Is Identity Theft Protection Worth the Money? The Pros and Cons

As cyber thieves become savvier, identity theft continues to rise. According to the 2017 Identity Fraud Study conducted by Javelin Strategy & Research, 2016 was the worst year ever for identity theft.

amount stolen by cyber thieves from 15.4 million U.S. consumers in 2016

Their study found that cyber thieves stole $16 billion from 15.4 million U.S. consumers.

Cyberattacks on companies that hold sensitive financial information are also becoming more prevalent. In September 2017, cybercriminals stole the personal data of 143 million U.S. consumers from credit reporting agency, Equifax.

“In today’s connected world, identity theft is ubiquitous,” says Steven Bearak, CEO of IdentityForce, a company that provides identity theft detection, support, and recovery services.

Says Bearak, “Fraudulent new account openings and account takeovers are very common. Fraudsters often have your account communication rerouted, keeping you in the dark so that the theft can continue longer.”

Consequences of identity theft

The repercussions of having your identity stolen are far-reaching and potentially devastating. Your credit score is likely to plummet. You’ll most likely need credit repair.

Credit Force estimates that victims of identity theft spend up to 600 hours or more struggling to retain their stolen identities.

To understand the far-reaching effects, here is a sampling of what an identity thief can do in your name:

  • Apply for credit cards
  • File fraudulent tax returns
  • Apply for a job
  • Lease an apartment
  • Open bank accounts
  • Obtain a driver’s license and passport
  • Buy and finance a car
  • Get a mortgage

How do you stop identity theft?

How do you protect your credit and your overall identity? When it comes to identity theft protection tips, Bearak’s top tip is to remain vigilant.

He says, “With all of the scams out there, being aware and careful with your personal information is your best defense.”

According to Bearak, everyday activities may unknowingly put you at risk. “Sharing phone numbers, home addresses, and email addresses can open the door for thieves to get deeper access to personal information.

They can use that information to access your medical records, credit card numbers, tax returns, and retirement and bank accounts. Avoid sharing personal information unnecessarily.”

Another way to remain vigilant is to monitor any changes in your credit and identity profile. You can do this on your own or purchase identity theft protection. Such services offer monitoring of your personal information for signs of identity theft.

These companies also offer recovery services to help you deal with the aftereffects of identity theft. Some companies include access to your credit reports and scores.

Free or paid identity theft protection?

Free identity theft protection options exist, including the federal government’s IdentityTheft.gov website. You can report an identity breach on the website. They then offer you a personal recovery plan and guidance.

The identity theft protection companies that charge a fee generally offer more services. They monitor your credit and personal information. Some just monitor for credit card fraud, while others include social security number theft.

There are even companies that monitor the dark web where information, such as social security numbers, is bought and sold.

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You’re alerted when there’s suspicious activity surrounding your credit or identity. If you discover fraud early enough, you can avoid extensive financial damage.

Identity theft protection companies also assist with identity recovery, including paperwork and phone calls. Some offer identity theft insurance.

How do I get identity theft protection?

Securing identity theft protection is fairly straightforward. Once you determine the company you would like to use, log on to their website and sign up. They will ask you a variety of questions regarding your financial situation and personal identity.

Is identity theft protection a waste of money? Pros and cons

To decide if identity theft protection is right for you, it helps to compare the advantages and disadvantages. Here are the pros and cons.

Pros

  • Constant monitoring of your information/data
  • Various options regarding services (For instance, some companies offer to monitor for entire families, including children)
  • Potential financial reimbursement for whatever is lost if your identity is stolen under their watch
  • Many companies offer a money-back guarantee–if you’re not satisfied with their services
  • Assistance navigating the required paperwork and phone calls if your identity is stolen.
Cons

  • There is a recurring cost. You’ll usually pay from $18 to $25 a month.
  • Identity theft insurance may lack transparency. Read the fine print carefully. There are exclusions.
  • Identity theft protection can’t shield you from everything. Says Bearak, “No matter what anyone says, you can’t stop all types of identity theft. However, receiving alerts when something suspicious occurs goes a long way toward protecting your identity.”

The bottom line

There are no guarantees, but given what your identity is worth and the consequences of having your identity breached, it can be a good idea to get identity theft protection. Professional identity theft protection can help you protect the good credit you’ve worked hard to build.

Says Bearak, “The identity theft landscape is continuously evolving, with new scams being designed every day to steal personal information.  We will continue to see data breaches rise and become even harder to stop. This again means that we all need to be even more vigilant with our personal information.”

If you’ve experienced identity theft and are in need of credit repair options, consult SuperMoney’s Credit Repair Reviews page.

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