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Do You Need Identity Theft Protection Services?
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. That’s why NerdWallet advises proactively freezing your credit — it can prevent the opening of fraudulent accounts.
» SIGN UP: Monitor your credit score for free while your report is frozen
Consider paying for an identity theft protection service only if:
- You’re already the 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
- It is likely that you won’t go through the effort of actively monitoring your own credit
Perform the basic services offered by these companies yourself, often at no charge:
- You can keep an eye on changes to your credit reports and track your credit score for free through various personal finance websites, like NerdWallet, or some credit card issuers.
- 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 cannot do for you.
“The first thing consumers need to do if they’re worried about ID theft is just to freeze their credit reports,” says Chi Chi Wu, staff attorney at the National Consumer Law Center. “Freeze, freeze, freeze. Everything else is gravy on top of that.”
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:
- Monitoring: 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.
- Alerts: 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.
- Recovery: 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.
» MORE: Guide to identity theft and cybersecurity
Compare identity theft protection services
You may decide you want a full suite of safeguards and don’t mind paying for peace 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 are the ones that 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.
1. LIFELOCK ULTIMATE PLUS
- LifeLock’s Ultimate Plus plan offers more than 15 services to help you watch for and recover from identity theft
- The company tries to add value to its package through additional features, such as a $1 million identity theft recovery plan and legal assistance
- In 2015, the Federal Trade Commission fined the company $100 million for failing to secure customers’ data and for deceptive advertising
- LifeLock contracts with Equifax to provide some of its credit monitoring. The double whammy of recent data breaches at Equifax and LifeLock should give you pause.
- The top-tier plan is pricey, especially when covering a family: including a spouse costs an additional $29.99 a month, and children add $5.99 each.
Cost: $29.99 a month or $329.89 a year for LifeLock’s Ultimate Plus plan
Best for: Those who don’t have an entire family to protect; those who can afford to spend a little extra for comprehensive coverage. Read our full LifeLock review here.
2. IDENTITYFORCE ULTRASECURE+CREDIT
- IdentityForce offers less expensive three-bureau monitoring than big names like LifeLock
- You can get a family plan, which covers two adults and any children 25 and under
- Offers alerts about suspected health insurance fraud
- The sign-up process is tedious, requiring you to input information multiple times
- The family plan is not readily apparent on the website and you may need to call to request it
- Pinning down the lowest price can be tricky, since prices vary depending on whether you sign up online or over the phone
- $23.99 a month or $239.90 a year for the IdentityForce UltraSecure+Credit plan, which offers tri-bureau monitoring costs
- Family plans are $35.90 a month or $359 if you purchase a year at once, which will give you two months free
- Note that prices can be cheaper over the phone than online
Best for: Those who want family-wide protection on a budget; those who want medical identity coverage.
3. ID WATCHDOG PLATINUM
- ID Watchdog keeps credit monitoring, alerts and recovery simple
- The plan has perks such as access to credit reports and scores, as well as a credit simulator
- One standout feature: It will help you recover from pre-existing identity theft for an additional fee of $79.95 to $279.95, depending on the kind of fraudulent credit line
- The company’s mobile app and desktop interface provide less information than those of its competitors
- ID Watchdog offers fewer monitoring services than other companies
- Some of the monitoring services can take up to 24 hours to complete scanning and populating your account
Cost: $19.95 a month or $219 for an annual plan for ID Watchdog Platinum, 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.