Identity Theft Protection Services: Worth Having?

With all the reports of security breaches, do you feel like it’s only a matter of time before your identity is stolen? And if that’s true, will signing up for an identity theft protection service save you from the time, expense and exasperation of cleaning up an identity thief’s mess?  You’ve probably been offered these services, but it’s hard to know what’s worth the cost. Do you really need an identity theft protection service? Here’s a look at what some of the best-known identity theft protection services offer, where they fall short and how much they cost.

1. ID Essentials from TrustedID

Many identity theft protection services are available as freestanding services through a company that specializes in ID theft protection. TrustedID started out that way. It has since been purchased by Equifax, but Equifax also has its own separate, name-brand ID theft protection service. We chose to review TrustedID since it has been widely featured in news stories about ID theft, which might increase the likelihood of a consumer signing up for this service. Here’s what ID Essentials from TrustedID offers consumers.

Credit reports, credit scores and credit monitoring: TrustedID’s identity theft protection service monitors your credit daily with all three major credit bureaus. You’ll also get your Equifax 3-Bureau credit report and score; however, this score is an educational score and not the same one lenders and creditors use.  

Threat evaluation and reduction: TrustedID scans public databases and black market Internet sides for fraudulent use of your Social Security and credit card numbers. It’s questionable how useful this information is since you can’t unexpose a compromised Social Security or account number.

The service also provides an Identity Threat Score to help you evaluate your risk of becoming an identity theft victim. The Identity Threat Score looks at how much of your information is publicly available – and where it’s available – to determine whether you are at low, moderate or high risk of identity theft. Based on your risk level, the service will recommend steps to reduce your risk. The service also tries to get your publicly available personal information removed from the Internet, though it can’t guarantee that the sites will honor removal requests or won’t reintroduce your information later.

TrustedID also checks your Facebook profile and privacy settings to determine if they put you at risk of ID theft. TrustedID also gets your name off junk mail and preapproved offer lists. You can handle these tasks yourself for free through optoutprescreen.com and DMAchoice.org

Resolution assistance: TrustedID says its restoration process includes reviewing your credit files with you to check for inaccuracies and fraud, notifying the providers of your affected accounts (financial institutions, credit card companies, utility providers and merchants) and notifying the appropriate government agencies. It also says you may be required to notify major credit bureaus, the Federal Trade Commission’s Identity Theft hotline and appropriate law enforcement authorities if you want to take advantage of the insurance coverage, so it’s unclear how much of the cleanup work you’ll have to do yourself.

Insurance: TrustedID offers up to $1 million in coverage for out-of-pocket costs you could incur if your identity is stolen. Lost wages coverage maxes out after 4 weeks or a total of $5,000. The insurance, which the service calls a “warranty,” also covers administrative expenses you incur in cleaning up ID theft (such as postage and purchasing additional credit reports, with a limit of 6 reports in 12 months) and legal defense fees to an approved attorney.

Money stolen from your bank account and other direct losses are excluded from the warranty. Lost wages for the self-employed do not appear to be covered, but employees may be reimbursed for vacation or personal days taken to resolve ID theft. You must notify the service within 30 days of discovering the identity theft to be eligible for insurance coverage. Unlike some ID theft services, TrustedID does not appear to require you to use any other insurance that might cover your loss before its insurance kicks in. However, the insurance does not cover ID theft events that occurred before you subscribed to the service.

Pricing: Plans cost $14.99 a month or $125 per year ($10.42/mo.) for individuals; family plans that cover two adults (plus “child” and “other relatives living in your household”) are $27.99 per month or $240 per year ($20 per month). All plans have a 14-day free trial, but you must provide your credit card number when you sign up, and the free trial will automatically convert to a paid subscription unless you call to cancel. Plans renew automatically.

 

2. Experian’s ProtectMyID

Each of the three major credit bureaus – Experian, Equifax, and TransUnion – offers its own identity theft protection service. We randomly chose to evaluate Experian’s.

