What is identity theft protection?
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Identity theft protection is an umbrella term that includes any service that helps shield people from the illegal capture of their personal data, such as name, birthdate and Social Security number, and the use of that information to steal money or commit some other fraud.
Identity theft protection can make consumers aware of suspicious activity early and help them minimize the damage.
Types of identity theft protection
Identity theft protection services do not prevent your personal information from being stolen, but they can prevent the very worst from happening by helping you detect fraud early.
ID theft protection services vary in scope. Most companies offer different tiers of service and charge more for expanded protection. Some services just monitor your credit report and send you activity alerts. More comprehensive coverage helps victims recover and restore their identity. For example, some ID theft protection plans take charge of canceling and replacing lost or stolen credit cards and credentials.
ID theft protection services also use different resources. They do not all search and/or monitor the same databases and they vary in how frequently they scour records and websites for your personal data and suspicious activity. Some offer more tools to reduce exposure to identity theft, such as virtual private networks (VPN) and password managers.
Customers are typically billed monthly or annually for these services. Here is a breakdown of the types of identity theft protection services.
Credit reports list consumers’ credit and loan accounts, and the amounts owed. Credit reports also show “hard” inquiries into a person’s credit record when they apply for a mortgage, credit card or other loan, as well as any late payments, bankruptcy filings or foreclosures.
Credit-monitoring services monitor your credit report at one or all three of the major credit-reporting bureaus (Equifax, Experian and TransUnion) and alert you of any activity, whether it’s a change of address or a new loan application. Some also track and disclose changes in your credit score.
Identity monitoring services can scour public records, such as property and arrest records, social media sites, the dark web and more for activity tied to your name, address or other personal information. This allows you a quick heads-up if your Social Security number is being sold on the dark web, for example, or if your name turns up on an application for public utilities in a town where you don’t live or own property.
You may get an alert if your personal data has been compromised in a company data breach, or if your login credentials for other websites have been exposed.
Identity theft insurance
Identity theft insurance helps a victim recoup the cost of recovering and restoring their identity. This may include reimbursement of legal fees, phone bills, notary fees, mailing costs and more.
ID theft insurance is sometimes included as a rider on a homeowners or renters insurance policy, it can be bought as a separate policy or as part of an ID theft protection package.
Some policies have deductibles and benefit limits. Nationwide Mutual Group, State Farm and Travelers Companies Inc. are among the top writers of ID theft insurance, according to the Insurance Information Institute.
Identity theft recovery
A broad ID theft protection plan will include recovery assistance. You may be assigned a dedicated agent to handle your case who can make phone calls, write emails and do the legwork required to restore your identity. This can save victims a lot of time and stress.
“In some cases, (the recovery process) can only be a couple of phone calls and it doesn’t take much time; conversely, we’ve had people where it’s taken years,” says Eva Velasquez, president and CEO of Identity Theft Resource Center (ITRC), a nationwide nonprofit that educates consumers and helps them recover their identity, at no charge.
“For a lot of folks, they don’t know how to recover from an identity crime and so having an expert walking you through that process can be very, very valuable.”
Do you need identity theft protection?
You don’t have to have a computer or smartphone to become a victim of identity theft. Mail stolen from a mailbox can lead to identity fraud. Criminals have a lot of ways to steal sensitive personal information and use it for their gain.
Identity theft protection services cannot prevent someone from stealing your identity; but if the theft is caught early enough, they can prevent or minimize the fraudulent use of it.
If you decide to sign up for credit monitoring or buy an ID theft protection plan, you still need to be extremely careful with your personal data.
“These services can certainly have value, but you can’t abdicate all responsibility,” Velasquez says. “You will have to participate in the recovery process along with the service.”
Whether you need ID theft protection, and how much, depends on your circumstances.
What to consider in an identity theft protection service
If you decide to buy identity theft insurance, you should comparison-shop like you would for any other product.
“Make sure it’s right for you and something you need,” Velasquez says. “Do your homework just like you would when you engage with any company and make sure it will meet your needs.”
It’s important to read the fine print and understand the details of any ID theft protection plan.
Keep in mind that federal law limits consumers’ liability for fraudulent credit card charges to $50, and many consumer card issuers offer zero liability, so buying ID theft protection for credit cards alone is not likely necessary.
Consider how much knowledge, confidence and time you have to resolve identity theft on your own. Paying someone to do it for you could be worth it.
Another factor to consider is your budget. ID theft protection plans cost about $8 to more than $30 per month, depending on how extensive the coverage is.
If you feel vulnerable, having ID theft protection can offer peace of mind.
Popular identity theft protection services
If you can’t afford to pay for ID theft protection, there are some free resources. The ITRC, mentioned above, has a free data breach information service called Notified and will help you recover your identity at no charge. The Federal Trade Commission will also help you report and recover from identity fraud.
Since the pandemic, consumers have been entitled to one free credit report per week from each of the three credit-reporting bureaus. Also, some credit-monitoring services are free. For example, Capital One’s CreditWise is a free credit-monitoring and notification service.
In the marketplace, there are a lot of ID theft protection services, and you can find ratings and reviews to help you choose. Here is a list of some reputable products. These are not product endorsements, just a reference to help you get started:
- LifeLock by Norton
- Complete ID by Experian
- Identity Guard