Identity theft protection is a group of services designed to help people monitor certain personal information, identify suspicious activity and, depending on the service, receive assistance if their identity is misused.
Identity theft, can take many forms. Someone could use stolen personal information to open an account, apply for credit, make purchases, obtain services or commit other types of fraud. The Federal Trade Commission (FTC) recommends regularly reviewing financial statements and credit reports and taking action quickly when something looks unfamiliar.
Paid identity protection services can add another layer of monitoring and assistance, but they are not a guarantee that identity theft will never happen.
What Does Identity Theft Mean?
Identity theft occurs when someone uses another person’s personal or financial information without permission.
The information involved can include a name and address, Social Security number, credit card or bank account information, medical insurance information and other identifying details. Depending on what information is obtained, an identity thief may use it to open accounts, make purchases, obtain services or commit other forms of fraud.
One challenge is that identity theft is not always immediately obvious. You might discover it through an unfamiliar transaction, an account you don’t recognize, a change to your personal information or an unexpected bill.
That is where monitoring can be useful.
How Does Identity Theft Protection Work?
Identity protection services generally combine some form of monitoring with alerts, information and, in some cases, recovery assistance.
The exact features vary considerably between providers and plans. A typical service may include some combination of the following:
1. Identity Monitoring
Identity monitoring looks for certain appearances or changes involving personal information in databases and other sources.
Depending on the service, monitoring may cover information such as changes of address, certain public records, applications for services or other indications that personal information may be being used. The FTC notes that identity monitoring can cover information that may not appear on a traditional credit report.
If the service detects something it considers noteworthy, it may send an alert so you can investigate.
2. Credit Monitoring
Credit monitoring is related to identity protection but is not exactly the same thing.
Credit monitoring generally watches for changes or activity on your credit reports, such as a newly reported account or certain credit inquiries. Depending on the service, monitoring may cover one, two or all three major credit bureaus.
This can help you notice certain types of activity that you don’t recognize.
However, credit monitoring has limits. It does not necessarily alert you to every type of identity misuse. For example, the FTC notes that credit monitoring generally will not tell you when someone uses your Social Security number to file a fraudulent tax return or withdraws money from your bank account.
3. Alerts
Alerts are one of the most visible parts of many identity protection services.
An alert might notify you about a particular type of change or activity that the service has detected. The purpose is to give you an opportunity to investigate rather than discovering the problem much later.
It is important to understand that an alert is not automatically proof of identity theft. Some alerts may represent legitimate activity, so you still need to review the information and determine whether it is something you recognize.
4. Identity Recovery Assistance
Some identity protection plans include access to recovery specialists or case managers if you discover that your information has been misused.
Depending on the service and plan, recovery assistance may include guidance on contacting creditors, reviewing documents, correcting records or taking other steps to restore your identity. Some services may also assist with communications with certain organizations when you authorize them to do so.
This can be particularly useful because recovering from identity theft can involve several organizations and multiple steps.
4. Identity Theft Insurance
Some identity protection plans include identity theft insurance, either as part of the plan or as an additional feature.
This type of coverage generally relates to certain expenses associated with recovering from identity theft. The FTC notes that policies may cover expenses such as document copying, postage, certain lost wages or legal fees, depending on the policy.
Insurance should not be confused with reimbursement for all money lost to a scam or identity theft. Coverage, exclusions, limits and deductibles vary by policy, so the actual terms should always be reviewed before purchasing a plan.
What Identity Theft Protection Does Not Do
It is easy to assume that paying for an identity protection service means your identity is completely protected. That’s not how these services work.
Monitoring can help you notice certain types of activity, but it cannot guarantee that every instance of identity theft will be detected.
For example, a service may monitor particular databases or types of information but not have access to every source where your personal information could appear. Even credit monitoring has specific limitations.
Identity protection also does not replace basic security practices.
Using strong, unique passwords, enabling multifactor authentication, protecting sensitive documents, being cautious with unexpected messages and regularly checking financial accounts are still important steps.
Do You Need to Pay for Identity Protection?
Not necessarily.
There are several steps consumers can take themselves at little or no cost.
For example, the FTC recommends reviewing credit reports and financial statements and explains that consumers can place a credit freeze or fraud alert when appropriate. A credit freeze can make it harder for someone to open a new credit account in your name.
You may also already have access to certain monitoring or protection features through a bank, credit-card company, employer benefits program or insurance provider.
The question is therefore not simply whether identity protection is “good” or “bad.” It is whether the additional monitoring, alerts, assistance and other features of a particular service are useful to you and worth the cost.
When Might a Paid Service Be Worth Considering?
A paid identity protection service may be worth considering if you prefer having multiple monitoring features gathered in one place or want access to recovery assistance if something goes wrong.
It may also appeal to people who want regular alerts rather than relying entirely on manually checking different accounts and reports.
However, the right choice depends on the individual’s needs.
Before signing up, consider:
- What information does the service actually monitor?
- Which credit bureaus are included?
- What types of alerts are provided?
- Is identity recovery assistance included?
- Is there an additional cost for recovery services?
- Does the plan include identity theft insurance?
- What are the insurance limits and exclusions?
- Which devices or family members are covered?
- What is the introductory price?
- What will the price be when the introductory period ends?
- Can the service be cancelled easily?
Comparing these details can be more useful than choosing a service based solely on its advertised monthly price.
How to Compare Identity Protection Services
There is no single feature that makes one identity protection service right for everyone.
A useful comparison should look at the scope of monitoring, the type of alerts, recovery assistance, coverage, plan limitations and total cost.
For example, two services might both advertise identity monitoring while offering different monitoring sources or recovery features. Likewise, two plans with similar prices may provide very different levels of coverage.
At ProtectionSeek, our goal is to make this comparison easier by organizing information about identity protection and other digital protection services in one place.
When reviewing a provider, look beyond the headline price and consider what is actually included in the plan.
The Bottom Line
Identity theft protection is best understood as an additional layer of monitoring and assistance rather than a guarantee against identity theft.
Some services focus primarily on credit monitoring, while others combine credit monitoring with broader identity monitoring, alerts, recovery assistance or insurance. The features and limitations can vary significantly between providers and plans.
You can also take important protective steps yourself, including reviewing your accounts and credit reports, using strong authentication and considering a credit freeze or fraud alert when appropriate.
If you decide that a paid service makes sense for you, compare the actual features, coverage, limitations and long-term cost before choosing a plan.
Explore ProtectionSeek’s Identity Protection options to compare providers and learn more about the features available from different services.
Important note
ProtectionSeek provides general information to help consumers research digital protection services. We do not guarantee that any service will prevent, detect or resolve every instance of identity theft. Features, pricing, coverage and terms can change, so review the provider’s current terms before making a purchase.
Some links on ProtectionSeek may be affiliate links. If you purchase a service through one of these links, ProtectionSeek may receive compensation at no additional cost to you.