Credit reports, credit scores and credit monitoring: Experian’s identity theft protection service, called ProtectMyID, gives you online access to your Experian credit report and score. It monitors your Experian, Equifax and TransUnion credit reports and notifies you of potentially fraudulent activity such as new credit or loan accounts or new inquiries about your credit.

Threat evaluation and reduction: ProtectMyID scans the Internet daily for fraudulent use of your Social Security, debit and credit card numbers. The service also notifies you if your mailing address is changed. If there is no activity related to your identity for an entire month, you’ll receive what the service calls an All Clear Surveillance Alert.

Resolution assistance: ProtectMyID promises to connect you with fraud recovery professionals who can help you resolve an identity theft problem. The company says its professionals will contact the proper authorities and assist with the paperwork.

Insurance: Experian’s service also provides $1 million in identity theft insurance with no deductible. The insurance covers fraudulent electronic funds transfers, lost wages, legal defense and private investigator costs as well as your expenses related to paperwork and replacing identification. The lost wages limit is $1,000 per week for 4 weeks and is limited to wages lost within 12 months of discovering that your identity has been stolen. Self-employed individuals can received reimbursement for lost wages based on their prior year tax returns, and individuals employed by someone else can receive remuneration if they had to use vacation or personal time to resolve the ID theft.

To benefit from the insurance, you must report an ID theft event within 90 days of discovering it and you must comply with the Fraud Resolution Unit’s instructions, such as notifying each credit bureau and reporting the crime to law enforcement. If you have other insurance that covers your identity theft loss, this policy won’t kick in until those policies have paid you.

Pricing: ProtectMyID costs $15.95 per month or $159.95 per year ($13.33/mo.). Plans renew automatically. A 30-day free trial is available that automatically converts to a paid membership.

 

3. Wells Fargo’s Identity Theft Protection

We decided to review Wells Fargo’s Identity Theft Protection because, as one of the largest banks in the United States, Wells Fargo has millions of existing customers who might be inclined to choose its identity theft protection services over those of competitors. Wells Fargo offers a basic product that it calls “Identity Theft Protection” and a premium product that it calls “Enhanced Identity Theft Protection.” Here’s what these programs offer and how they differ.

Credit reports, credit scores and credit monitoring: Wells Fargo’s identity theft protection product consists of daily credit monitoring of your reports with the three major credit bureaus and alerts when there are potentially fraudulent changes in your credit profile. The basic service gives you one credit report from each of the three major bureaus when you first sign up and quarterly thereafter, while the premium service provides your credit reports every 30 days. Enrollees also receive a one-time credit report that consolidates the information in their credit reports from all three major credit bureaus.

The premium service, but not the basic service, comes with a credit score tracker, credit score change alerts and credit score simulator. The credit score tracker follows an educational score called Experian Scorex PLUS, which is “not used by lenders to evaluate your credit” but “is intended to reflect common scoring practices.” The enhanced protection also provides credit monitoring tools that can help you improve your credit score, but other services, such as Credit Karma, offer these tools for free.

Threat evaluation and reduction: Wells Fargo does not offer Internet scanning, nor does it offer any threat evaluation or reduction services other than the credit monitoring described above.

Resolution assistance: Wells Fargo’s ID theft resolution service is called Identity Fraud Support. It offers a dedicated specialist to support you throughout the process and a kit of information explaining the steps you need to take to resolve the problem. Both services provide access to a credit information hotline where someone will explain your credit report to you. The company promises to assist you, but not to do the work for you.

Insurance: Both the free and the premium service provide up to $10,000 in identity theft insurance, the details of which are only available after you sign up. Be suspicious of this lack of transparency. There’s also a $100 deductible.

Pricing: Identity Theft Protection costs $12.99 per month; Enhanced Identity Theft Protection is $15.99 per month. Plans renew automatically. There is no annual billing option and no annual subscription discount.

