Last summer, an insurance guy from Ohio —who closely resembled Urban Meyer — sat down across from me in a hotel hot tub. He recognized me as "the Ramsey guy." For the next fifteen minutes, as I tried to relax and have a drink, he went on about how I didn't understand debt and what a lifesaver Dave Ramsey had been for him and his wife. I finally replied, "Good for you, buddy. I'm going to go get another drink and put it on my room, and that'll be charged to my credit card." You should have seen his face.
Until now, I have focused this monthly column on debunking Dave's misunderstanding of insurance products and investments in general. Today, my message is simpler, however. Today I'll show you the wolf who wears the sheep's clothing.
What Dave says about identity theft
In the September 9, 2015 episode of The Dave Ramsey Show, Dave discusses the subject of credit cards. He notes that seven out of 10 times credit card companies don't thoroughly check your credit. They only spot check, he says — and, in fact, they only do this about 30 percent of the time. The show concluded with Dave urging everyone listening to call Zander Insurance and find out more about the identify theft protection plans they offer.
To be honest, I forgot about this until I came across the following excerpts from Dave's weekly print column, "Dave Says." On August 12, 2014, Dave was asked if freezing your credit is a good tactic to protect against identity theft.
First he says:
"If Joe Crook signs an application with your name and address, and the credit card company issues the card without checking — they blind-issue cards about seven out of 10 times — then the card will be issued to the thief."
He goes on to say:
"I'd also recommend having a good identity theft protection program in place. I have it on myself and all my team members at the office. If you don't have this, and someone gets a card in your name, the credit card company will demand that you pay the bill. You can insist it's not you, but that won't do much good. Then, you'll have to go through the hassle of filling out affidavits and police reports.
You may get out of paying for it in the end, but you'll still have to spend dozens, if not hundreds, of hours dealing with the credit card company trying to get the whole mess straightened out."
Moreover, in a November 2012 appearance on Fox and Friends, Dave attacks credit card companies more directly, stating that they "invite identity theft into their industry by their lack of underwriting."
Researching the issue
My staff has made dozens of phone calls to Visa, Discover and American Express. We've been told by almost every local issuer that credit is checked every time an application is submitted. Only Visa corporate, by way of a customer service clerk, said that sometimes credit history is not checked if the applicant holds existing accounts.
A Google search indicates there are some credit cards that explicitly state they will not check your credit. The only ones I could find, without actually applying for one, were prepaid debit/credit cards.
Why would Dave Ramsey spout inaccurate facts about credit card issuers? As with taxes, investments and life insurance, it may be due to incompetence rather than intent to deceive. But for someone who claims to be America's favorite financial resource, I'm not sure that is less damning.
The real odds of identity theft
Zander Insurance Group, one of Dave Ramsey's oldest endorsements, offers an identity theft protection plan that runs between $75 per year for an individual and $145 per year for a family. As noted above, Dave is not shy about promoting this fact to his loyal weekly listeners and readers, which number 11.5 million. What if Zander, through Dave's endorsement, can pick up a 3 percent response rate — that's higher than normal, but these are loyal Dave fans — and 80 percent of the responses turn into proud new owners of Zander identity theft insurance?
