Courtesy of Ora DeMorrow

Everyone is looking for a new business opportunity. The best opportunities are those that tackle problems and fears. Now, with identity (ID) theft as the #1 crime in the world, beating out drug trafficking as the foremost moneymaker, a huge number of companies are providing services and solutions to address the crime.

Here’s the problem: many of these services are band-aid solutions that give you only the illusion of being protected. Many are the same services that have always been offered—they’ve just been repackaged as ID theft solutions. Most are more focused on protecting the interests of companies—banks, insurers, etc.—rather than yours. Almost all of their ID theft solutions are offered to fatten their own pockets and empty yours.

What services are available? Which are really worth the cost? Which actually help minimize risk and exposure, and ease the pain when dealing with an incident? Let’s examine the pros and cons of each type of service:

Credit report monitoring services

These services monitor your credit history to detect suspicious activity or changes in your credit history. Credit monitoring can help you detect credit-related fraud and ID theft.

Companies offer this on a subscription basis, and plans are typically available as a one-bureau service, with data access to only one of the three national credit reporting bureaus, or as a three-bureau service, with data access to all three bureaus (Equifax, Experian, and TransUnion). To detect ID theft, it’s generally advisable to see data from all three bureaus.

Companies providing credit monitoring will typically alert you to important activity, such as credit inquiries, public record updates, delinquencies, negative information, employment changes, new accounts, and other changes to your credit history.

In a nutshell, credit report monitoring alerts you of financial issues, but it’s up to you to fix the problem. Monitoring does not address medical, Social Security, character/criminal, or driver’s license ID theft.

Credit report monitoring is informative, but protection and restoration services are much more comprehensive and usually provide monitoring as an included benefit.

Insurance

ID theft insurance varies in coverage, deductible, and costs, just like many other forms of insurance. In most cases, it will cover lost wages due to time taken off work to correct or repair damages from ID theft. However, this coverage often carries a limit, typically about $2,000. The Privacy Rights Clearinghouse estimates that victims spend, on average, the equivalent of 22 workdays trying to correct damage from this crime.

Other benefits may include attorney fees (which may or may not be necessary); document notarization fees; mailing, postage, supply, and copying costs; and phone bill charges you may incur while correcting the damage done to your credit and financial reputation.

ID theft insurance provides no reimbursement for money that is stolen or for ID theft expenses incurred because of who the "thief" was. Most commonly, a family member is the culprit in the case of ID theft. In such instances, most insurance does not pay benefits.

The National Association of Insurance Commissioners cautions that insurance "cannot protect you from becoming a victim of ID theft and does not cover direct monetary losses incurred as a result of ID theft."

Costs vary, depending on the coverage and how you obtain your policy. There are three main ways to obtain ID theft insurance:

• As a provision in your homeowner’s or renter’s insurance
• As a service of your credit card company, bank, or lender
• By purchasing it as an individual "stand-alone" policy

ID theft insurance is most valuable when paired with a restoration or protection service.

Resolution services

Not to be confused with restoration, ID theft resolution companies are selling directly to consumers, charging fees that can run as high as $1,000 (sometimes more). Unlike credit monitoring services, resolution services guide ID theft victims through the nightmarish process of closing fraudulent accounts, dealing with creditors, and/or proving to government agencies that an imposter is not really you.

ID theft resolution services may provide some much-needed guidance and handholding during a trying time for victims, but consumer advocates say victims can do much of the work on their own, at minimal cost, without the added anxiety of sharing personal information with a third party—especially since many of these services are relatively new.

Bottom line, it’s best to avoid these costly services as a stand-alone product. As with credit monitoring services, resolution services are usually provided to you along with restoration and protection services for no added cost.