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Two years ago, Todd Davis, the founder of LifeLock, decided to plaster his Social Security number wherever he could get ad space. For a fee of about $10 a month, LifeLock offers what it calls a “proven solution” that prevents its customers from becoming victims of identity theft and fraud. I wrote about whether a solution like this is worth the money a few weeks ago (Is ID Theft Protection Necessary)… and apparently it’s not.

One man in Texas has already succeeded in getting a payday loan in Davis’ name. However, when asked about the breach Davis stressed that his service does not guarantee that your I.D. won’t be stolen. Rather, it aims to reduce the likelihood that your I.D. is stolen, and if it is, LifeLock promises to fix the problem.

But that’s not the real problem. LifeLock’s current problem is dealing with lawsuits of up to 105 of people who now claim that LifeLock didn’t live up to its advertising and have suffered at the hands of identity thieves.

So what can you do to prevent 83 people from trying to access your personal information? The answer is not LifeLock. The answer, as of today, does not involve only one approach. You need to be active in monitoring your own credit, and perhaps combine your own efforts with a service such as LifeLock… to help you with the monotonous lifting. Take a read through Is ID Theft Protection Necessary and try and follow the suggestions I’ve made. Monitoring your own credit, placing freezes on your credit, and many other “tricks” can keep you one step ahead of the game.

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But as this problem grows we also see the growth of an entirely new industry – identity theft protection. Banks, credit bureaus, and a host of companies are now providing identity theft protection for prices ranging from a few dollars a month to over $100 per year… but are they worth it?

What Does ID Protection Provide?
Most ID theft protection companies provide a standard fare of services in three major areas: prevention, detection, and identity restoration.

ID theft prevention is actually a lesser-known service, with most people focusing on ID theft detection instead. However, many companies offer services to prevent fraud from even happening by setting and renewing fraud alerts with major credit agencies. The fraud alerts tell the credit bureaus that you your identity may have been compromised, alerting creditors to actually contact you to confirm your identity before opening a new account. In addition, some companies offer to remove you from pre-approved credit offers to decrease the likelihood of someone filling one out in your name.

In terms of helping detect ID fraud, most companies offer some sort of 24/7 continuous credit monitoring service, alerting you to any inquiries into your credit, new accounts opened, or changes to your personal information. Annual or even monthly credit reports are also standard menu items for detection services.

Identity restoration is usually offered in the form of ID Theft “insurance.” The policies, ranging from $20,000 to $1,00,000 are meant to reimburse you for any damages incurred from your identity actually being stolen. Did someone open a new credit card account in your name and rack up $10k in charges? Your ID theft insurance would, in theory, pick up the tab.

Can I Do This Myself?
The underlying worth of ID theft protection is the convenience. There’s no magical product that these companies offer, no “new” service. After doing a little bit of research you’ll come to find out that you can do almost everything the ID theft protection companies do yourself… for free. So the question you have to ask yourself is whether or not the $19/month is worth your time. In a recent FTC study, the median amount of time spent resolving ID theft was found to be four hours. And 10% of victims spent more than 55 hours resolving their problems. So if you can spend a few hours a year maintaining an ID theft protection regimen then you probably shouldn’t waste your money on someone else’s services.

How Can I Do This On My Own?
If you’d like to provide your own ID theft protection, here are a few places to start:

First, skip the insurance. According to a report by Javelin Strategy and Research, consumers spend an average of $422 out of pocket to resolve identity fraud, could spend more than $900 in cases where the fraud goes undetected until a debt collector gets involved or the victim is denied credit. According to another Federal Trade Commission study, in more than 50% of the cases, victims incurred no out-of-pocket expenses for ID theft. In fact, you’re liable for only $50 in unauthorized credit-card charges, and that’s usually waived. Also, take a minute to call your bank, credit union, and homeowners insurance company – you may find they offer identity theft insurance to you for free just for being a customer.

As mentioned above, the best way to prevent ID theft is to contact one credit bureau (which will in turn contact the others) every 90 days to put a fraud alert on your account. The problem is, without proof of actual fraud, you can’t request an extended fraud alert, hence the renewal every 90 days. Alternatively, you can place a freeze on your credit. The rules are different between states, so you should check with your state consumer organization to find out what the rules for credit freezes are. Credit freezes prevent both fraudulent and legitimate lenders from reviewing your credit report without your consent, giving you perhaps more protection than you want. It’s most effective when you’re dealing with an aggressive identity thief, or fear that someone — such as an angry ex-spouse — is trying to ruin your credit.

In terms of credit monitoring, laws are now in place to allow you to receive one FREE credit report from each of the major credit agencies EACH YEAR. This allows you to request a free credit report every 4 months throughout the year (there are 3 major agencies). Start by going to https://www.annualcreditreport.com/cra/index.jsp . And putting a fraud alert on your account every 90 days as mentioned above entitles you to a free copy of your credit report from each of the three credit bureaus every 90 days. That’s 15 free credit reports a year – definitely more information than you probably need to adequately monitor your credit.

If by chance you are the victim of identity theft, there are a number of organizations that provide free help and support. Since this topic could be the subject of its own post I’ll point you instead to the Identity Theft Resource Center, the Privacy Rights Clearinghouse, the FTC’s Identity Theft Site, and the attorney general’s office in some states.

