ID theft translates into revenue for some

By Liz Moyer

updated 2:52 p.m. ET June 8, 2005

Worries about data security are translating into revenue opportunities for the nation's three biggest credit reporting agencies.

Shares of Equifax are hovering near their 52-week high of $36.52. The company, with $1.3 billion in annual revenue, is notching double-digit profit gains.

A new focus on protecting personal information, prompted by several recent disclosures by banks and other companies of lost or stolen data — the most recent being Citigroup's loss of confidential information on 3.9 million customers — stands to benefit all three credit-reporting agencies in the form of new fees for credit monitoring and fraud detection.

Indeed Wednesday morning, Equifax will announce that it has arranged with eBay to sell credit monitoring and fraud protection services to the online auction site's 147 million users. Called Equifax Credit Zone, it will allow users to buy credit reports as well as monitor their accounts for suspicious activities.

Consumers' seemingly endless appetite for loans and credit products has propelled results of the big credit agencies in recent years. Equifax and its rivals, TransUnion and Experian, reap fees from lenders for providing credit reports and other data about potential borrowers and from consumers for providing a variety of credit-reporting, scoring and tracking services. They also use the personal data they collect for direct marketing.

Potential problems loom
Still, there are potential problems for these companies just over the horizon. Rising interest rates threaten to choke off loan demand, which would reduce the number of credit reports the agencies could sell to lenders. New regulations that take effect Sept. 1 could also cut off a big source of revenue: The credit agencies will have to provide annual credit reports free of charge to anyone who asks for one.

So credit monitoring services are being hawked aggressively. For a monthly or yearly fee, each agency will notify consumers by e-mail of any changes or activity in their credit reports. Identity theft insurance is included. The policies for any potential identity threat target, underwritten by American International Group, Travelers and other insurers, will compensate for lost wages, lawyers' and notaries' fees, phone charges and mailing costs to rehabilitate your credit. But, it won't restore lost money.

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