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What You Need to Know About Credit Monitoring and ID Theft Protection Services

What You Need to Know About Credit Monitoring and ID Theft Protection Services

Every other week it seems there is news of yet another data breach, big names like Sony, Starbucks, Target, Home Depot, the list is long. Truth is, it’s almost not a question of whether your information will get stolen, but when.

There are credit monitoring and identity theft protection services, but sorting out who does what can be confusing. Knowing what you’re getting and what you’re not will make all the difference should you wind up a victim.

"Identity theft prevention and monitoring services usually cost a monthly or yearly fee, but these costs can buy peace of mind and end up being a worthwhile investment. This is especially true when technology and the web make us that much more susceptible to the loss of identity," says Leslie Tayne, an attorney specializing in financial issues with the Tayne Law Group.

Where to turn for help is the big question? Do you go to your bank, free crediting monitoring services on websites? Choose wisely. "There are a lot of free options. But ‘free’ doesn’t always translate into best. At least there is very little risk or downside to taking advantage of free offers. Free credit monitoring services are available on CreditKarma.com, CreditSesame.com, Quizzle.com, but they generally offer monitoring for one or two credit bureaus at most, not all three," says Michelle Black, a credit expert for Hope4USA.com, a credit education and restoration program.

There are a lot of free options. But ‘free’ doesn’t always translate into best.

The problem with many identify theft protection and credit monitoring companies is that they simply don’t offer the services necessary to fully protect a consumer, says Howard Dvorkin, author of Credit Hell: How to Dig Out of Debt, "For example, many don’t offer insurance, fraud alerts or proper customer assistance," he says.

Be clear if you are buying a service that is reactive, meaning they help you out once you’ve been victimized, or whether it is preventive, they take steps to make it tougher for cyber criminals to have their way with your information.

Some companies hype the low cost for their services, but what’s the use of paying any price if you’re not going to get proper protection, he asks.

Maybe you’re thinking your bank is a good idea. "Using bank services for ID theft monitoring is not always the best choice, as many banks will only monitor accounts associated with their bank, leaving any separate credit cards and bank accounts unmonitored and thereby subject to vulnerability," says David Pollino, fraud prevention officer for Bank of the West.

According to Alex Gerard, founder of CardsMix.com, Discover, JPMorgan Chase, Bank of America, Ally Financial, Citigroup and USAA are among the banks providing a free monitoring service with a real-time FICO score. "I recommend bank customers use their bank credit monitoring services if it is available. but also a third party tool like Credit Karma," says Gerard.

Be careful who you deal with

You want to deal with a reputable company. "There are a few companies that are outright scams to get your name, date of birth and social security number so you can become a victim. One of the biggest factors in identity theft today is the simple fact that everyone’s information is available for sale online. Identity thieves know this and simply buy the details of their victims," says Trip Elix, who runs itsmyinfo.org, a website that attempts to list all of the companies that are reselling people’s information.

The Consumer Federation of America has studied companies that offer these services and found that some make claims that are exaggerated or misleading, and it’s not easy to tell from their websites and advertising exactly how their services work, how much they cost, or what protection or assistance they really offer.

The CFA has a list of nine things to check when shopping for identity theft services. For one thing, if the claims on the identity thefts website or its advertisements make you think that the service will completely protect you against identity theft, steer clear. The CFA says no one can absolutely protect your personal information from being stolen or fraudulently used, and identity theft service providers that follow good practices won’t imply that they can. Another red flag is if the identity theft service uses scare tactics to get you to enroll. Does the identity theft service make basic information about the company easy to find on its website? If the answer is no, keep it moving. If you’re not sure where the company is located, how to contact it, or its product distributor directly for answers to questions, the CFA says that’s another reason to think twice. For more from the CFA’s list, go here. Security guru Robert Siciliano rates the services out there at, www.bestidtheftcompanys.com.

Do your part

Truth is, the best defense is a good offense. Be proactive. "Change all your online passwords often, starting with those for your bank, credit cards, brokerage, and other financial accounts. Change your social media account passwords regularly, as well, to help keep anyone from hijacking your identity and infiltrating your network of friends and acquaintances," says Pollino.

You can get a credit freeze which prevents most third parties from accessing your credit report.

You can get a credit freeze which prevents most third parties from accessing your credit report. "This prevents fraudsters from using your personal identifying information to open financial accounts or make transactions that require a credit check under your name," says Pollino.

Freeze or lower the daily spending limits of accounts that you don’t use frequently. Set up text alerts to immediately advise you each time your accounts are used, suggests Thomas Nitzsche, financial educator with ClearPoint Credit Counseling Solutions. He also suggests enrolling in AllClear ID "Basic", which is free and includes ID theft monitoring, monthly reports an phone alerts. "They are an industry leader," says Nitzsche.

Get an annual credit report quarterly at www.annualcreditreport.com.

Get an annual credit report quarterly at www.annualcreditreport.com. "You are entitled to one free report per year from each of the three services, so if you stagger the requests you can get a report every four months from Equifax, Experian and TransUnion," says Pollino.

Whatever you do, don’t think it won’t happen to you. Says Pollino, "Cyber criminals have become more sophisticated. You have to protect yourself."

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Anonymous   |     |   Comment #1
When the firms offering any credit related "service" start publishing their track record with metrics on how well they perform AND eliminate a lot of the disclaimers in the fine print, most should consider them at that time. 
Anonymous   |     |   Comment #2
Changing passwords regularly provides no protection - and drives you crazy trying to keep track. The real hazard is using the same password on multiple accounts. When passwords are stolen, the crooks immediately try each name/password combination on other sites. 
Anonymous   |     |   Comment #3
Sooner or later, one of those "identity protection" or "credit monitoring" outfits that people sign up for will themselves get hacked.
Anonymous   |     |   Comment #4
Well said.  No doubt about it.  That's the reason I don't use 'em.
Anonymous   |     |   Comment #5
Thumbs up.  Anything today can and will eventually be hacked.  I would never use one of these "services" where all my critical data is together, organized, and in perfect order.  And I'm certainly not going to pay to make it easier for some smart hacker to steal from me.  Heck, today even airplanes are being hacked . . . even though the airlines and plane manufacturers are of course trying to cover this up.

The problem is the same right across the board:  It costs real money to provide data security, whether it be within airplanes or inside the financial industry.  Greedy executives are not willing to spend the money they must in order to keep us safe.  Until there are real penalties for these people - meaning some go to jail -  nothing will change.  Today for them it's all about "risk/reward".  And the uncaring executives are perfectly willing that we take all the risk provided it is they who reap the rewards.
Anonymous   |     |   Comment #6
It is all about money, they really have no interest in you.  The most important group to sustain their business is the hacker.  
Anonymous   |     |   Comment #7
Credit monitoring is a joke, that is info after the fact. Put a freeze for few years and demand the new credit to be issued upon your approval only. Credit bureaus can call you to verify if that is you who requested new credit or bank account(s).