Consumer protection and fraud are coming to the forefront of legal issues handled by ARAG North America, especially over the recent holiday season, when 60 percent of its total claims were related to identity theft.

ARAG, an international company founded in Germany, bases its U.S. operations out of an 85-person office in Des Moines. It is one of the few companies that specializes in legal insurance. Paul Kluding, ARAG’s local corporate communications manager, says legal insurance works similar to other forms of insurance, with customers paying a monthly premium.

“I usually compare it to health care, but instead of having access to doctors, you have access to attorneys,” Kluding said. “The concept is the same, and we have thousands of lawyers nationwide and more than 100 in Iowa who participate in our network. Our customer can choose their attorney from our network, and whether they need over-the-phone or in-person consultation.”

ARAG has been in Des Moines since 1989, when it acquired Midwest Legal Services. Up until 2000, the company limited its legal insurance to companies to purchase as employee benefits. Halfway through 2002, ARAG came out with a consumer product called LegalRx, which includes a unique form of identity theft protection. Packaging the legal insurance with a tool to prevent and address identity theft was a direct reflection of the growing problem, Kluding said.

“Part of the reason we added identity theft coverage was the feedback we were getting from our attorneys on the type of work they were doing for our clients, with more of it being in the area of identity theft,” he said.

Bob Brammer, communications director for the state attorney general’s office, said his office does not keep a running count of identity theft cases, but acknowledges that they “get tons of calls on the topic.”

“The FTC (Federal Trade Commission) calls it the fastest growing consumer problem in the U.S., and we subscribe to that being true here,” Brammer said. “It’s a very nasty, pesky problem to unravel. Even if you don’t spend money, you spend lots of time trying to take care of it.”

In the past year, sales of ARAG’s LegalRx have doubled. Kluding relates this to the growing number of people needing legal services. A 2003 survey from the American Bar Association estimated that 70 percent of households had a need for legal help during a year, but half do not seek it. ARAG’s $19.95 per month premium buys a year’s worth of legal insurance for about the same price as one hour of legal counsel, which averages about $240 nationally, according to a survey by Harris Interactive.

“You just never know what kind of legal situation you could be in, so it offers that protection at any time,” Kluding said. “Consider it like car insurance. You wouldn’t buy car insurance the day of an accident, but ahead of time for protection.”

Fifteen percent of all cases ARAG handled in 2003 were cases of identity theft. The most recent data the FTC has on its Web site, www.ftc.gov., rank Iowa as 45th in the nation in the number of the number of identity theft cases per 100,000 people. In 2003, Iowa had about 31 victims per 100,000 people, while neighboring states of Illinois and Missouri ranked ninth and 17th on the list, a sign that the problem may be knocking at Iowa’s door.

“When you think of it from a criminal perspective, it’s not that difficult to steal someone’s identity,” Kluding said. “We see it most in the metropolitan areas so far, but it’s not that it isn’t just as easy to do here.”

ARAG helps victims of identity theft expedite the process of smoothing out the problems created by having their personal information fraudulently used by another person to obtain credit, property or services.

“An attorney steps into the victim’s corner right away and helps move things along more quickly,” Kluding said. “A creditor may call saying, ‘What are you going to do about this debt?’ and the victim may say, ‘Hey, it’s not my debt.’ But to have an attorney calling on your behalf saying ‘My customer did not make this debt,’ and at the same time, the attorney can send letters to credit bureaus and other creditors to let them know. Just having a lawyer’s letterhead involved can make a world of difference.”

AVAILABILITY OF CREDIT REPORTS RAISES QUESTIONS

ARAG expects to be busy in the months to come as a result of the FTC’s new rule allowing consumers to obtain a free copy of their credit report once a year from consumer reporting agencies, allowing individuals to better monitor what is happening to their credit.

The new rule, which is part of the Fair and Accurate Credit Transactions Act and the Fair Credit Reporting Act, began its gradual roll-out process last month on the West coast. The Midwest will become eligible March 1, the East Coast on June 1 and all U.S. territories by Sept. 1. Many ARAG customers who have taken advantage of the opportunity to view their reports have found issues with its content and called ARAG for help.

“We are talking to a lot of people who feel they have been a victim of identity theft, when really, there has just been an error – either a mistake in the social security number or a common name or somebody else’s credit was transferred to theirs,” Kluding said. “There are statistics that say that 70 percent of credit reports have an error that will fall to the consumer, and we are helping people with that. It’s a big issue, and I think it’s going to get even bigger now that more people are accessing their credit reports.”