Identity Protection Service
Identity theft is a serious problem in today’s connected digital world. When so much information is moving around on the internet, there are increasing instances of a thief succeeding in stealing personal information of innocent unknowing victims. Once the thief has your personal information, he/she can use that to appear as “you” and start making financial transactions. The thief can open bank accounts, apply for payday loans and use that money without you knowing it, and even claim your tax refund! While some financial transactions would appear on a credit report, there are many which will not. If someone withdraws money from your account, it will not appear on a credit report. You will need to check your bank statement for that. Similarly, if someone draws a payday loan on your name, your credit report will not show you that because online payday loans do not require credit checks. You will only see it on the report once the loan is delinquent and it goes to the collection department.
What are the solutions?
One solution to this problem is vigilance. You can continuously monitor all your accounts. Banks and financial institutions allow you to set up text/email alerts so that you get notifications when your account balance changes. You can also get your free annual credit report and look for any changes. Federal law requires the three biggest credit bureaus in the country to give you one free credit report every year. These three bureaus are Experian, TransUnion, and Equifax. You can also monitor your retirement account, credit card statements, investment accounts, etc. more frequently. Medical record fudging is a big problem. An identity thief may be getting medical care under your name. This leads to changes in your medical history. If you go to an emergency room and if your records are not accurate, then you may not get the correct treatment. Always read and scrutinize your medical bills and insurance records. Do bear in mind that all of these monitoring activities requires time and effort from your end.
One more option which does not require much time and effort is the placement of a credit freeze on your credit files. Major credit bureaus offer this option for a small fee. When you place a freeze on your credit files, no one will be able to access your credit files and reports without your permission. You will have to unlock these files for anyone to be able to view them. This unlocking may also involve some fee. So, if you do not mind spending a bit of money or if you are not frequently applying for a loan (which would require the lender to view your credit files), then putting in a credit freeze could be a good option.
However, what if you will be applying for a loan? Or what if your social security card got lost or misplaced? If you know for sure that your personal data is not secure, or if you were a victim of a data breach, then all of the above steps are insufficient to protect you from a future possibility of identity theft. No matter how much you monitor your info, there is always a chance that a suspicious transaction happens without your knowledge. An identity thief can get hold of your lost/stolen information, and start masquerading as “you” to conduct all sorts of fraudulent activities. In such cases, you need an identity theft protection service to help you out.
When to use an identity theft protection service?
Identity theft services are of two main types: identity monitoring and identity recovery service. Identity monitoring simply monitors for any changes to your credit report. It does not prevent an identity theft from happening. It keeps tabs on various databases to detect if any change is made to your address, phone number, loan application status, etc. It is better than a credit monitoring service because the latter only monitors credit reports. But as mentioned above, there are quite a few instances where the credit report remains unaffected but financial fraud takes place without your knowledge. Hence, choosing a good identity monitoring service can go a long way in lowering the risk of a fraudulent transaction.
However, no matter what you do or whichever service you choose, an identity theft cannot be 100% ruled out. If the theft does indeed occur, there are a series of steps which you must take to protect yourself and reclaim your identity. There is a solution for these “post-theft” actions and it is called as the identity recovery service. This service goes a step further than the identity monitoring service. The recovery service focuses on actions which need to be taken AFTER identity theft has taken place. The identity monitoring service focuses on everything BEFORE a theft. An identity recovery service usually involves a team or individuals who are trained professionals in dealing with identity theft. They partner with you and normally help you write notices, letters to creditors, walk you through various procedures, etc. The company that you partner with helps you place a credit freeze on your credit files and may even represent you at financial institutions and creditors if you request them to do so. It is estimated that on average, a victim spends about 200 hours dealing with credit bureaus in trying to solve identity theft issues. A lot of that time, cost, and stress can be saved by engaging with a reputed identity theft protection service.
How to evaluate an identity protection service?
There are quite a few identity protection service companies. They offer a variety of features and services. Below are some pointers on what you should be looking at when evaluating a service. By understanding the features mentioned below, you will be able to compare various identity protection services and pick the right company to work with:
- Database monitoring: Find out which databases the company monitors. Databases have your personal information, and the company that you work with must look for changes in this information. Hence, it needs to regularly scan to verify the information and compare it to previous iterations. You must also find out how often the database checking happens.
- Identity theft insurance: Some companies bundle their recovery service with an identity theft insurance. The insurance limit on such policies is normally up to $1 million. Such policies can reimburse you for any expenses which occur in the process of reclaiming your identity and notifying the authorities of the theft. Legal fees, postage expenses for sending letters and notices, notary costs, etc. are all included. Sometimes, lost wages arising out of the occurrence of theft may also be covered. If you need to travel to a financial institution or a legal/government authority for the purpose of reporting/resolving the theft, then those expenses may also be covered. Note that the identity theft insurance does not cover the money which you have already lost from the theft.
- Monitoring of all three credit bureaus: As you may know, there are three main credit bureaus: Experian, TransUnion, and Equifax. Each one of them compiles their information in a different way and information which is visible on the credit report of one bureau may not be visible on the report of another bureau. So, it is important to vigilantly monitor your credit reports from all the three bureaus. Look for an identity protection service which monitors these three bureaus and not any one or two.
- 24/7 phone support availability: Identity protection services will monitor your personal information. But when there is a suspicious change, how will they notify you? Will they send you a text or email you? After they do notify you, what if you have questions about the same? Time is a critical factor in the prevention of financial fraud, as waiting too long can be disastrous. You would want to work with a service which offers customer service over the phone 24 hours a day 7 days a week. You will also want to understand how you will be notified of any changes to your credit reports or other personal information.
- Power of attorney: If you want your identity protection service to represent you at financial institutions and other offices, you will have to give them a power of attorney. Having them deal with creditors and other authorities will free up your time to deal with your family and personal circumstances after a theft has taken place. Find out if the identity protection service accepts the power of attorney from you if you were to work with the company.
- Family protection: Identity theft may not always be limited to yourself. The sensitive personal information of your family, your children, or other close relatives may also get misused. So, you must evaluate what kind of protection an identity monitoring/recovery service offers to your immediate family members. Inquire about the cost for this additional coverage and evaluate whether it is affordable as compared to what competitors are offering.
- Pre-existing theft: Most identity protection services offer your support only for a theft which occurs while you are a subscriber. This is not good if you woke up one day and found out that something is wrong with your credit report. Companies that support pre-existing theft will help you, but the ones that don’t will not touch the paperwork at all. So, find out if pre-existing theft is covered, especially if you are already a victim of identity theft.
- User Interface: Visit the website of the company you are evaluating and see what their interface is like. Is it easy to use? Some companies even have apps, and their apps are so well-built, that you may not even need to call them. Everything can be done through the app. So, it always helps to evaluate what working with a company would be like. Check how smooth will your interaction be.