Where Can I Purchase ID Theft Protection?
As with any type of financial service, be sure to do your homework before purchasing. Starting with this post is a good start – congratulations! As a next step, assess what type of protection you’re looking for and the places you can find it. Are you willing to do some of the leg work and want to buy only insurance? Do you want to pay only for credit monitoring? There are a few sites out there such as ConsumerCompare.org that present an easy-to-read chart of ID Theft Protection services and what’s offered by each. Be sure to focus not only on price, but check the “small print” to see if the services offered have any sort of limitations. Also, be on the lookout for reviews from actual customers – ones that have and have not been hit by identity theft.

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Now just a few weeks ago, at the Macworld Expo in San Francisco Apple announced software upgrades to the iPhone, the AppleTV, and the iPod Touch. As expected, the iPhone and AppleTV owners weren’t charged a dime because that type of upgraded was included in the original purchase price.

However, the software update to the iPod Touch was more significant that the others with the addition of five new mobile apps—Mail, Maps, Stocks, Weather, and Notes. So Apple decided that such a significant software upgrade would require $19.99 to activate. Now I have no problem with Apple charging for the new apps. In fact, I think it adds to the perceived value that the iPod Touch has and adds even more value to the software running the iPod Touch as well as the iPhone. What I do have a problem with is everyone and their dog explaining that Apple was forced to charge for the upgrade, citing GAAP accounting principles or even worse, Sarbanes-Oxley.

Doesn’t anybody remember the $1.99 charged for the 802.11n wireless adapter last year? Everyone blamed the extra fee on accounting rules then, just as they are now. But the more stories I read, the more that this argument appears asinine. Why would any company be forced to charge for a product? Hasn’t anyone heard of Google?

The simple fact is that Apple charged $19.99 because they thought the upgrade was worth it. Whether or not you agree is up to you, but it had nothing to do with accounting principles. In fact, I went back and dug up this quote from Lynn Turner, former chief accountant of the Securities and Exchange Commission, which I thought explained the situation perfectly:

“[generally accepted accounting principles] doesn’t require you to charge squat. You charge whatever you want. GAAP doesn’t even remotely address whether or not you charge for a significant functionality change. GAAP establishes what the proper accounting is, based on what you did or didn’t charge for it.”

In this light, the revenue recognition treatment of the iPhone and AppleTV appears reasonable because the accounting rules apply to how the company dealt with the $500 it had already charged customers. In fact, it is probably in Apple’s best interest to “smooth” the earnings of the iPhone over 24 months instead of recognizing it all up front and then explaining subsequent drops in earnings. In that case, the accounting treatment used is a privilege for Apple, not a requirement.

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In an effort to appear legitimate, the bogus e-mails include text from an actual speech about the wildfires by a member of the California Assembly.

The scam e-mail urges recipients to click on a link, which then opens what appears to be the IRS Web site but which is, in fact, a fake. An item on the phony Web site urges donations and includes a link that opens a donation form which requests the recipient’s personal and financial information.

“People should exercise caution when they receive unsolicited e-mail or e-mail from senders they don’t know,” said Richard Spires, IRS Deputy Commissioner for Operations Support. “They should avoid opening any attachments or clicking on any links until they can verify the e-mail’s legitimacy.”

The bogus e-mails appear to be a “phishing” scheme, in which recipients are tricked into providing personal and financial information that can be used to gain access to and steal the e-mail recipient’s assets.

The IRS also believes that clicking on the link downloads malware, or malicious software, onto the recipient’s computer. The malware will steal passwords and other account information it finds on the victim’s computer system and send them to the scamster.

Generally, scamsters use the data they fraudulently obtain to empty the recipient’s bank accounts, run up charges on the victim’s existing credit cards, apply for new loans, credit cards, services or benefits in the victim’s name or even file fraudulent tax returns to obtain refunds rightfully belonging to the victim.

As a rule, the IRS does not send e-mails soliciting charitable donations, nor does not send unsolicited e-mails or ask for personal and financial information via e-mail. The IRS never asks people for the PIN numbers, passwords or similar secret access information for their credit card, bank or other financial accounts.

Recipients of the scam e-mail can help the IRS shut down this scheme by forwarding the e-mail to an electronic mail box, phishing@irs.gov. This mail box was established to receive copies of possibly fraudulent e-mails involving misuse of the IRS name, logo or Web site for investigation. The IRS and the Treasury Inspector General for Tax Administration (TIGTA) work with the U.S. Computer Emergency Readiness Team (US-CERT) and various Internet service providers and international CERT teams to have the phishing sites taken offline as soon as they are reported.

If you’d like to contribute to one of the many charities accepting donations for victims of the California wildfires, please go to the respective charity’s website directly. NEVER click on a donation link from an email.

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Wise Bread has a fun little article about both kinds of money laundering: the “classic” scheme involving Italian restaurants and dry cleaning establishments, and the “modern” brand of money laundering which usually involves some sort of business in the Cayman Islands.

Note: I do not condone illegal money laundering in any way, and I should warn you that there are very severe punishments that come along with even being a part of such a scheme. But if you’re just curious as to what it means to launder money, then check out the Wise Bread article.

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If you’re looking for a home-based business where you might actually make money, Yahoo Finance has a list of the Top 25 Home-Based Business ideas, including Yoga Instructor, Accounting, Web Design, Gift Baskets, and Computer Repair.

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