Are Identity Protection Services Worth It?

Identity protection services safeguard personal information from misuse by detecting, alerting, and assisting individuals in recovering from identity theft. This article provides information on these services and complementary individual practices to help readers make informed decisions about their identity security.

Key Features of Identity Protection Services

Identity protection services offer features designed to monitor personal information and provide assistance if identity compromise occurs. Credit monitoring tracks activity across major credit bureaus like Experian, Equifax, and TransUnion. This alerts individuals to new credit inquiries, new accounts, or significant changes to existing credit lines, indicating unauthorized attempts to use their credit.

Dark web monitoring scans illicit online marketplaces for compromised personal data, including Social Security numbers, bank details, and login credentials exposed in data breaches. Early detection allows preventative measures before fraud occurs. Many services also provide identity theft insurance, offering financial reimbursement for costs incurred due to identity theft. This insurance typically covers expenses like legal fees, lost wages, and other miscellaneous costs, often up to $1 million.

Identity restoration or recovery assistance provides guided support if identity theft occurs. Dedicated case managers help victims navigate the process of restoring their identity. They assist with filing fraud alerts, freezing credit, disputing fraudulent charges, and communicating with creditors and government agencies.

Operational Aspects of Identity Protection Services

Identity protection services continuously monitor various data points and generate alerts when suspicious activity is detected. For example, if a new credit account is applied for using an individual’s Social Security number, the credit monitoring system triggers an alert. Similarly, if personal data appears on the dark web, the dark web monitoring system flags this exposure. These alerts are typically delivered to the user through email, SMS messages, or a dedicated mobile application.

Upon receiving an alert, the user reviews the activity to confirm if it is legitimate or fraudulent. If fraudulent, the service provides immediate guidance on next steps, such as placing a fraud alert with credit bureaus or contacting the relevant financial institution.

If identity theft occurs, a dedicated identity restoration specialist is assigned. This specialist works directly with the individual to resolve the theft, assisting with tasks like filing police reports, contacting creditors to close fraudulent accounts, and correcting erroneous information on credit reports.

Scope and Exclusions of Identity Protection Services

Identity protection services generally cover financial, medical, and criminal identity theft. They detect unauthorized use of personal information for new accounts, fraudulent purchases, or misrepresenting identity in legal or medical contexts. However, exact coverage varies between providers.

Services often have exclusions and limitations. Most do not cover losses from pre-existing identity theft or losses due to an individual’s own negligence, such as voluntarily sharing passwords. Business identity theft is also generally outside the scope of personal plans.

Financial reimbursement through identity theft insurance has limitations. There are usually caps on the amount reimbursed for expenses like lost wages or legal fees, and deductibles may apply. Services may not actively monitor every type of personal data or online platform, meaning some niche forms of identity misuse might go undetected.

Individual Actions for Identity Security

Implementing personal practices can significantly enhance an individual’s identity security, complementing or serving as an alternative to paid services. Creating strong, unique passwords for all online accounts is a fundamental step, combining a mix of uppercase and lowercase letters, numbers, and symbols. Using a reputable password manager can help manage these complex credentials securely and efficiently, reducing the risk of multiple accounts being compromised if one password is breached.

Enabling multi-factor authentication (MFA) on all available accounts adds a crucial layer of security, requiring a second form of verification beyond just a password. This could be a code sent to a mobile device or a biometric scan, making it much harder for unauthorized users to gain access even if they obtain a password. Regularly reviewing credit reports from each of the three major credit bureaus—Experian, Equifax, and TransUnion—is also essential. Individuals are entitled to a free report from each bureau annually through AnnualCreditReport.com, allowing them to spot suspicious activity or inaccuracies.

Diligent review of bank and credit card statements for unfamiliar transactions can quickly flag fraudulent activity. Promptly shredding documents containing sensitive personal information, such as old bills, account statements, and pre-approved credit offers, prevents dumpster divers from accessing valuable data. Exercising caution with unsolicited emails, text messages, or phone calls that request personal information helps in avoiding phishing scams. Securing personal information online by being mindful of what is shared on social media and using secure, private networks for sensitive transactions further protects an individual’s identity.