The risk of identity theft continues to increase. Rarely a month passes without another story of data breaches, data theft or significant losses. Identity theft cost Americans more than $25 billion last year, and a single incident can take countless hours to resolve. There are many products and services out there that can help prevent, detect and resolve identity theft.
In this guide we will help you create the best strategy for defending against identity theft. We also identify the best credit monitoring services so that you are prepared and protected.
What is Identity Theft?
Identity theft is any attempt by another person to use your identity for their own personal or financial benefit. Identity theft victims are protected by law, and they have the right to a full restoration of their identity, but achieving restoration isn’t always easy. It is up to identity theft victims to find and follow the recommendations of the Federal Trade Commission to achieve full restoration of their accounts, identity and good legal standing.
Identity theft manifests itself in two forms:
The most common form of identity theft is an account takeover which involves another person using either your credit or debit accounts to make transactions for their benefit.
A less common form of identity theft is called identity takeover. This involves thieves using the name, social security number, or other personally identifying information to fraudulently assume their victim’s identity for their own benefit.
When it comes to identity takeover, it’s not just your credit and money that is at risk, it’s your entire identity. In worst case scenarios, you may find that your ID is filled with false medical records, false work documents, criminal charges, unpaid taxes in addition to financial and credit issues to resolve.
How Does Identity Theft Happen?
Identity theft can take place through physical and cyber channels, and nearly everyone is at risk for identity theft. Knowing the most common identity theft scams can help you take common sense steps to mitigate risk.
- Data Breaches- Your account number gets stolen from a large corporate database along with thousands or millions of other people’s accounts.
- Account Skimming- A thief steals your card ID and pin from an ATM or during a transaction, and uses it for purchases or to steal cash later on.
- Stolen Cards- A thief steals your card and uses it.
- Phishing- A cyber criminal reaches out to unsuspecting people in the hopes of obtaining account information
- Online Hacking- Cyber criminals steal your account information when you are logged into an account on an unsecure wireless connection.
- Unauthorized use- A friend or family member uses your card (or your ATM Pin) to make purchases without your knowledge or consent.
- Stolen tax documents- Thieves steal tax documents that include SSN, employment information and more from your mail, trash or digital locations.
- Documents in your trash- Thieves steal documents with personally identifiable information from your trash or recycling bin.
- Data Breaches- Your personal information gets stolen from a large corporate database.
- Phishing- A cyber criminal reaches out to unsuspecting people in the hopes of obtaining personal and financial information
- Online Hacking- Cyber criminals steal your personal information when you are not on a secure wireless internet connection.
- Unauthorized use- A friend or family member uses your personally identifying information (such as SSN, address, and more) for personal gain.
How Can I Protect Myself?
Although it is impossible to eradicate identity theft, but each person should take steps to mitigate their risk of identity theft and the reach of consequences in the event of such theft.
Mitigating the risks and costs associated with identity theft depends on a thoughtful approach in four categories:
- Proactively preventing identity theft
- Monitoring your identity for fraud
- Limiting the cost of resolution
- Restoring your identity
You can learn more about the free and paid options for each of these categories below:
Although it’s impossible to completely prevent identity theft, everyone can take steps to decrease their risk of being a victim.
It is particularly important to note that friends and family members are often the perpetrators of identity theft. If you are unwilling to press charges against someone, then you need to do all you can to prevent them from stealing your identity.
How do I prevent identity theft?
Criminals can find ways around even the best security, but you can take steps to make yourself a less attractive target for thieves.
Top 10 ways to decrease your risk of Account Takeover
- Don’t give out your ATM Pin Number to anyone (including family or friends).
- Use your hands to cover the pin-pad when using an ATM
- Avoid ATMs at convenience stores or other locations that don’t have security footage
- Password protects your phone.
- Don’t log into bank accounts or credit card statements on public Wi-Fi.
- Do not give out account information (online, over the phone, or in person) unless you are about to make a transaction.
- If anyone calls to ask for your account information, do not give it out. If you suspect the call may be legitimate, call your credit card company or bank back through their secured lines.
