A couple of times every year, I need to take a moment to cover certain misconceptions about identity theft, because news articles keep coming up that may not see the complete picture before offering advice. The biggest question seems to be, is identity theft protection worth the price?
What I most often notice is that the answer to this question seems to hang on whether or not the author understands identity theft. If they are under the impression that identity theft has nothing to do with anything more than your credit cards and bank accounts, then they will say it is not worth the money. They go on to tell you that you should get your free credit report once a year and let it go at that. And if identity theft were nothing more than dollars, that would be very economical advice, especially if you check one credit bureau every four months.
Financial identity theft accounts for less than one in four cases of identity theft. The vast majority being reported have more to do with criminal charges coming up but against the identity theft victim, Social Security fraud, or most concerning, medical identity theft. And while it is true that a credit monitoring program will not really help you with any of these, credit monitoring is not the only form of identity theft protection out there. When we look at the different types of identity theft, it is easy to see that it is far more than just our money at stake.
Over the years, I have realized that it is not really possible to stop identity theft from happening. Simply put, we don't have control over the personal information that identity thieves use in the first place, so how could we? The most effective identity theft programs I have seen may include credit monitoring or keep tabs on various aspects of our digital identity, but also include some way to recover when it happens to you. Identity restoration programs seem to be at the top of the heap when it comes to protecting our identity, and these really seem to be more of a true identity theft insurance program than anything else out there. Paying $20.00 a month for something like this makes a lot more sense than paying $20.00 a month for someone to keep tabs on your credit report. The top-of-the-line programs take care of any form of identity theft, not simply financial, and include legal assistance when it is needed.
When talking to insurance professionals about these types of programs, they always ask if people really buy them. I tell them it's about 50/50. And even if someone does not get an identity theft program today, it is always in the news, and they are always considering one.
The Federal Trade Commission published a bulletin about whether or not identity theft protection programs were worth the money, and even they seemed to be thinking only about financial identity theft when they wrote it.
Generally speaking: if an identity theft protection program does not cover legal expenses, or only looks at your finances, it is not worth very much. I would not recommend anyone pay more than $5.00 a month for something like this. If an identity theft protection program covers a broad range of information in its monitoring, it might even be worth $10.00-$12.00 a month, mostly depending on the information that they cover, and how important that is to you. Credit monitoring programs are only going to have value to someone who has been at high risk of financial identity theft, but most of us can easily do our free annual credit report to keep tabs on this. Flagship identity theft protection programs will focus on taking care of the problem after it has happened, and ensure that if you are a victim, you have the help of a lawyer when legal problems come up.