to trick you into going paperless for your reasons even though I want you to do it for my reasons (shhh! this tactic is a scecret, don’t tell anyone!). If you want ideas on how to go as paperless as possible, read JD’s post for ideas.

Reason 1: Save On Envelopes & Stamps

Each bill you don’t have to send is one in which you don’t have to stick into an envelope, which usually is provided, and stick a 41 cent stamp on. If you mail off two credit card payments, a mortgage payment, a car payment, a cable payment, and a utility bill each month, that’s $29.52 saved each year in stamps alone. Don’t scoff at the thought that going paperless only saves you thirty bucks in stamps, would you pick up a thirty dollar bill if it were sitting on the ground? I would.

Reason 2: Avoid Fees Because Payment Systems Remember

One of the benefits of getting email notification of a statement is that when you get the email you’re generally at your computer, which means you can log on and schedule a payment. If you get a paper bill, you have to go get your checkbook, write out a check, put it in the envelope with the stub, put a stamp on it, and walk out to your mailbox. There are plenty of opportunities in that process chain to just put the bill down and take care of it later. If you’re online, just log into your account, schedule a payment, and have a nice day until the next notification.

Reason 3: Schedule To Pay At The Last Minute

Keep those hard earned dollars in your bank account until the last moment and have the bank remember when to pay for you. When you log on and schedule the payment, most places will let you pick the day you want to send it. Simply wait until the last day (I generally schedule it three or four days before the last day, just in case… though the just in case has never happened and I’m not really sure what could happen) so your dollars keep earning interest. While I can’t quantify how much money you’ll earn each year, it won’t be much but it’s better you than some company.

Reason 4: Electronic Payments Are Rarely Lost

The USPS processes gazillions of pieces of mail each year and a percentage of those are lost or mangled in processing and O’Doyle’s Law states that all bad stuff happens to you when it will hurt you the most (it doesn’t because I just made up that law but if there is a law for that I don’t know it), so put two and two together and realize that a physical payment is far inferior to an electronic one. With electronic payments, you get confirmation of a successful scheduling or payment almost immediately. If it’s “lost,” you generally know because the next page doesn’t load. When regular mail is lost, you generally know because you get a missed payment fee.

Reason 5: Electronic Theft Is Harder

It takes very little effort to steal your information when you mail a check payment. If you have a traditional mailbox, it just takes someone with enough stones to open up a stranger’s mailbox and snatch the envelope. Once they open it up, they have your name, address, bank name and your checking account number – all off your check. If someone wants to steal your information when you make an electronic payment, it’s impossible because you aren’t sending your bank information with your request every single time. You only register the bank once, it’s never displayed back to you for security reasons (in case you unwittingly give out your credentials to a thief), so they’ll have to somehow catch you when you enter that in and spend eons of time to crack the SSL 128-bit encryption (good luck, read this for more on SSL 128-bit encryption). The Law of Least Resistance says that a thief, given the skills to two both, would rather open your mailbox.

There are probably plenty of other ways that going paperless will save you money either right this moment or in the long run but those are probably the biggest. So even if saving the environment isn’t on the forefront of your mind (though it should be!), save yourself some of the other kind of green by going paperless and everyone wins.


LifeLock CEO’s Identity Stolen & Co-Founder Is Suspect

So yesterday I did an analysis on whether identity theft insurance was worth it (it’s not) and my example ID theft insurance company was Lifelock, where the CEO posts his social security number directly on the website. Well, turns out that just recently someone tried to obtain a loan using his social security number and he discovered the social security number through the Lifelock website. Two things I wanted to say about that – first, the fact that he was caught is not a vote of confidence for Lifelock and second, you must be a fool to try to steal the identity of someone touting an identity theft insurance service. On the idea that it’s not a vote of confidence, the first thing the company does is request fraud alerts (here’s a do it yourself guide to do what Lifelock does for you, except it’s almost free), which means any strange looking loan request will get reported to you. You can request these fraud alerts yourself so the fact that the victim was the LifeLock CEO doesn’t really matter.

Robert Maynard, co-founder of Lifelock, has a less than sterling personal and business history. All this can be gleaned from a very interesting Phoenix New Times article I’ve linked to below. One of the popular stories he tells is how he spent a week in jail after being picked up for failing to pay a $16,000 casino marker (loan) at the Las Vegas Mirage. He tells the story as an identity theft victim but upon investigation it was shown that the loan was actually his and the Mirage had a copy of his driver’s license, taken when he took out the loan. In fact, Maynard may have stolen his father’s identity and opened up an American Express card that he charged $154,000 on. As if all that wasn’t juicy enough, Maynard’s credit-repair company was shut down by the Feds for false advertising and deceptive practice and he’s prohibited from working in the credit-repair industry forever. If you’re thinking about Lifelock specifically, I recommend reading that article because they also mention that they’ve only paid out three claims (no mention of how many denials).