- Use high quality passwords for online financial accounts.
- Change passwords for online financial accounts frequently.
- Shred documents (including old checks) that have account numbers in them before disposing.
Protecting yourself from identity takeover requires protecting yourself from cyber-criminals, criminals who may have access to paper documents, and from thoughtless friends and family members. Even though identity takeover is less common, it’s even more important to take protective measures against it.
Top 7 Ways to Reduce Your Risk of Identity Takeover
- Do not give out your Social Security number to anyone unless there is a legitimate financial, tax or employment need.
- Shred or burn documents that contain personal identifying information.
- Do not access tax documents or tax software via public Wi-Fi.
- Do not store your Social Security Number on your phone.
- Freeze your credit if you suspect someone attempted to steal your identity.
- Use anti-virus software or personal encryption software.
- Use high quality passwords on all accounts that contain personal info.
What companies can help me prevent identity theft?
Most protective measures are free to consumers, and any company that promises full prevention of identity theft is lying. Because identity thieves constantly evolve, it is not possible to fully avoid identity theft risk.
Unfortunately, no company can completely prevent others from taking over your accounts. As long as you have digital accounts you will retain some level of risk.
However, Identity Guard ($19.99 per month) mitigates risk by providing customers with password, keystroke and anti-virus protection on their personal computer. This will reduce your risk of being individually targeted for identity theft.
If you are worried about identity takeover, one low cost option you may want to consider is a credit freeze. If you are either in the process of cleaning up identity theft, or you have reason to believe that you are at a high risk for identity theft then you should consider placing a credit freeze on your account. A credit freeze prevents other people from viewing your credit history, and it prevents you and others from initiating new lines of credit.
Credit freezes (which range from $4-$10 per credit bureau, and are free if you are a victim of identity theft) provide as much protection as any of the major identity theft insurance products that are available on the market.
Some companies can help you reduce your risk of identity takeover by adding additional security against hackers and cyber criminals.
The premier advertiser of identity theft protection services was LifeLock who has been sued repeatedly for falsely advertising their ability to completely prevent identity theft. Since then, LifeLock has turned more towards advertising protection through monitoring.
Using the encryption methods explained above, Identity Guard ($19.99 per month) mitigates risk for account takeover from cyber criminals who may target personal information.
When it comes to identity theft, the best defense is the early detection of fraudulent activity. If you detect fraudulent activity early on, you can usually prevent full account takeovers, quickly get reimbursed for fraudulent activity, and deal with less paperwork as you unravel the effects of identity fraud. As a result, we recommend that everyone take monitoring their personal information seriously.
How do I monitor for identity theft?
Since account takeover involves the fraudulent use of existing credit and debit accounts, it is fairly easy to monitor your accounts using just a few simple tricks.
- Set up your own alerting system on all open accounts (even if you don’t use them regularly)
- Review transactions before paying your credit card bill.
- Pay attention to alerts from your bank or account issuer if they experience a data breach
- Receive proactive data breach updates using identity theft protection services.
Identity takeover has both financial and non-financial components, but most monitoring efforts focus on the financial component of monitoring. This is because identity theft most commonly manifests itself through new credit accounts being opened or negative information (unpaid bills) being introduced to your credit report. The top ways to monitor for identity takeover include:
- Checking your full credit report from all three bureaus at least once per year.
- Set up free credit monitoring for two bureaus on a regular basis.
- Annually check for fraudulent or incorrect information on savings accounts or checking accounts using the ChexSystems.
- Pay for three credit bureau monitoring.
- Pay for web or “dark web” surveillance that will identify if your social security number is being offered for sale.
- Pay for change of address alerts from monitoring companies.
What companies can help me monitor for identity theft?
While no company can identify every instance of identity theft through monitoring, you may find that you are more comfortable maximizing the amount of monitoring available to you.
Major debit and credit card companies will typically alert you if they suspect a fraudulent transaction on your account. They will likely place a temporary freeze on your card until you call to resolve an issue.