 

4. ID Experts Membership from Zander Insurance

Listen to a few episodes of personal finance advice guru Dave Ramsey’s call-in radio show and you’ll probably hear him promote Zander Insurance’s ID theft protection service. We decided to review this service because Dave’s millions of listeners might be inclined to choose this product over others since they trust his endorsement. We also chose Zander because it sells what it claims is the only identity theft protection service that “will handle all the work to restore your identity” and covers all types of ID theft, including Social Security fraud, medical ID theft, tax fraud, employment fraud, benefits fraud and family fraud. Zander also claims a 100% success rate in restoring victims’ identities to their pre-theft status. Here’s what ID Experts from Zander Insurance offers consumers.

Credit reports, credit scores and credit monitoring: Zander does not provide these services. It only reminds you to order your free annual credit reports and shows you how to order them. However, Zander’s service is less expensive than those that offer credit monitoring.

Threat evaluation and reduction: ID Experts gives customers access to a detailed protection test for assessing their risk of ID theft. It then suggests proactive steps you should be taking based on your risk level.

Resolution assistance: Zander Insurance provides consumers with a “recovery advocate” to assess the damage and create a recovery plan, with your cooperation. It says it handles disputes and file paperwork on your behalf and gets fraudulent criminal or civil judgments and fraudulent accounts removed from your credit report. Zander’s service promises to take over all the work of restoring your identity should you become a victim.  It also handles ID theft that occurred before you signed up for the service as long as you had no knowledge of the event at the time you signed up.

Insurance: This service provides reimbursement for lost wages and Zander-approved legal defense fees and expenses. You must submit proof of expenses and lost income, and reimbursement occurs only after your ID theft case closes. The insurance also covers reimbursement for funds lost through an unauthorized electronic funds transfer that your financial institution did not reimburse.

You must report an ID theft event within 90 days of discovering it for Zander to cover it. Also, if you already have ID theft coverage through your homeowner’s insurance, a credit card or another source, you must seek full reimbursement for expenses and lost income from that policy before Zander’s policy will consider paying the difference.

Lost wages reimbursement goes as high as $7,500 per week, but only covers a maximum of four weeks. Self-employed individuals can received reimbursement for lost wages based on their prior year tax returns. Individuals employed by someone else can receive remuneration if they had to use vacation or personal time to resolve the ID theft.

Pricing: Individual plans cost $6.75 per month or $75 per year ($6.25/mo.); family plans covering two adults plus children cost $12.90 per month or $145.00 per year ($12.08/mo.). Plans renew automatically.

 

The Bottom Line

Most identity theft protection services offer similar levels of hand-holding through the identity theft prevention and recovery processes, but you can usually do most – if not all – of what they offer yourself for free. What’s more, the insurance is subject to numerous restrictions and limitations, most notably not kicking in at all until another policy you probably already have pays up. Perhaps the biggest problem with any identity theft protection service is that there’s no way to know how well it works unless you find out that your identity is stolen and you need to take advantage of the service’s recovery assistance and insurance.

So do you really need an identity theft protection service? According to the Bureau of Justice Statistics’ 2012 Crime Victimization Survey, only 14% of victims experienced a financial loss for which they were not reimbursed. Only 16% of that 14% group (about 2% of all the victims) lost $1,000 or more that was not reimbursed. See Identity Theft: How Much Should You Worry? for more details. The assistance Zander promises in doing the recovery work for you might be worth it if it works as well as promised, since lost time cleaning up the mess is the biggest cost for many victims. However, for most people, most identity theft protection services are probably not worth the expense.

If you’re considering signing up for any identity theft protection service, read the terms and conditions carefully before handing over your credit card number to see what you’re really getting for your money. And read Identity Theft: How To Avoid It for more information on protecting yourself.

Article source: http://www.investopedia.com/articles/personal-finance/091014/identity-theft-protection-services-worth-having.asp

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