Soaring ID Theft Propels These 3 Security Companies

Approximately 15 million Americans in the U.S. have their identities used fraudulently each year with financial losses totaling near $50 billion.

Close to 100 million additional are at risk for having their personal identifying information stolen placed when records maintained in government and corporate databases are lost or stolen.

These alarming statistics demonstrate identity theft may be the most frequent, costly and pervasive crime in the United States.

The ways thieves steal information has become sophisticated. They can read “noise” waves and intercept data with ATM skimmers, or infiltrate peer-to-peer networks like music sites. Other criminals target consumers with phishing (by email), SMSishing (by text) or Vishing (by voicemail).

It’s not all rocket science, though. Many old-school techniques still work: dumpster diving, wallet theft, snail mail swiping, someone looking over your shoulder at a device, collecting credit card numbers on the phone or online scams that retrieve your data.

Unfortunately, criminals are adept at cracking codes, creating viruses and weaseling their way into improperly secured networks at work, school, banks and anywhere else that involves a computer.

People can only go so far to protect themselves, and, unfortunately even the most savvy IT professional in the world isn’t capable of building an impenetrable fortress.

As recently as five years ago,  very few companies offered services and products specifically designed to protect consumers from identity theft or, if victimized, to assist them in recovering from the crime.

Today, dozens of companies offer a range of services from credit monitoring, to the placement of fraud alerts, to opt-out services, to ID theft insurance and recovery services.

Here’s a look at three such service companies:

3 Security Companies: LifeLock (LOCK)

Considering LifeLock has had 35 consecutive quarters of increases in revenue and subscribers, it’s obvious the business is resonating well with consumers.

For $25 per month, LifeLock will remove your name from junk-mail lists, monitor the Web for fraudulent use of your name, Social Security number and other personal information, and alert you about potential breaches. Additionally, it says it will spend up to $1 million to help subscribers if they do become victims.

In the past, the company was criticized for preying on the fear of identity theft rather than providing a service that prevented it. Others claimed the measures LifeLock took could be done by anyone, without its help, which is true. More recently, the Federal Trade Commission (FTC) began an investigation into its marketing and advertising policies. The news brought shares down from a peak of $23 in February to about $18 today.

However, the company is in a good financial position. Total revenue for 2013 rose 34% from a year ago to $369.7 million, and is projected to grow between $455 million and $465 million in 2014.

Its IPO went for $9 just over a year ago, and newlyweds to the stock are basking in 102% gains.

3 Security Companies: VeriSign (VRSN)

It seems you can’t buy anything online or bank online without seeing the VeriSign check mark somewhere on a website. Via your browser, this leader in website identification and encryption allows you to confirm a website’s identity before transmitting any personal information by clicking on the VeriSign logo. VeriSign uses 128-bit encryption to scramble personal information and stays that way as it moves through the Internet.

Verisign also operates the infrastructure for all the top-level domain names (.com, .net, .edu, .gov and others) and manages and protects DNS infrastructure for 121 million of them. The company raked in nearly $1 billion in revenue last year from .com and .net registration fees through a contract with the Department of Commerce that runs through 2018.

The Warren Buffett-owned stock reported revenue of $246 million for the fourth quarter of 2013, up 7% from the same quarter a year ago, and the company is looking forward to a strong 2014.

3 Security Companies: Intersections (INTX)

Although Intersections is considered a leader in identity risk management and privacy protection, its customers—mainly financial institutions—have been defecting on a regular basis. Revenue slipped 11% in 2013 as subscribers went from 4.5 million at the onset of that year to just 2.9 million by December.  The company also provides retail services under the Identity Guard name.

Intersection relies primarily on U.S. banks to push its identity-theft platform, but due to regulatory scrutiny in the banking industry many of its clients have stopped marketing its products. That’s certainly cause for concern, and as a result, the company is forecasting a further drop in revenue between 11% and 18% in 2014 or $300 million.

Its saving grace—albeit long term—may be a $400 million revenue target for 2016 once its Identity Guard and VOYCE brands gain traction.

Written by Karen Riccio

Article printed from InvestorPlace Media,

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