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Do You Need Identity Theft Protection Services?

Pay for a service only if you're at high risk, don't want to freeze your credit and won't do monitoring chores yourself.
Credit Score, Personal Finance
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identity theft protection services

Identity theft protection companies pledge to act as guardians of your personal information, for a monthly or annual fee. Many products compete in this space, offering varying levels of coverage. 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.

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
  • You know that you won’t go through the effort of actively monitoring your own credit

What identity theft protection companies do

Monitoring and alerts: Identity theft protection firms start with credit monitoring that will alert you about activity, such as new accounts opened in your name and credit inquiries received, so you can react quickly. 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.

The companies may offer other services such as scanning for unauthorized use of your Social Security number and notifications of bank account activity; and possibly some nonfinancial sorts of monitoring, such as alerts about registered sex offenders in your neighborhood. Some plans offer extensive extras, such as watching for payday loans taken in your name or evidence that your medical ID has been swiped.

Some plans have extensive extras, such as watching for payday loans taken in your name or evidence that your medical ID has been swiped.

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 cyber security

You can take a DIY approach

You can 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. And you can report identity theft and follow free recovery paths outlined by the federal government at IdentityTheft.gov.

To ensure the best protection, experts recommend freezing your credit files at all three major credit bureaus — Equifax, Experian and TransUnion — something an identity theft protection company cannot do for you. The charges to place a freeze or temporarily lift it later vary by state, but typically are less than $20. Over time, that’s cheaper than paying a monthly fee for ID theft protection, which can run to $30 or more.

The first thing consumers need to do if they’re worried about ID theft is just to freeze their credit reports. Freeze, freeze, freeze. Everything else is gravy on top of that.

Chi Chi Wu, Attorney, National Consumer Law Center

“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.”

If you choose to use identity theft protection services

A freeze and DIY monitoring offer adequate coverage, so NerdWallet does not recommend paying for identity theft protection services.

Still, 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 which exposed your financial data.

Here’s a look at three popular products in the ID 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. IdentityForce UltraSecure+Credit

Pros: IdentityForce offers less expensive three-bureau monitoring than big names like LifeLock. The IdentityForce UltraSecure+Credit plan costs $23.95 a month or $239.50 a year. You can get a family plan, which covers two adults and any children under 25, for $33.90 a month. Notably, it offers alerts about suspected health insurance fraud. It also has educational resources that some other companies lack.

Cons: 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. Once you’re logged in, the dashboard details “Identity Threat Alerts” that are more of an aggregation of news stories than alerts specific to you. The app is somewhat bare-bones.

Best for: Those who want family-wide protection on a budget; those who want medical ID coverage.

2. ID Watchdog Platinum

Pros: ID Watchdog keeps credit monitoring, alerts and recovery simple. Its ID Watchdog Platinum provides no-frills coverage for $19.95 a month or $219 a year. The plan does have 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 per fraudulent credit line.

Cons: 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, so if you want extras like lost wallet assistance, look elsewhere. Some of the monitoring services can take up to 24 hours to complete scanning and populating your account.

Best for: Those who want basic, no-frills credit monitoring; those who need help recovering from pre-existing identity theft.

3. LifeLock Ultimate Plus

Pros: LifeLock’s Ultimate Plus plan, at $29.99 a month or $329.99 a year, 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.

Cons: In 2015, the Federal Trade Commission fined the company $100 million for failing to secure customers’ data and for deceptive advertising. Also, 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.

Best for: Those who don’t have an entire family to protect; those who can afford to spend a little extra for comprehensive coverage.

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