Identity theft protection companies pledge to act as guardians of your personal information, for a monthly or annual fee. Generally, they start with credit monitoring and layer on additional services so they can alert you to potential problems.
But alerts just flag you after the fact; they don’t prevent someone from stealing and misusing your financial data.
Consider paying for an identity theft protection service only if:
- You’re already a victim of identity theft or at high risk of it; for instance, if your Social Security number has already been disclosed in a data breach or you’ve lost your Social Security card
- You don’t want to freeze your credit reports
- You know you won’t go through the effort of actively monitoring your own credit
You can do it yourself
You can perform the basic services offered by these companies yourself, often at no charge:
- You can keep an eye on changes to your credit report and track your credit score for free through various personal finance websites or some credit card issuers
- You can report identity theft and follow free recovery paths outlined by the federal government at IdentityTheft.gov
- You can freeze your credit files at all three major credit bureaus – Equifax, Experian and TransUnion – for free, something an identity theft protection company can’t do for you
The first thing consumers need to do if they’re worried about identity theft is just to freeze their credit reports.
What identity theft protection companies do
In general, identity theft protection companies offer three main services: monitoring of your personal information, alerts of its use and resources for theft recovery. Many also offer tangential services, such as alerts about identity theft news and local sex offender registries.
Here’s an overview of the three primary services:
Identity theft protection firms monitor your credit files and alert you about activity, such as new accounts opened in your name and credit inquiries received, so you can react quickly.
Notify you of instances where your personal information has been used, like if someone tries to open a bank account in your name. This can be helpful because many people don’t realize identity theft has happened until their credit is wrecked, their bank accounts depleted, or they suddenly have a lot of new debt in their name.
If someone hacks your information and uses it maliciously, these companies can help you recover lost money and help undo the damage to your credit. Most offer insurance policies of up to $1 million.
Compare identity theft protection services
You may decide you want a full suite of safeguards and don’t mind paying for peach of mind. Or you may know you won’t do it yourself.
If so, compare prices and coverage details to find a plan that fits. Make sure the product you choose monitors credit data at all three credit bureaus; otherwise, you would be paying for incomplete protection.
Avoid credit monitoring products from the credit bureaus, which tend to have less robust coverage and may limit your right to sue them, even if they’re the ones who exposed your financial data.
Here’s a look at three popular products in the identity protection industry. This is a small sampling; you may find a different provider that suits you better. If you’ve already placed credit freezes, you’ll need to temporarily lift them to allow a provider access to your files for monitoring.
|Lifelock Ultimate Plus||
Cost: $29.99 a month or $329.99 a year
Best for: those who don’t have an entire family to protect; those who can afford to spend a little extra for comprehensive coverage
Best for: those who want family-wide protection on a budget; those who want medical identity coverage
|ID Watchdog Platinum||
Cost: $19.95 a month or $219 for an annual plan, which offers tri-bureau credit monitoring
Best for: those who want basic, no-frills credit monitoring; those who need help recovering from pre-existing identity theft