Little-Known Financial Perks of Using Identity Theft Protection Services
Like many Americans, I've received those dreaded notifications that my personal information has shown up on the dark web and that my passwords have been compromised. And this problem isn't slowing down. The Federal Trade Commission (FTC) said fraud losses increased 30% in 2022, to reach $8.8 billion.
Recently, I got an email from Equifax letting me know that the credit limit on one of my credit cards had increased. I already knew about the increase, but it was nice to see that I was notified of a significant change in my credit that could have easily gone unnoticed.
However, identity theft protection goes far beyond credit change notifications, and some perks can be especially beneficial to your personal finances.
1. Subprime loan monitoring
One of the potentially lesser-known features of identity theft protection is the monitoring of subprime lending activity tied to your identity. For example, according to Equifax, some identity theft services monitor financial activity outside the traditional banking system, including payday loans, subprime lending, and rent-to-own services.
If your identity is used to apply for a loan or credit through any of these avenues, you'll be notified to confirm it was you or stop it if it's not. If you're not a regular user of some of these financial services, receiving a notification about them can be especially helpful.
2. Fraud protection for children
Surprisingly, identity theft and fraud can happen to anyone, even children. Equifax says $688 million in child identity fraud was committed in 2022 and that it's more challenging to fix fraud involving a child's identity -- taking 78% longer to resolve than for adults.
The opportunity for thieves is huge. Criminals can open lines of credit with a child's identity, and because they're monitored less frequently, the accounts can go undetected for years, per Equifax.
3. Tax return fraud assistance
The IRS says there was $5.7 billion in tax fraud in 2022 -- and, unfortunately, it's relatively easy for criminals to impersonate you. All they need is your name, birthdate, and Social Security number. Once the fraud has been committed, it can take months or even years to get your tax refund, according to H&R Block.
Thankfully, some identity theft protection services can help you restore your tax identity with the IRS and even work to get your tax refund back to you.
How to monitor your credit for free
Some companies offer free identity theft protection in the wake of security breaches. I've received this service at least twice, and while it didn't feel good to know my personal information was stolen, it was a relief to have free access to ongoing monitoring.
The good news is that it's easier than ever to monitor your credit. For example, you can get free credit reports through AnnualCreditReport.com. The government recently indefinitely extended free weekly credit reports for Americans, providing consumers with an easy and free way to monitor their credit.
To stay on top of any potential fraud, Experian recommends checking your credit report at least once per year. Of course, if you're concerned about a breach you've been involved in, you can use your free credit report access to check it anytime.
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Little-Known Financial Perks of Using Identity Theft Protection Services was originally published by The Motley Fool
