Gideon Yu, former chief financial officer of YouTube Llc. and current chief financial officer of Facebook Inc., is one of the most notable new executives in Silicon Valley. But while Yu operated in high technology’s highest circles over the past two years, an impersonator was quietly using his name and credit card number to make fraudulent purchases.
Yu and his wife did not spot the identity theft for months, until a spending spree in Reno, Nevada, got their attention. After the unpleasant fallout—ineffectual police reports, endless phone calls with banks—Yu delved into the world of identity theft prevention, looking for tools to protect himself and the estimated 15 million Americans who have been touched by the crime. “It felt like a problem that was really ripe for solving with technology,” Yu said.
This week, Debix, based in Austin, Texas, which places automated calls to its customers every time someone opens credit in their names, will announce that it has raised a round of financing from private investors such as Yu and Launny Steffens, a former vice- chairman of Merrill Lynch.
Other individual investors, joined by venture capital firms, also see opportunity in the business of combating identity theft. The big three US credit agencies—Equifax, Experian and TransUnion—offer several identity theft prevention tools but generally make it difficult for consumers to put such measures in place, requiring them to send requests via certified mail, for example, and to renew fraud alerts every 90 days. New companies such as Debix, LifeLock and TrustedID say they can make it easier for consumers to protect themselves—for a monthly fee of about $10 (Rs394).
Safety measures: Debix offers a service to alert customers each time credit is opened in their name.
“We take a miserable and painfully confusing process and make it as easy as we can, given the constraints the credit agencies put on us,” said Scott Mitic, chief executive of TrustedID, which is based in Redwood City, California.
Debix, which will begin widely marketing its service this month, has perhaps the most technologically ambitious approach.
Subscribers pay $99 a year and give the company their cellphone number and two backup numbers. Whenever new credit is opened in their name, Debix’s automated network calls the customer and plays a message that the customer prerecorded in their own voice. Customers then must enter a four digit PIN code to approve the transaction, or press the star button to decline it.
Debix has signed up 275,000 customers in the past two years by offering the service through companies and state governments that have lost their customers’ or citizens’ private data and now want to extend an additional layer of identity protection to victims.
The company’s chief executive, Bo Holland, said modern payment and credit networks did an incomplete job of facilitating commercial transactions. “What is missing,” he said, “is a common switch to allow two parties with no prior relationship to confirm each other’s identities.”
LifeLock, based in Tempe, Arizona, has about 400,000 customers and raised $6.85 million last spring from three venture capital firms, including the prominent Kleiner Perkins Caufield & Byers.
For $10 a month, or $110 a year, LifeLock places and preserves fraud alerts on a customer’s credit reports with the big three credit companies and several smaller credit firms.
It says it also keeps customers’ names off junk mailing lists and can clean up their credit history if the thieves prevail and steal their identity.
In October, a third player, TrustedID, raised $10 million from the venture capital firms Opus Capital and Draper Fisher Jurvetson. The company says that it has “hundreds of thousands” of customers. It charges $12.95 a month and sets not only fraud alerts but freezes, which make it impossible for creditors to grant credit until the freeze is lifted.
Like its rivals, TrustedID’s business will be vulnerable if US Congress succeeds in pressuring the three major credit agencies to make these identity theft fighting measures cheaper and more accessible to consumers.
©2007/INTERNATIONAL HERALD TRIBUNE