Over the years, we have cast a skeptical eye on services that charge a fee in exchange for identity-theft protection. Why pay for a company to monitor your credit reports when you can get them free? In a 2009 study, the Consumer Federation of America found that ID-theft programs exaggerated what they could deliver to customers and failed to provide clear information on their Web sites.
See Also: Is Your Identity at Risk?
Now many services are backing away from hard-to-prove promises in response to a list of best practices the CFA developed. "For the most part, no identity-theft service can claim honestly that it can prevent your personal information from being stolen and misused," says Susan Grant, CFA's director of consumer protection. Rather, the services focus mostly on alerting you that your identity may have been stolen, notifying your credit card companies, and providing advice and assistance with the next steps.
Barry Glassman, a certified financial planner and president of Glassman Wealth Services, in McLean, Va., says he recommends ID-theft services to clients because a range of entities, from your employer to your gym, keep your personal data on file. And criminals are finding more efficient ways to grab that info, as a recent spike in data breaches shows. By using an ID-theft service, you may learn more quickly that someone has, say, applied for a credit card in your name.
What to look for. Several companies, including the three major credit bureaus (Equifax, Experian and TransUnion), provide identity-theft services for a monthly fee of $10 to $30. One feature of many plans -- including ITAC Sentinel's basic $10-a-month package -- is card-theft or lost-wallet protection. Agents help you cancel and replace credit cards and other wallet contents (you provide your information to the service when you sign up).
ITAC's basic service checks your report from one credit bureau. The higher-level ITAC Sentinel Plus plan ($13 a month) includes daily monitoring from all three bureaus, and you'll receive alerts about potential problems, such as new credit card accounts listed in your file. Many programs provide insurance, such as reimbursement for notary fees, but it's usually too limited in scope to be worthwhile, Grant says.
Some plans dig into areas that are tough for individuals to monitor. TrustedID's IDEssentials program ($15 a month, or $125 a year) includes monitoring of your health-insurance policy on black-market sites in case your policy number is for sale; it also scans the sites for your Social Security and credit card numbers. The Identity Guard Platinum plan (recently $19 a month) also surveys the black market, and it checks public records to see whether someone has used your personal information to, say, get a driver's license. In addition, the service offers antivirus protection and software for your computer that encrypts keystrokes.
Like some other programs, Identity Guard provides more benefits if you pay more. The Platinum Plus plan (recently $25 a month) adds monitoring of your kids' Social Security numbers.
Before you make a decision, see whether, say, your bank or insurer offers free or low-cost identity protection. AARP members can use a special TrustedID service for $110 a year, a discount of $15. And keep in mind that there's a lot you can do on your own to minimize the damage. Check each of your credit reports once a year at www.annualcreditreport.com, and examine statements from your bank and credit, medical and insurance providers for signs that someone has tampered with your accounts. Credit Sesame provides free monitoring of your Experian report, and Credit Karma checks your TransUnion file free.
Mary Clare Fischer contributed to this story.