Identity theft is an increasingly occurring offense these days. With plenty of personal information on the internet, innocent people have become victims of identity thieves. These criminals get hold of your personal details such as name, address, ID numbers, etc. and then misuse that information to conduct unauthorized transactions.
A case of identity theft could lead to the opening of a bank account that you don’t know about, it could lead to a criminal claiming your tax refund, and it could lead to a default on an unauthorized online loan which may have been drawn on your name. It would be a nasty surprise if you get a call from the collection department asking you to pay back a delinquent loan.
Identity theft will potentially spoil your credit score as well. Financial activities tend to show up on credit reports and a negative credit report can lead to all sorts of problems for the individual whose identity has been stolen.
There is something even scarier about identity theft than items showing up on a credit report. What if the identity thief got access to your bank account or debit card and started to withdraw money in your name from your account. If you have SMS alerts, you will find out about such transactions.
But if you don’t have such alerts set up, there is no way you will know that a criminal has withdrawn money until you check your bank statement. Such activities will not show up even on a credit report. In order to avoid such a situation, you will have to be vigilant and constantly monitor your accounts if you suspect identity theft. Banks and financial institution give you options to monitor your accounts.
You can set up email alerts and SMS notifications every time there is an activity on your bank account. Another option is to regularly check your credit card statements and retirement account statements to spot any suspicious activity.
You can also get your free annual credit report copy from the three biggest credit bureaus of the nation, namely Equifax, TransUnion, and Experian. However, the problem with this option is the frequency with which you can view your credit report.
Even if you stagger your report delivery dates at equal time intervals, you will still receive one copy every 4 months. A lot can happen in between those 4 months if there is indeed a case of identity theft.
Also, imagine this: What if the identity theft involves a criminal seeking medical care under your name? The thief can use your Medicare or insurance information and fraudulently get medical care. It will lead to an erroneous medical record under your name. After all, your medical history will change. If you, unfortunately, have to visit an emergency room in the future, then the wrong treatment or medication can be given to you based on your incorrect medical history. It is always a good idea to scrutinize your medical records, insurance records, and medical bills periodically.
But, how often can you keep monitoring everything? It will take a fair bit of time and effort to monitor all your financial and medical records with a high enough frequency to catch a case of identity theft. A decent alternative is to look at identity theft services. There are professional companies that specialize in monitoring your information as well as helping you with all the procedures involved in recovering your identity if identity theft has indeed taken place.
Professional identity protection services
An identity monitoring service will simply monitor your personal information from various sources. The company will look at select databases for changes to your address, telephone number, or any loan/credit card application statuses that may have changed/originated.
There is also something known as a credit monitoring service. It simply monitors your credit reports at credit bureaus. For maximum effectiveness, it is important to have both identity monitoring and credit monitoring because, as pointed out above, there are instances of identity theft when an unauthorized transaction shows up on a credit report but not on your bank account and vice versa.
Note that none of these services go beyond monitoring. These services will tell you if identity theft has happened, but they won’t prevent identity theft from happening.
Since there is no foolproof guarantee against identity theft, the next question then is what happens if you indeed are a victim of identity theft. In such a situation you need an identity recovery service. You will need guidance and help with legal processes and legal documents to recover your identity and rectify any damage which may have been caused to your credit files.
An identity recovery service will have professional and experienced personnel hand hold you throughout the identity recovery process and even represent you in front of creditors. An amazing statistic about identity theft victims is that they spend 200 hours on average trying to get their credit reports sorted out.
Main features of an identity protection service
Before we look at the various companies offering identity theft protection services, let us first understand the common or core features that make up such a service.
Monitoring information via databases: An identity monitoring service involves periodically checking information of a client on select databases and spotting any unauthorized or suspicious changes. There are multiple databases which carry a person’s personal information. As you go about exploring the services of various companies, find out what databases the company is monitoring. The more databases a company covers, the wider its ability to spot cases of identity theft.
