Is Identity Theft Protection Worth it?

Recent headlines regarding major data breaches have heightened concern about identify theft.   You may be thinking about purchasing an identity theft protection service to help mitigate this risk.  ID theft protection services can seem like a good idea, but they may not provide as much protection as you expect.

Identity theft protection services cannot prevent identity theft, they monitor your personal information and alert you of any unusual or suspicious activity.  There is no way to fully protect your identity, the information needed to compromise your finances is already out there.  The primary services provided by ID protection firms include monitoring your credit reports and notifying you when someone makes a credit inquiry, opens a new account or takes out a loan using your identity.  In some cases, they monitor your Social Security and driver’s license numbers for new credit applications.  Most firms also provide recovery assistance to get your money back and restore your credit.

Services for identity theft protection cost around $10 to $30 per month, depending on the level of service provided.  Some of the most popular products include IdentityForce, LifeLock, ID Watchdog and Identity Guard.   Before purchasing a service, thoroughly research the company and compare the prices and services to find the best fit for your needs. The product you select should monitor information from all three credit bureaus Experian, Equifax and TransUnion.

Be aware of exaggerated promises on the services provided. Several firms providing ID theft protection have been cited for false advertising.  In 2015, the Federal Trade Commission fined LifeLock $100 million for failing to secure customers’ data and for deceptive advertising and Equifax recently experienced a major data breech compromising the data of millions of consumers.

Many experts, including Consumer Reports, state that you can save money by doing your own credit monitoring.  You can access a free credit report from each of the three credit bureaus annually.  Stagger requests from each bureau throughout the year to get a report every four months.  For greater convenience, you can request free credit reports through annualcreditreport.com, the only site authorized by federal law to issue credit reports. You are also entitled to a free credit report if you place a 90-day fraud alert on your account.  Freezing your credit can be an effective step toward securing your identity if you aren’t planning to apply for credit soon.   As of September 21, 2018, due to a new federal law, you can freeze and unfreeze your credit through all three credit bureaus at no charge.

Although you can monitor your own credit, it may be worth $120 to $360 a year to put your mind at ease by adding an extra layer of protection and recovery assistance.  An identity theft protection service may be especially useful if you don’t have the time or the inclination to monitor your own credit, you are already a victim of identity theft or you suspect your identity may have been compromised.