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By Liza Horvath



The Fatal Flaw in Identity Theft Protection


You have to love the television and radio commercials where the speaker publically states his social security number conveying his complete trust and confidence in his identity theft prevention company. For a few dollars a month you, too, can be protected against fraud, scam and identity theft – or so states the advertising. The company is so sure they can protect you that they offer a $1 million “insurance policy” to help make things right should they fail. While engaging the services of an identity theft prevention provider is not necessarily a bad thing, there is a fatal flaw that should be considered.


To appreciate the flaw, we first need to understand how identity theft prevention companies work and then remember that where human nature is involved, endless opportunities exist for deviations from the “norm.” The way these companies provide protection is they monitor the three main credit reporting agencies – Transamerica, Experian and Equifax – along with using some propriety monitoring services developed by the companies themselves. If an inquiry for credit is made in your name, the company sends you an email alert. If you are shopping for a loan or applying for a new credit account, you recognize the inquiry as legitimate and do nothing. If you are not actively seeking credit, you alert the monitoring company that you have not initiated new credit and they investigate the inquiry. If there is impropriety, they stop the would-be thief from obtaining credit in your name.


However, humans do not always act in predictable ways. We become ill, have accidents, we die, and many of us will suffer cognitive impairment, dementia or Alzheimer’s. When we act well, “human,” we are most vulnerable to both undue influence and identity theft. For example: You are slowly declining in cognition but still happily live at home, pay bills, feed the dog and take care of yourself. You keep your children, trusted advisor or trustee at a distance because you do not need them involved at this time and they, respectful of your independence, do not intrude.


Months or years go by until one day it is apparent to everyone – including you – that help is needed. Your trustee steps in and, after making sure the dog is fed, begins to review your financial accounts. Low and behold, your trustee discovers that you have been scammed and your identity stolen. How can this happen if you have identity theft protection? Your trustee contacts your identity theft protection company hoping to cash in on that $1 million insurance policy to get back the money you have lost only to find that the company did what they said they would do – each time there was a credit inquiry, they sent you a notification and, hearing no objection, they allowed the credit inquiry to be completed.


Unfortunately, months prior you had lost interest in using your computer and your identity theft company was not notified. The scammers sailed right in and now you must deal with fraudulent credit card accounts and mobile phone accounts – all of which are being charged to you.


Identity theft protection is a good thing but, like all of our planning in today’s world, it must be backed up – it is essential to have a “Plan B.” The only way to stay safe is to be organized, make plans for the things we cannot foresee and keep family or trusted advisors close.


Liza Horvath has over 30 years experience in the estate planning and trust fields and is the president of Monterey Trust Management, a financial and trust management company. This is not intended to be legal or tax advice. If you have a questions call (831)646-5262 or email liza@montereytrust.com










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