Responding to consumers' growing concerns about online fraud and identity theft, American Express Co. unveiled a premium-level fraud-monitoring service.
For $15.99 per month, cardholders who participate in Amex's ID Protect Premium service will receive more elaborate monitoring of the Internet to detect unauthorized use of their personal information, such as Social Security numbers, names and addresses, and up to $1 million in insurance benefits to cover potential losses from identity theft.
By adding the service alongside its existing $9.99-a-month Single Identity fraud protection, which the company has renamed ID Protect, Amex is "looking to monetize various levels of identity-theft protection as more consumers indicate they are worried about it," said Phil Blank, senior security risk and fraud analyst for Javelin Strategy and Research.
Amex already offered an "outstanding" array of instant notifications of suspicious account activity at no cost to cardholders, Blank said. But Javelin research found that roughly one in four consumers is willing to pay for extra identity-theft services from a credit card company. Among those, 29% subscribe to more than one service and 8% subscribe to more than two such services, Blank said.
As a result, Amex's move, which it announced Wednesday, may reap solid returns, and other credit card marketers likely will follow with their own beefed-up, higher-priced fraud-protection services.
"It appears that there is a pretty big market out there to be tapped among consumers who have higher concerns about identity theft, and they are willing to pay extra to get more layers of protection," Blank said. "We're going to see more of these premium-level services cropping up from credit card marketers."
Amex's premium-level service provides customers with 24-hour monitoring of black-market websites, public records and online directories to detect unauthorized use of personal data, with "prompt alerts" of such activity.
Customers also receive ongoing credit monitoring and a one-time credit report with the results from the top three credit bureaus. They receive protection from losses in case credit or debit cards are stolen, use of the latest version of Norton Internet Security Online software, and up to $1 million in identity-theft insurance to offset costs associated with legal expenses and reimbursement of unauthorized funds transfers not covered by their financial institution.
But savvy cardholders may not consider it a good value to pay nearly $200 a year for enhanced identity-theft protection beyond what is already available free of charge, one analyst said. Most credit card issuers and card networks already boast high-quality, built-in fraud-protection services.
"People have to be careful about what they're buying," said Brian Riley, senior research director with TowerGroup. "Most cardholders' liability in case of theft or loss is limited, and even if the loss is your fault your out-of-pocket obligation is usually about $50 at the most, so $1 million in coverage probably won't be necessary in most cases."
Amex's timing in launching the service is propitious, Riley said, since consumers are on alert after this month's data breach at Epsilon, the email marketing unit of Alliance Data Systems Corp. Though the breach primarily involved email addresses, financial companies have warned that this can be used to attempt to steal financial data in phishing attacks.
Amex "couldn't have picked a better time to roll out this service in the wake of a major data-breach event," Riley said.
