"It's silly to buy a service for something you can get for free -- free credit reports, fraud alerts. I can't imagine why you would pay somebody for that," he says. Consumers are entitled to one free credit report from each of the three credit agencies -- Equifax ( EFX), Experian, and TransUnion -- each year, according to Claudia Farrell, spokeswoman for the Federal Trade Commission. They can also place a fraud alert for free, while credit-freeze regulation varies by state. Cate notes that despite the extreme stories of people whose finances were destroyed by identity crooks or those who had to undergo a lot of duress to right the wrongs of such a criminal, identity theft is actually declining. Most incidents stem from carelessness and naivete -- forgetting a credit-card somewhere, giving over a Social Security number to an unauthorized person or buying into scams on the Web. Furthermore, most victims get matters resolved and cash reimbursed in a short period of time through card issuers, banks and credit agencies. "It's not like buying flood insurance when the water's rising; it's like buying flood insurance when a drought is looming," says Cate. "And certainly there are more of these stories that are apocryphal than are true." Joyce Cavanagh, an associate professor at Texas A&M University and an expert on identity theft, considers security breaches at companies that gather and store consumer data to be the biggest threat. PrivacyRights.org maintains an ominous and extensive list of such breaches -- which have occurred at every imaginable entity, including government agencies, universities, doctors offices, retail stores, investment groups, phone companies and Domino's pizza.