Prosper Daily, formerly BillGuard, ($9.99 a month or $6.99 a month if you pay for a full year) can link directly to all your accounts, so you can see all debit and credit transactions and review them for fraudulent activity.
Identity Takeover typically manifests itself through negative credit information, so monitoring your credit report for fraudulent information, is the best way to monitor for identity theft.
In addition to the free annual credit reports, free two bureau monitoring, and free checking account monitoring, it is possible to pay to receive three bureau credit monitoring services along with the monitoring of other data that will help you identify and resolve identity theft early on.
This can be a good choice if you are in the midst of dealing actively with credit card fraud, or you want some of the additional coverage from these insurance providers.
Prosper Daily, formerly BillGuard, ($9.99/month or $6.99/month if you pay for a full year) offers daily monitoring from all three credit bureaus, transaction monitoring on your credit and debit cards (helpful if you have multiple active accounts), and “black market” surveillance of your social security number. In addition to these monitoring services. Black Market alerts are helpful if you need to know that you are a heightened state of risk.
TrueCredit ($9.95/month) and AARP ($9.17) offered through TrustedID also provides cost effective monitoring of all three credit bureaus if Prosper Daily is a poor fit for you. AARP and TrustedID also provide up to $1Million in Identity Theft insurance which is a benefit explained below.
myFICO ($29.95/month) offers quarterly 3 bureau credit monitoring along with intelligent identity theft monitoring features including Black Market Website Surveillance of the sale of your identity information and Social Security number alias watch which monitors the names and addresses associated with your SSN.
Limiting the Cost of resolution:
Although laws exist to limit financial loss for consumers, identity theft resolution tends to have some out of pocket costs. These costs include liability losses (limited to $50 if fraudulent charges are reported within 2 days or $500 if reported within 60 days), legal costs (ranging from $20 for notarized forms to a few thousand if you undergo legal battles), and lost wages if you have to take time off to battle the legal system.
How do I limit the costs of resolution?
- Use debit and credit cards that advertise $0 Fraud Liability
- Report any fraudulent transactions (especially cash withdrawals) immediately.
- Follow your bank’s process for cancelling and reissuing accounts immediately.
- Change login IDs, passwords, and PIN codes immediately.
- Follow these steps to report identity theft.
Typically account takeover can be resolved at no out of pocket costs to you. By alerting your issuing bank, you can typically be made financially whole (unless the theft involved ATM withdrawals using your PIN number).
- Report identity theft right away.
- You will need to file an identity theft affidavit and a police report.
- Change passwords and PINs as quickly as possible.
- Follow these steps as quickly as possible to minimize the likelihood of litigation.
- Consider purchasing identity theft insurance which will cover the financial costs associated with identity theft resolution.
Identity takeover is much more cumbersome to resolve, but outside of litigation, the financial costs are limited. If you are worried about loss liability or potential courtroom expenses, you may want find that purchasing identity theft insurance protection will be valuable for your peace of mind.
What companies can help me limit the cost of resolution?
If your account is taken over, by law your financial institution must hold you to a $0 Fraud Liability on fraudulent transactions if you still have possession of your card.
However, if your card was lost or stolen, then you have up to $50 in liability if you report the fraudulent transaction within two days, and up to $500 in liability if you report the fraudulent transaction within 60 days. After that point, your liability is limitless.
Prosper Daily, formerly BillGuard, ($6.99-$9.99 per month) offers resolution services at no additional cost to all their customers. They offer up to $10K in recovery of fraudulent electronically transferred funds if legal recourse with a financial institution has failed (this could happen in some debit account situations), and the transfer has been reported to Prosper Daily within 90 days of the transfer, and the customer has sought funds from their financial institution first.
Zander ($6.75 per month) offers resolution services at no additional cost to their customers. Additionally, they offer up to $10K in recovery of fraudulent electronically transferred funds if legal recourse with a financial institution has failed, and the customer has sought funds from their financial institution first.
Neither Prosper Daily nor Zander will pay out any benefit if the unauthorized transfer was made by a person using your card and your PIN number if you gave them access to that information in the past.
