Yesterday, a consumer watchdog group called the Customer Federation of America (CFA) released an extensive report analyzing the various identity theft protection services, and calling for heightened standards for this young industry.

In the report, the CFA identifies key problems that need to be addressed on behalf of such services, including clear descriptions of services and methods, accurate disclosure of costs up front, creating distinctions of what “insurance” would cover and whether it is of value, and various other industry practices that could use some improvement.

The report notes that the majority of services are oriented mainly toward credit monitoring, and points out that many of these services charge customers for things that they could do themselves for free. For instance, some companies include credit reports and fraud alerts in their services. In actuality, however, they are obtaining the free credit report available to every American on a yearly basis, and placing fraud alerts that consumers can place for themselves at no charge, if they feel they are at risk for credit card fraud. Furthermore, as the report points out, many of these companies are deceptive in their practice of obtaining these credit reports and fraud alerts on behalf of their customers. One such company, Lifelock, is singled out in the report as having been accused of fraudulently impersonating customers in order to place fraud alerts in their names. Lifelock is currently facing several lawsuits regarding this discrepancy, in which the plaintiffs claim that Lifelock is acting illegally in this way.

The CFA report also goes into detail on misleading wording, including the “guarantee” promises of many companies. They note that often, companies touting a “million dollar guarantee” often bury fine print deep inside their web site that attaches confusing limitations and exceptions. Consumers are lead to believe that they will be protected in all cases of identity theft, when in fact they may actually incur expenses should they fall victim.

Although they say that there is no cure-all prevention or resolution measure available for identity theft, they do give recommendations for two services: ID Watchdog and ID Theft Assist. According to the report, these two companies were the most customer-friendly out of the 16 companies examined, based on their full-service protection and resolution services. They do not provide services that are “of little value” such as insurance and fraud alerts, and are committed to resolving customers’ issues.

The report, at 52 pages long, is chock-full of criticisms for the industry, but also offers some hope. As they illustrate, there are some up-and-coming businesses that are focused on customer service, and hopefully the standards they have outlined will help guide the industry in the right direction.

For the full report, click here.