On a sidenote, one interesting fact I learned from the Phoenix article, if you put a fraud alert at one bureau, they are by law required to notify the other two. That can save you two phone calls every 90 days, which is how long the fraud alert is good for, if you decide to go the DIY route (which is what I’d do if you’re fearful).

Much thanks to Josh for the Star Telegram article about the ID theft and much thanks to Jake for the Phoenix New Times article about the questionable history of Robert Maynard, Lifelock co-founder.

Update: Oh, if you want to read more, Phil points out this great article on TechCrunch.


Is Identity Theft Insurance Worth It?

With the growing number of identity thefts, given the age of computers and our comfort with electronic commerce, a lot of identity theft insurance companies have been hitting the news lately. Are they really worth it? Is identity theft so prevalent that you would actually need insurance to protect against it? I personally know at least one person who has suffered from identity theft and it cost them quite some money and a lot of their time, easily two or three months of headache and hassle, to clear everything up. Looking at the numbers, is it worth it to pay a company like Lifelock $99 a year for up to $1,000,000 in identity theft insurance? (Many companies and banks offer identity theft insurance but Lifelock appears to have the most bang for your buck from the ones I’ve seen; a bank such as Wells Fargo offers a mere $10,000 in protection for close to $160 a year)

Not entirely sure. According to the FTC, in 2006, the worst state for identity theft was Arizona with 147.8 victims out of every 100,000 persons, or 0.15% chance of being a victim of identity theft. It is also estimated that each victim spends approximately $1,500 and 175 hours to clear their good name. If you estimate that each hour costs $30 (for an annual salary of $60,000), then the total cost is approximately $6,750. Thus, the average annual expected cost of identity theft per person, as measured by probability of being a victim multiplied by cost, is $10.13. Thus, a service like Lifelock is not “worth it” in the strict financial sense.

I poked around the Lifelock website to what they actually offer and they tell you, plain and simple, what they do and the fact that you could do it for yourself for free (I add how in the parenthesis):

  1. Tell each of the credit bureaus to set fraud alerts on your accounts. (You can do this yourself by calling the bureaus and requesting it)
  2. They tell the credit bureaus again every 90 days. (Again, you can do this yourself)
  3. They request your name be removed from junk mail lists. (You can do this free yourself at OptOutPrescreen)
  4. They request free copies of your credit reports. (You can do this free yourself at AnnualCreditReport)
  5. If your identity is stolen, they will spend up to $1,000,000 to help you get it back. This is the only thing you can’t do yourself… well you can self-insure but you won’t have $1M backing you up.

The most interesting thing about the site is the fact that the CEO, Todd Davis, plasters his social security number, 457-55-5462, all over the site. Assuming that is his social security number, that’s a pretty bold thing to be doing and a strong “money where your mouth is” type of statement that I can admire. Of course, that alone isn’t a reason to try the service, doing a calculation like I did earlier, which showed this particular $99/yr service is not worth it, is how you should be making your decision. That being said, putting your social on the web like that is certainly a great marketing ploy.

(Another company that offers a very similar service is TrustedID but it’s $12.95 a month, making it a less attractive offer; but I mention it in case you wanted to get a better feel for the industry. They lack the catchy marketing ploy of plastering their CEO’s social security number on their site.)

Verdict: Identity theft insurance isn’t worth it when you look at the numbers but sometimes it’s about peace of mind. As for me, I won’t be getting it anytime soon unless the probability of identity theft goes up significantly.

 Personal Finance 

Replacing A Lost Social Security Card

Luckily I’ve never lost my social security card (which is good because I have a lot of money saved up in it!) but the key to being prepared is to be educated before a crisis strikes, so today I’m just going to review what you should do if you lose your social security card and how to get a replacement.

Unfortunately, when you lose your card there is no one you can report it to in order to prevent any sort of identity theft or other shenanigans. If you were to tell the Social Security Administration, they unfortunately will do nothing because there isn’t anything they can do. Most of the time you only need the card itself when you apply for something like a job, driver’s license, etc. and need proof of identification; but when you’re applying for something like a credit card, you only need the number (the card is meaningless). So, the first thing you should do if you lose a card is to put steps into place to prevent identity theft like freezing credit reports.

How do you replace the card? You’re allowed three per year and ten lifetime, excluding name changes and a few other exceptions. If you haven’t met your maximum limit, first you want to fill out this application, and then prepare all your identification documents. You will need:

  1. U.S. driver’s license;
  2. State-issued nondriver identity card; or
  3. U.S. passport.

If you don’t have those, there are some other replacements you can use instead.

You can either mail the documents in (I doubt this is a good idea) or go to a social security card center and submit the application.

Hopefully you’ll never need this information (don’t carry your card around in your purse or wallet, you’ll never need it!) but in case you do, I hope it has helped.

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