Banks, insurance companies, even the credit bureaus who sell your information, now offer to help protect you - for a price. But what do you really get?

Out of control identity theft is fueling a growing industry. Consumers, fearing the a quagmire of fraud and ruined credit ratings, are more willing to pay for the security of knowing someone is watching when they can't.

At Intelius Inc. in Bellevue, workers field a continuous stream of calls about a service called IDWatch. The company specializes in tracking private and public data for background checks, pre-employment, criminal checks and now, identity theft protection.

Executive Vice President of Sales and Marketing, Edward Petersen, says that by continually monitoring public and private records the company can tip you off sooner to potential problems, so you can take action before identity theft occurs. The service costs $100 per year.

"It could be something as simple as a change of address," Petersen said. "It could be something as simple as another phone line being opened up in someone's name, it could be something as complex as someone taking your credit card number or social security number and selling your data online."

Record Monitoring, Insurance and Fraud Alerts

Identity theft protection primarily comes in three forms: record monitoring, id theft insurance, and fraud alerts on your credit file.

A Colorado company called LifeLock goes as far as to guarantee it can prevent identity theft, by placing fraud alerts on your credit file to lock out new activity unless you say it's okay.

That's something you can do yourself through the credit bureaus. The only catch is that the credit bureau alerts only last for 90 days. After 90 days you have to repeat the process. LifeLock boasts it can automatically renew the alerts for you, plus get your name of pre-approved credit lists, something else you can do yourself, for $120 a year.

Identity theft Insurance reimburses your expenses once you're a victim. It typically pays up to a certain amount for the costs of making copies, mailing documents and filing reports.

But most insurance does not reimburse you for any fraudulent charges on your accounts. The insurance typically covers lost wages, (if you use paid sick leave or vacation time to deal with identity theft, you're not losing wages).

Some insurance may provide assistance in clearing up identity theft with creditors, but you still have to do the actual leg work.And don't forget the deductible, which may be higher than any costs you'll incur. ID Theft Insurance ranges from $25 to $100 dollars a year depending on the amount of coverage you buy.

Most record monitoring plans review your credit files, provide you with copies of your credit report and alert you of new or unusual entries on in your file. But again, beware the credit monitoring services vary. Do they monitor the three or four major credit bureaus or only one? They cost as much as $200 a year.

Peace Of Mind

Retired Veteran Dan Daniels pays $100 a year for credit report monitoring -- something he was doing even before his personal information was stolen in the recent Veterans Administration security breach.

As Daniels sees it, if there's a problem, he knows he will still have to do the leg work of filing fraud reports and working with his creditors, but he feels it's worth it for the piece of mind to know he'll get a heads-up.

"It's worth it to find out if somebody's using my social security number or one of my accounts," Daniels said.

Between the almost daily reports of identity theft and focused marketing by companies selling protection, more and more consumers agree with Dan. But how often does the protection detect a problem?

I asked Ed Petersen how many IDWatch customers actually call back with questions about information that turns up on their report.

"The numbers that we had last time I looked at it, it was not a material percent. It's about 1 percent of the people that called in and had a question about the information," he said. "Now of that one percent, there's a much smaller percent where it actually was, in fact, something wrong."

I asked him, "Doesn't that support the notion that they're wasting their money?"

"I don't think so,", Petersen said. "I think when you look at it, it's how much.... What is wasting your money for id theft protection? Because if something does happen it's a very expensive process to get it cleared."

Employee Benefit Trend

The identity theft problem is so bad that many employers are even buying ID theft protection as an employee benefit.

But before you buy be sure to compare all your options: banks, credit card companies, insurance companies, private data companies and credit bureau.

With insurance, read the fine print about deductibles and proof of expenses. Make sure any monitoring includes all the major credit bureaus, not just one. Ask about extra fees or penalties for canceling the service. And remember, you can do most of this yourself for free, if you have the time.

For More Information:

The ID theft protection racket

Rise in Identity Theft Spurs New Type of Insurance

Is identity theft protection worth the money?

ID Theft Insurance Isn't Insurance

Intelius IDWatch

LifeLock

Credit Monitoring Comparison

Privacy Rights Clearinghouse