Are Identity Theft Protection Services Really Worth It? Can Anyone Truly Keep Your Data Safe?
Identity theft is so common, it can start to seem unavoidable. 31.8 million Americans had their credit cards breached in 2014. Thirteen million Americans are the victims of full-blown identity theft every year. And in an age of constant media output, we are constantly aware of every new instance of data theft and security failures. From the WikiLeaks CIA dump to the JPMorgan Chase breach, it seems to be happening all the time in every industry.
And much of the frustration surrounding identity theft comes from the fact that our data is often exchanged without our express permission. We’re at risk of having it stolen from entities we never even gave it to.
There are options; there are a considerable amount of services available that are offered in attempts to combat identity theft. But there are also mixed messages being sent concerning whether or not these protection services are actually worth it or not.
Paid Identity Theft Protection Services
When you’re considering the types of protection available, the piece of the puzzle that needs to be established first is that while identity theft and credit card theft are related, identity protection and credit monitoring are not the same thing.
What is the Difference Between Credit and Identity Monitoring?
Credit monitoring is only effective for informing you of new information related directly to your credit score. Identity theft protection is more focused on monitoring how your personal information is used outside of your credit score. Both run between $120 and $300 a year.
Credit Monitoring: Credit monitoring notifies you when there is any activity on your credit report. Credit monitoring is helpful in that it gives you immediate awareness. Instead, of waiting to see your credit report at the end of each month, if someone uses your card, you’ll immediately know.
However, it’s important to recognize that the value in credit monitoring resides wholly in its ability to update you in a timely manner. It can’t prevent a crime, it merely allows you to respond quickly.
“Credit monitoring is like shutting the door after the horse has left the barn, whereas a credit freeze is a preventative measure,” Chi Chi Wu of the National Consumer Law Center told TIME.
If you’re considering a service be sure to ask:
- Which credit reporting agencies do you monitor?
- Do you monitor CRB (credit reporting bureau) reports daily, or less frequently?
- How much access will I have to my credit reports? Can I see them at all three CRB reports? As many times as I want without incurring extra charges?
- Are other services included, like access to my credit score?
Identity Monitoring: Again, identity monitoring will inform you if your personal information is used in ways other than what your credit score will indicate. So a change of address request or activity on a site that thieves often frequent to swap information, will show up. But take note, tax and government fraud won’t. So, if someone is abusing your Medicaid benefits, identity monitoring won’t notify you.
What to ask prospective services:
- What kinds of information do you check, and how often?
- What personal information do you require and what do you do with that information?
- Are other services included with the identity monitoring service? What services do you charge extra for?
Identity Recovery: Identity Recovery Services work to help individuals navigate the aftermath of identity theft. Typically, an individual is assigned a case manager who does things like helping to communicate with creditors and debt collectors. They give counsel on the necessary paperwork, etc.
An important thing to note while deciding whether or not this is a worthwhile choice for you is that federal law has made it your right to do the things for yourself that a recovery service will offer to help you with. So, if your identity is stolen, you have a right to do things like get free copies of your credit report and stop creditors and debt collectors from reporting fraudulent accounts.
Identity Theft Insurance: Most major identity theft protection services offer identity theft insurance. Identity theft insurance pays towards the costs associated with getting your identity back. The thing to be aware of though, is that this insurance typically functions differently than traditional insurance. We’re talking about the costs of things like postage and copying related documents, not the actual financial losses brought about by someone using your information.
Free and Low-Cost Identity Theft Protection Services
While the mainstream options are the ones often highlighted after major security breaches happen, there are a lot of worthwhile things that can be done by a consumer to protect their interests without making quite so large a financial commitment.
Free Credit Report: You’re entitled to a free credit report from each of the three major credit reporting agencies every twelve months. If you stagger your requests, you can see your report every four months. Annualcreditreport.com is the only federally approved site to make it happen.
Free Credit Monitoring: CreditKarma provides free credit monitoring for TransUnion and Equifax.
Free Monitoring + Low-Cost Resolution: Regularly recommended by Dave Ramsey, Zander offers free credit monitoring, and resolution services for $6.75 a month, or $75 for a year. They also offer $1 million in insurance.
In addition to outsourcing certain aspects of your care, you can also take relatively small, preventative steps to fortify your defensive tactics and protect your identity.
Keep Track of Snail Mail: Your mail is a prime target for anyone hoping to take your personal information in person. If you aren’t going to be checking it on a daily basis because of something like an extended trip, ask USPS to put a hold your mail until you return so that no one has access to a pile of your mail. Similarly, don’t just toss it; shred your mail before throwing it out so it can’t be stolen from the trash.
Implement Multiple Passwords: It’s a huge pain to remember multiple passwords. But the fewer you have, the easier it is to gain access across many of your accounts. Perhaps one of the most embarrassing things uncovered during the reporting following the breach of Equifax was that they had used ‘admin’ as both a username and password for a database. Don’t be like Equifax, be smart and use a variety of passwords.
Use Malware Protection on your Computer: Having virus/malware protection is a relatively simple step that is totally worth the few minutes of download time required. It’s your first-line of defense in preventing viruses or spyware from finding their way onto your system.
When Identity Theft Protection Services Are Worth It
This is the big question, is it worthwhile to trust a third party with your information and in many instances your money, and to expect them to produce an element of safety that you can’t or don’t want to provide for yourself?
The thing to always remember is that while the marketing may suggest otherwise, the options that include paying for a service are not primarily preventative, but reactionary. The ideology that drives them is not that they will prevent you from being a victim, but rather that you will know you are one immediately.
And there’s certainly value in knowing immediately. The sooner you know someone has taken your credit card information or personal identifying information, then obviously, the life of their crimes will be shorter.
When You Want Peace of Mind
A Gallup poll from several years ago showed that the crime Americans fear the most is hacking, and there have certainly only been more examples of why that fear may be valid since then.
But, the very same reasons that cause us to fear being hacked lend themselves to make us collectively ask if protection services are worth it at all. The institutions we trust to safeguard our information aren’t foolproof, why believe that the protection is?
Plus, there are stories that indicate that the institutions that offer the services know that that fear is a foundation to drive products. For example, Fortune recently reported, “Wells Fargo & Co is examining whether it caused unnecessary financial harm to customers through residential mortgage fees, frozen deposit accounts or ‘add-on’ products like identity theft protection, the bank said in a U.S. regulatory filing on Friday.”
When You Can’t Protect Yourself Alone
Purchasing a service that offers to help you protect and monitor your information should be done if you are:
A.) Unwilling to do any of the monitoring required for you to be aware as soon as someone uses your information.
B.) You’re willing to pay, not because you’re under the impression that it will save you from heartache, but because it brings you a peace of mind that you believe is worth paying for.
Ultimately, this is not black and white, it’s a matter of deciding what is most important to you in terms of both finances and the amount of energy you’re willing to devote to monitoring your information. At this point, your best bet when combating criminals interested in stealing your identity, is to be vigilant and pay attention so that when and if something does happen, you’re ready to respond. You shouldn’t purchase protection because you feel institutional pressure, but because you believe it’s the best choice for you.
Looking for more ways to protect your credit score? Visit our credit score resource and learning center for more tips and guides.
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This post was updated February 28, 2019. It was originally published October 5, 2017.