Identity Theft

If you're concerned about data breaches or identity theft, you may be considering signing up for identity theft protection services. Before you enroll, it's important to weigh the costs and benefits of various types of services. You also can compare them with free and low-cost services. The federal government's IdentityTheft.gov website provides free personal recovery plans and step-by-step guidance to help identity theft victims recover.

What Are Identity Theft Protection Services?

Many companies refer to their services as identity theft protection services. In fact, no service can protect you from having your personal information stolen. What these companies offer are monitoring and recovery services. Monitoring services watch for signs that an identity thief may be using your personal information. Recovery services help you deal with the effects of identity theft after it happens.

Monitoring and recovery services are often sold together, and may include options like regular access to your credit reports or credit scores.

Monitoring Services

There are two basic types of monitoring services — credit monitoring and identity monitoring.

Credit monitoring tracks activity on your credit reports at one, two, or all three of the major credit bureaus — Equifax, Experian, and TransUnion. If you spot activity that might result from identity theft or a mistake, you can take steps to resolve the problem before it grows. Usually, credit monitoring will alert you when:

 • a company checks your credit history

 • a new loan or credit card account is opened in your name

 • a creditor or debt collector says your payment is late

 • public records show that you've filed for bankruptcy

 • there is a legal judgment against you

 • your credit limits change

 • your personal information, like your name, address, or phone number, changes

Credit monitoring only warns you about activity that shows up on your credit report. But many types of identity theft won't appear. For example, credit monitoring won't tell you if an identity thief withdraws money from your bank account, or uses your Social Security number to file a tax return and collect your refund.

Some services only monitor your credit report at one of the credit bureaus. So, for example, if your service only monitors TransUnion, you won't be alerted to items that appear on your Equifax or Experian reports. Prices for credit monitoring vary widely, so it pays to shop around.

Questions to ask credit monitoring service providers:

 • Which credit bureaus do you monitor?

 •  How often do you monitor reports? Some monitor daily; others are less frequent.

 • What access will I have to my credit reports? Can I see my reports at all three credit bureaus? Is there a limit to how often I can see my reports? Will I be charged a separate fee each time I view a report?

 • Are other services included, such as access to my credit score?

Identity monitoring alerts you when your personal information — like your bank account information or Social Security, driver's license, passport, or medical ID number — is being used in ways that generally don't show up on your credit report. For example, identity monitoring services may tell you when your information shows up in:

 • change of address requests

 • court or arrest records

 • orders for new utility, cable, or wireless services

 • payday loan applications

 • check cashing requests

 • social media

 • websites that identity thieves use to trade stolen information

To find out if your information is being misused, identity monitoring services must check databases that collect different types of information to see if they contain new or inaccurate information about you. For example, they might check the National Change of Address database to see if anyone is trying to redirect your mail. The effectiveness of the monitoring will depend on factors like the kinds of databases the service checks, how good the databases are at collecting information, and how often the service checks each database. There also may be information that a service cannot monitor. For example, most monitoring services can't alert you to tax or government benefits fraud, including Medicare, Medicaid, welfare, and Social Security frauds.

Questions to ask identity monitoring providers:

 • What kinds of information do you check, and how often? For example, does the service check databases that show payday loan applications to see if someone is misusing my information to get a loan?

 • What personal information do you need from me and how will you use my information? Are other services included with the identity monitoring service? Do they cost extra?

Identity Recovery Services

Identity recovery services are designed to help you regain control of your good name and finances after identity theft occurs. Usually, trained counselors or case managers walk you through the process of addressing your identity theft problems. They may help you write letters to creditors and debt collectors, place a freeze on your credit report to prevent an identity thief from opening new accounts in your name, or guide you through documents you have to review. Some services will represent you in dealing with creditors or other institutions if you formally grant them authority to act on your behalf.

Identity Theft Insurance

Identity theft insurance is offered by most of the major identity theft protection services. The insurance generally covers only out-of-pocket expenses directly associated with reclaiming your identity. Typically, these expenses are limited to things like postage, copying, and notary costs. Less often, the expenses might include lost wages or legal fees. The insurance generally doesn't reimburse you for any stolen money or financial loss resulting from the theft.

As with any insurance policy, there may be a deductible, as well as limitations and exclusions. Also, most policies don't pay if your loss is otherwise covered by your homeowner's or renter's insurance. If you're interested in identity theft insurance, ask to see a copy of the company's terms and conditions.