Every year, there seems to be some massive credit card hack at a retailer. The two biggest in recent memory were when thieves stole credit and debit card data from 40,000,000 people who shopped at Target in 2013 and 50 million from Home Depot shoppers in 2014.
While it feels good to get something free after you've had your information stolen, is it really worth it?
What These Services Offer
What they offer is “constant” monitoring of your credit reports so they can catch the symptoms of identity theft as early as possible. They look for suspicious activity, like unauthorized credit pulls that might indicate someone is opening up a credit card in your name, and alert you.
By catching issues as early as possible, repairing them becomes much easier and faster.
A few years ago, something suspicious happened to me and my credit report. Someone had used a similar social security number to mine to get a cell phone. There wasn't any identity theft but it was curious because a second Social Security Number, a new address, and a credit pull appeared on my credit report. I didn't detect it until much later but an identity theft protection service would've seen these (as anyone looking would) as being strange and alerted me.
Are They Worth It?
We took a closer look at the LifeLock service and we realized that those companies offer identity theft monitoring capabilities you can do yourself (if you are so inclined). You can get a very close approximation by using the Waterfall Method in requesting your credit reports.
The one thing that cannot be done for free is the, typically $1 million dollar, insurance plan. With Lifelock, for example, you get a laundry list of benefits if you're the victim of identity theft:
- Replacement of documents – the cost of replacing documents, including driver’s licenses, passports, birth certificates, marriage certificates, and stock certificates, as well as the cost to obtain police reports and the cost of additional legal expenses such as affidavits and notarizations required in connection with replacing documents as a result of a Stolen Identity Event
- Traveling expenses – reasonable expenses, including gas, parking and airline tickets, incurred in traveling to obtain replacement documents, to attend meetings or proceedings, or to rectify records as a result of a Stolen Identity Event
- Loss of income – actual lost income for time necessarily taken off work and away from your work premises, whether whole or partial days, including vacation days, floating holidays and discretionary days but not sick days or time taken away from self-employment, solely as a result of your efforts to amend or rectify records relating to your true name or identity as a result of a Stolen Identity Event
- Stolen handbag, purse or wallet – actual cost of replacing your stolen handbag, purse or wallet in addition to replacing the cash contained therein, as a result of a Stolen Identity Event. No coverage will be provided unless the theft is reported to law enforcement within twenty-four (24) hours of the incident.
- Childcare and elderly care – actual cost of providing additional childcare or care of elderly relatives that you are directly responsible for while having to travel to replace documents, attend meetings or proceedings, or rectify records as a result of a Stolen Identity Event
- Travel Assistance – reasonable additional expenses incurred in order to obtain duplicate, replacement or new travel documents, including passports and airline tickets, as well as additional reasonable travel and lodging expenses incurred to enable you to return to your permanent residence as a result of a Stolen Identity Event
- Fraudulent withdrawals – the principal amount of money you have lost resulting from an unauthorized transfer of monies from one or more of your checking, savings, money market, or other financial accounts, or from the theft of a tax refund obtained or secured by the filing of a fraudulent tax return with the Internal Revenue Service or the taxing authority of a U.S. State, unless you have received reimbursement from another source or failed to request reimbursement from the entity holding the account from which funds were stolen
- Legal costs – reasonable and necessary expenses paid to lawyers and other legal professionals appointed by us and with our consent in connection with remediating a Stolen Identity Event, including defending any civil lawsuit filed against you, removing any civil judgment entered against you, defending you against any criminal charges filed against you due to the actions of another while using your identity, and assisting you with an audit or other proceeding or hearing conducted by a governmental agency as a result of a Stolen Identity Event
- Remediation services costs – reasonable and necessary expenses paid to investigators with our consent and retained by us in connection with remediating a Stolen Identity Event, including the costs of recovering control of your personal identity and recovering losses you incurred
- Case management services costs – expenses paid to an identity restoration case manager, as needed and approved by us, or incurred by us in complex Stolen Identity Events
You can't DIY those reimbursements (stolen handbag, purse or wallet insurance!?) and they could be significant in some cases, though there are limits to the insurance coverage. The often quoted dollar amount, like $1,000,000, usually refers to the last two line items – remediation services and case management services. Those will be the most expensive anyway.
That's why I consider the identity theft protection services as more of an insurance policy that has a bonus monitoring service, and not the other way around.
One other consideration, and I'm not entirely convinced about the frequency, but many of these programs also offer child protection as a monthly add-on. Child identity theft is especially hard to detect because we often aren't looking for it. I've never requested a credit report or my kids, though technically they're each permitted a free report from each bureau every year!
Do you use an identity theft protection service like Lifelock, Identity Guard, or Identity Force? (there are easily a dozen of these types of companies, I just listed some of the more popular ones)