Monitoring credit bureau records: Experian, Fairfax, and TransUnion are the three biggest credit bureaus in the US. Most banks and institutions refer to their credit reports when making decisions related to an individual’s application for loans or any other service. Hence, it is critical that an identity monitoring service check these credit reports regularly for any suspicious changes. When you explore various companies with identity theft protection services, make sure that those companies monitor credit reports and make doubly sure that they monitor reports from all three of the above-mentioned credit bureaus and not just one or two of them.
Identity theft insurance: Identity theft insurance allows you to claim reimbursement against expenses which you incur while reclaiming your identity and notifying the authorities about the theft. Notary costs, legal fees, and postage fees are included. Some policies will even cover lost wages arising out of identity theft. Any travel expenses arising out of visiting government authorities can also be covered under an identity theft policy. If you lose any money from identity theft, then that usually does not get covered under these insurance policies. The limit for such insurance policies tends to be around $1 million.
Family protection: If you are worried that your family members can be victims of identity theft, you can look for services which offer protection to immediate family members for an additional fee.
Power of attorney: Power of attorney is a document that you give someone to authorize them to represent you in front of authorities or in legal proceedings. If you do not have the time or do not want to attend every meeting/case hearing related to your identity theft cases, then you can hand a power of attorney to an identity theft protection company and have them represent you. Not all companies accept power of attorneys, so you must verify that such an option is available before finalizing a company to work with.
Transferring pre-existing theft: Most identity theft protection companies will work only on cases which have happened after you register for their services. However, some companies will allow you to transfer pre-existing cases as well. If you already have had prior identity theft issues and want help on those, then look for a company that will entertain pre-existing cases.
Credit freeze as an option to prevent identity theft
You can impose what is known as a credit freeze on your credit files to prevent them from getting modified in a negative way. All major credit bureaus offer the option of freezing credit files for a fee. Once you freeze your files, no one will be able to access them.
You will have to unlock the freeze in order to access the credit files. Sometimes, this unlocking step will involve a fee as well. Locking down your credit files will prevent an identity thief from accessing them and stealing personal information.
You should take note of the fact that even when a credit freeze is in place, the credit files can still be accessed if:
Phone or utility companies want to view it
Debt collection agencies are trying to recover payments
A landlord or rental agency wants to conduct a background screening
Creditors with a pre-existing relationship want to review your account
Any employer who you granted permission to conduct pre-employment checks
Top identity theft protection companies
Lifelock – Lifelock offers identity monitoring and recovery services. It does monitor credit reports from all three major bureaus such as Equifax, TransUnion, and Experian. It offers theft insurance of up to $1 million as well. 24X7 phone assistance is reassuring from a customer service point of view. One downside is the fact that the company was fined recently by the Federal Trade Commission in 2015 for a data breach. Its cost of services is also high when compared to other competitors. It has three levels of offerings, Lifelock Standard, Lifelock Advantage, and Lifelock Ultimate Plus.
IdentityForce – IdentityForce is a reasonably priced identity protection company offering credit monitoring, identity monitoring, and a decent family plan. It also looks into health insurance fraud. Before you make any decisions, compare the online and phone price for this company. The phone price is often cheaper than the online price. While many companies monitor credit reports yearly or monthly, IdentityForce does so quarterly. Theft insurance up to $1 million is also offered.
Identity Guard – If you like technology then you will find Identity Guard interesting. The company claims to use AI via IBM’s Watson to protect identity information of its clients. They have individual as well as family plans. Identity Guard monitors credit reports monthly. What Identity Guard does not have is a good identity repair service. They do not accept a Power of Attorney to help you restore your credit or identity on your behalf. Their phone support is also not 24X7 as they do not operate on Sundays.
ID Watchdog – If you have a pre-existing theft and are looking for a company that will agree to help you, you have landed at the right place. ID Watchdog will take up pre-existing cases for a fee. It has 24X7 phone support and offers theft insurance up to $1 million. One downside with ID Watchdog is that they don’t have as many plans as some other competitors.