Civic takes proactive approach to identity fraud

The CEO and co-founder of identity protection startup Civic is confident a proactive approach is the best way to protect yourself from identity theft — so confident that he’s offering a $1 million insurance policy.

Vinny Lingham said the incidence of identity fraud continues to rise in the EMV chip era. According to Javelin’s report “2016 Identity fraud: Fraud hits an inflection point” new account fraud rose 113 percent in 2015. More than 13 million Americans are fraud victims.

Civic has released a new service which helps people take a proactive approach to identity theft. Instead of waiting for fraud to occur and then spend months cleaning up the mess, Civic’s app sends instant alerts whenever their identity is being used.

When a user’s Social Security number is used with a Civic partner, they receive either a push notification or an email via an online email service. That gives the user an ability to report the fraud before the account is opened and theft occurs.

Vinny Lingham

Vinny Lingham

“Your Social Security number was never meant to be a form of identification,” Mr. Lingham said. “It was created to track your Social Security benefits, but has since evolved into the broken standard for identifying someone.

“We now have a situation where people can easily impersonate someone else remotely. The bottom line — Americans are not in control of when and where their personal information is being used and we plan to change that.”

Civic will continue to offer additional protection. Via a partnership with TransUnion, Civic members will receive a push notification whenever their credit report changes. They will also have free access to identity theft protection experts through a telephone hotline.

After receiving $2.75 million in seed funding in February, Civic has been signing partnerships with companies who use Social Security numbers as identification. They recently added background check startups GoodHire and Onfido.

“Our goal is to solve the massive problem of identity theft,” Mr. Lingham said. “We can get people proactively involved in self-protection.”

Mr. Lingham said upon registration users receive a $1 million identity theft insurance policy. If a Civic user becomes a victim of identity fraud they will spend up to $1 million to help the user recover.

He also does not believe that consumers should pay for fraud. Companies should instead monetize the process by charging other companies a fee every time they confirm someone’s identity. Accurate data and increased fraud protection is worth something to them.

Earlier in his career Mr. Lingham founded a gift card company, an experience which prepared him for his challenges at Civic. He said the gift card industry endures a high rate of identity theft and the companies absorbed the damage. Even though 98 percent of their transactions were legitimate the process of detecting the other two percent was akin to a game of whack-a-mole.

While he conceded the difficulty in preventing all fraud, Mr. Lingham said there is great value in making it harder to engage in it.

“Criminals move from the most resistance to the least. If we drop fraud 10 to 20 basis points they move to a different company.”

Mr. Lingham said a very real threat and one few are aware of is the problem of compromised identities lying dormant before they are exploited. Many companies only offer one year of protection and fraudsters know this, so they wait as long as four years before using a stolen identity. By the time that identity is sold to the one who actually commits fraud, the protection offered is long gone.

“The difference with our model is we give you a lifetime $1 million protection and charge others to get access to your information (when they confirm your identity),” Mr. Lingham said. “It’s free for life and as our network grows it becomes more powerful.”

The mobile app will be available soon.

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