For Jeff Smith, the potential nightmare of identity theft hit home when his wife received a call in December from the couple's credit card company asking if she had made a $250 purchase at a Jack-in-the-Box in Ontario, Calif.
She did not, but Mr. Smith, the president and chief executive officer of the $773 million-asset Ohio Valley Bank Co. in Gallipolis, said that two months later he and his wife were still trying to resolve the matter.
"I cannot imagine what we would be going through today if our identity was stolen as easily as our credit card number was," Mr. Smith said in an interview last month.
With that experience fresh in his mind, he needed little convincing when his risk management staff recommended that Ohio Valley sign up to resell a fraud prevention service offered by LifeLock Inc. of Tempe, Ariz. The bank's customers now pay roughly $10 a month for LifeLock to put a fraud alert on their credit reports and LifeLock's promise that it will clean up any identity theft problems that arise.
"I believe this partnership with LifeLock will provide our customers, including me, with proactive protection to prevent" identity theft "from happening at all," Mr. Smith said in a January press release announcing the agreement with LifeLock.
As of last week about 56 Ohio Valley customers had signed up for the service, he said.
LifeLock markets the service to consumers mainly through radio advertisements in which its chief executive, Todd Davis, reveals his own Social Security number.
But the company is also marketing through community banks, offering them a cut of $1 a month for each customer they sign up. Banks that have recently signed up include North Shore Bank in Brookfield, Wis., Founders Bank in Worth, Ill., Fidelity Bank in Wichita, and Brannen Bank of Inverness, Fla.
The $1.7 billion-asset North Shore has been offering LifeLock's service since September, getting word out first through statement stuffers and now primarily through the bank's Web site.
Stephen Steiner, North Shore's head of the retail banking, said that several hundred customers have signed up for the service. Though he does not expect it to be much of a money maker, he said offering it is worthwhile, because it gives customers peace of mind.
"We really approach it with the idea that it's something our customers may be interested in," he said.
Jane Tessmer, a vice president for marketing for Brannen Bank, said the $230 million-asset unit of Brannen Banks of Florida Inc. began reselling LifeLock's service in December and is marketing it to customers through statement stuffers and posters in branch lobbies. Also, account officers are pitching the service to new customers when they open accounts, she said.
Fraud alerts are intended to be used only by people who have had personal information stolen or who suspect they are about to be victimized. By law, if an alert shows up on a credit report, the merchant or lender granting the credit must take steps to verify an applicant's identity, such as calling the person at home to confirm that the application is legitimate.
Still, a number of consumer advocates say they are not convinced that fraud alerts really work.
One problem is that federal law does not specify how credit grantors must go about verifying an applicant's identity, according to Paul Stephens, director of policy and advocacy for the Privacy Rights Clearing House in San Diego. Without clear direction, he said, some lenders are apt to skip the verification process.
"The success of a fraud alert still depends on banks and other extenders of credit actually taking the action that they're supposed to take when your account has been flagged," Mr. Stephens said.
He also questioned why consumers would want to sign up for LifeLock, either directly or through their banks, when they can call the credit bureaus themselves and put alerts on their reports for free.
Meanwhile, the bureaus have their own issues with LifeLock.
Experian Information Services Inc. filed a lawsuit against LifeLock last month, alleging that the Fair Credit Reporting Act bars companies from filing fraud alerts on behalf of consumers.
Mr. Stephens said that bankers would better serve their customers by launching educational campaigns about ways to limit exposure to identity theft. For example, banks should make it clearer to customers that check card transactions are safer when processed as credit rather than debit, he said.
