In making the move, Credit Sesame says that it hopes to be able to offer its customers a full 360 degree view of their finances by being the first to offer credit management, credit reporting and identity theft protection all rolled together to any consumer. They are hoping to ultimately be “Credit Karma, Bankrate and LifeLock all rolled up into one place.”
To show that there is a need for this free service, they note that according to the US Department of Justice, there were over 11 million Americans that were victims of identity theft and fraud in 2013. This ended up costing consumers some $21 billion in financial loss during the year, an increase of $8 billion from 2010. The Federal Trade Commission (FTC) also has identity theft as the number one complaint from consumers in 2013, accounting for 14% of the total complaints they received.
The specific details of this new identity theft protection service have not yet been released, so exactly how it will work is still unknown. Since they mentioned that they want to be considered like LifeLock, one would assume that the service will be similar, but not cost a monthly fee as LifeLock does. All Clear ID currently offers free basic identity theft protection (and an upgraded service for a monthly fee), but it’s much smaller that Credit Sesame.
With its current base of users who have already signed up to get free credit scores, this move will instantly propel Credit Sesame into being the leading website offering free identity theft protection. Offering this new service will also help differentiate itself from its three main no-cost credit score rivals: Credit Karma, Quizzle and Credit.com.
It could also prove to be an instant rival to LifeLock. Services like Credit Sesame found fertile ground to grow because the websites that offered free credit scores before them required users to give their credit card and were enrolled in a “free” credit monitoring service for a month. When that first month ended, the credit card would be charged a monthly fee for the service which upset many consumers. Credit Sesame and others began to offer free credit scores with no credit card needed, which completely uprooted the financial model of the other services. This could be the same case for the current identity theft monitoring services. Why pay $10 a month for this service if you can get the same service at no cost?
The ultimate flaw with all these identity theft monitoring services is that they can’t prevent identity theft in the first place. They can only alert you, in possibly a speedier manner, than you would have known if you didn’t have it. In the end, the best way to prevent identity theft is to be diligent on the front end so that it doesn’t happen in the first place. This is why we have always recommended never to pay someone to protect your identity. Now that a free service will soon be available, you can choose to have someone do it for free while you take the steps to prevent it from occurring in the first place.
(Photo courtesy of Don Hankins)