These Services Alert You to Identity Theft. Are They Worth It?

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A number of services promise to notify you if you are a victim of credit fraud. But you'll pay a hefty fee.


The problem with identity theft is that you probably won't know when your personal data has been stolen–or even whether you've been a victim. A recent study by Javelin Strategy & Research found that the number of identity-fraud victims in the U.S. totaled 16.7 million in 2017. But that's only the tip of the iceberg, because the data of many millions more Americans has been exposed and may be used in the future to open fraudulent accounts. Last year's Equifax breach alone exposed addresses, birth dates, Social Security numbers and other sensitive data for nearly 146 million people, launching them into ID fraud limbo.

See Also: 4 DIY Solutions to Monitoring Your Credit, Preventing ID Theft

Enter ID theft protection services. For $10 to $30 a month, they will alert you via text, e-mail or mobile app if they detect (or suspect) misuse of your data or accounts–perhaps sooner than you'd notice on your own–and to walk you through repairs.

Do you need an ID theft protection service? That depends on how much you're willing and able to do by yourself. Most paid plans offer at least one tier that watches over all three credit bureaus at once and can flag changes to your reports–such as the appearance of a new credit account–more quickly than you might detect by ordering your once-a-year freebies from www.annualcreditreport.com. Moreover, a good service will sweep online databases to see if your personal details pop up in court records, payday loans, sex offender registries or applications for new financial accounts. The service will also keep an eye out for address changes that could suggest a criminal is trying to reroute your mail, and it might look out for unfamiliar names or addresses linked to your SSN, too.

ID theft protection services often scour the secret chat rooms and black-market websites of the "dark web" for evidence that your SSN, e-mail address, driver's license number, passport number, mother's maiden name and other identifying info are up for grabs. "Some of this monitoring is challenging or dangerous to do on your own without the technical know-how," says Eva Velasquez, president of the Identity Theft Resource Center. And although freezing your accounts is an important preventive step, it won't stop a crook from fiddling with your existing accounts.

Monitor to the max. A comprehensive package includes four main services: monitoring your credit report, monitoring other data tied to your identity, dealing with the aftermath of ID theft, and covering certain costs to restore your identity.

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If your information is compromised, "restoration" or "resolution" specialists can help you through the recovery process, which might feel overwhelming if you try to tackle it alone. For example, a dedicated case manager (equipped with a limited power of attorney, if necessary) may notify federal agencies, complete paperwork and correspond with creditors on your behalf. Or a specialist can talk you through the hassle of canceling and replacing credit cards, insurance cards and more if you lose your wallet.

Insurance policies, a staple of most plans, are less useful. Many providers tout $1 million policies because "it's an easy insurance policy to give a big headline number to," says Nick Clements, cofounder of MagnifyMoney.com. But the toll is mostly measured in the hours you spend and the stress you feel when you try to repair the damage that ID theft can cause. Most policies are limited to small payouts–for example, reimbursing out-of-pocket expenses that come with restoring your identity, such as postage and notary fees, or replacing documents such as passports, according to a 2017 report by the Government Accountability Office. They may also reimburse you for lost wages or legal fees.

ID theft services can't do much to get ahead of medical fraud, aside from scanning the dark web for health care identification numbers. Don't expect help detecting tax fraud, either.

Before you buy. Most services offer several plan tiers. But check out a service's other plans and decide which features you want, in case you are willing to trade certain features for a lower price. For example, a less-expensive tier of service may mean phone assistance and form letters to help restore your identity instead of unloading part of the burden onto a case manager.

Some services offer plans that include monitoring of your children or a parent. For example, LifeLock Senior ($19.99 per month) sends alerts to both you and your parent and monitors for changes in investment accounts, home titles and more. Child plans can look out for credit reports in your child's name and some public records. Some providers throw in a few preventive measures, such as antivirus and anti-phishing software; a junk mail opt-out; password managers; or the removal of personal information from people-finding websites.

To avoid committing for the long term, see whether the service offers a free trial or a money-back guarantee (most of the services we name offer free trials, although not necessarily for the tier we list). Or start with a monthly subscription rather than paying for the whole year. If you decide you don't need it, you'll have to remember to cancel before it automatically renews.

See Also: 8 Things You Should Never Keep in Your Wallet