Businesses see profits in fear of identity theft

Identity thieves aren't the only ones making money from stolen financial information.

Widely publicized breaches at companies such as CardSystems Solutions Inc. have driven consumer interest in products intended to protect consumers against identity theft. And companies have responded by either creating anti-theft products or remarketing existing products as identity-theft fighters.

But the business, while growing rapidly, has hit some speed bumps.

Yesterday, ConsumerInfo.com, which is owned by the credit-reporting bureau Experian, settled with the Federal Trade Commission on charges that it had deceptively marketed ''free credit reports" and did not adequately disclose that customers who signed up for the report would also be enrolled in a credit-monitoring service and be charged $79.95 if they didn't cancel within 30 days.

ConsumerInfo must reimburse customers whom it deceived and pay the FTC $950,000.

All three US credit-reporting bureaus -- Experian, Equifax, and TransUnion -- offer credit-monitoring services. But other products are flooding the market, too, enticing customers who have already been victims or who fear they might become one.

Steven Christenson, president of Identity Theft 911, which sells a service to help victims resolve identity-theft problems, said business has boomed since the breaches at ChoicePoint and Bank of America. Identity Theft 911 covered about 50,000 consumers at the beginning of this year, but Christenson predicts it will cover about 5 million by the end of the year.

''Business is beyond all our expectations," he said.

The credit-reporting agencies, meanwhile, offer plans that allow customers to monitor their credit reports monthly, weekly, or daily.

''Some consumers sign up and have checked their credit report every day since day one," said John Danaher, president of TrueCredit, which is the consumer branch of the credit-reporting bureau TransUnion.Since TransUnion started a service that allows customers to check their credit reports as often as they want, credit monitoring has grown to 30 percent of TrueCredit's business, from 5 percent two weeks ago, Danaher said.

''There's definitely a group of consumers who, due to media coverage, are very concerned about identity theft," he said. ''It's been very, very successful, and frankly, we've been surprised."

All US residents will soon be entitled to a free annual credit report from each of the credit reporting bureaus, under a program Congress mandated in 2003. It is being phased in, with the Eastern United States being added Sept. 1. State law has allowed Massachusetts residents to obtain free annual reports for almost a decade. The FTC said there is only one authorized site for consumers to use to get free reports under federal law: www.annualcreditreport.com.

Experian has also seen more use of its monitoring services, said executive vice president Peg Smith. Although the company made several efforts to better explain the deal tied to its free credit report, the FTC will require it to contact about a million consumers regarding the settlement, she said.

St. Paul Travelers is one of many companies that offer an identity-theft endorsement on homeowner policies, to cover costs such as attorneys' fees and lost wages stemming from efforts to repair an identity.

Joe Lester, identity fraud product manager at St. Paul Travelers, said its service covers more than 2 million customers, up from several hundred thousand last year. Part of its success is in offering the service to organizations, which can buy a group policy.

Another service: Officials from Malibu, Calif.-based CardCops scour the Internet for stolen credit card information inadvertently left in the public domain by thieves, and then build a database of that information. Their customers pay $14.95 per year to list credit card numbers with the company that can be checked against the database to see if the numbers are stolen. Merchants can also check card numbers used for purchases.

The chances of getting a successful hit? Chief executive Dan Clements declined to disclose specific numbers but said that of the ''tens of thousands" of customers that the company has, the number of matches has been in the ''low thousands."

''All of those identity theft ads scare the crap out of everybody," Clements said. ''They've forced the market."

Joe Light can be reached atjlight@globe.com.