Among the most prominent identity theft products, identity theft insurance promises to cover the complete cost associated with identity theft. This can include the costs of notarization, legal costs, filing costs, and even lost wages. Identity theft insurance policies can cover anywhere from $25,000- $1 Million in coverage though $25,000 should be more than sufficient for most people.
Prosper Daily, formerly BillGuard, ($6.99-$9.99 per month) offers resolution services at no additional cost to all their customers, and up to $1M in coverage for identity theft related losses. They offer up to $10K in recovery of fraudulent electronically transferred funds if legal recourse with a financial institution has failed (this could happen in some debit account situations), and the transfer has been reported to Prosper Daily within 90 days of the transfer, and the customer has sought funds from their financial institution first.
Zander ($6.75 per month) offers resolution services at no additional cost to their customers, and up to $1M in coverage for identity theft related losses. Additionally, they offer up to $10K in recovery of fraudulent electronically transferred funds if legal recourse with a financial institution has failed, and the customer has sought funds from their financial institution first.
Equifax ($17.95 per month) offers up to $25K in identity theft insurance along with 3 credit bureau monitoring services, resolution services. Although their limit is lower than the other companies, $25K is likely to be more than enough to pay for all the legal fees and lost wages that could occur in a worst case identity theft scenario. Their insurance does not cover recovery of unauthorized electronic funds.
Identity Guard ($19.99 per month) offers 3 credit bureau monitoring and personal resolution services, and their insurance is up to $1Million. Their insurance does not cover recovery of unauthorized electronic funds.
Metlife offers $5M in coverage for $22.95, and 3 bureau credit monitoring, but they do not offer resolution services. Their insurance does not cover recovery of unauthorized electronic funds.
If you’ve been the victim of identity theft, then it is up to you to report the identity theft and restore your good name to all affected areas. This can be a time consuming task, and some companies are willing to take on the burden for you.
How do I restore my identity after I’ve been a victim of identity theft?
- Call your credit or debit card company, cancel your existing account, and have them replace it with something new.
- Make sure that fraudulent charges are removed and your money has been restored.
- If instructed by your bank, file an identity theft affidavit and a police report.
- If necessary, follow these steps to resolve identity theft according to the Federal Trade Commission.
- If you have paid for identity theft resolution services, report identity theft to your company, so that they can complete resolution steps on your behalf.
Account takeover can usually be resolved between you and your financial institution without too much red tape or documentation required.
- Visit IdentityTheft.gov, a website that will walk you through all of the steps required to take back your identity. You will also be able to speak with real people. Steps include:
- Place a Fraud Alert and Get Credit Reports
- Report identity theft to FTC
- File a police Report
- Freeze your credit
- Close fraudulent accounts
- Repair your credit report
- Unravel misuses of your ID for tax, work, social security, medical or other purposes.
- Utilize resolution services from an existing identity theft resolution policy to assist or resolve issues for you.
What companies can help me restore my identity?
The average identity theft victim spends more than 30 hours unraveling the work of identity thieves in order to make themselves whole again. Several companies offer a range of identity theft resolution services that can help resolve both account takeover and identity takeover.
These companies offer resolution help, but they do not restore your identity on your behalf.
Equifax ($17.95 per month) offers resolution assistance through a members only toll-free hotline; depending on your situation, they may assign a caseworker directly to you, but it is up to you to complete all filing. Equifax has an A+ rating with the BBB, but their identity theft product had few online reviews
Identity Guard ($19.99 per month) provides a toll free hotline and promises one on one service, but you are expected to do the heavy lifting associated with filing paperwork and recovery. Identity Guard has an A+ rating with the Better Business Bureau, and all complaints filed against them have been resolved. Online customer reviews showed overwhelmingly positive support.
PrivacyGuard ($19.99 per month) offers a team of fraud experts but not individualized caseworkers. The experts take on much of the burden of contacting creditors and filing paperwork. However, online reviews for PrivacyGuard showed overwhelmingly negative experiences including billing problems and poor customer service.
myFICO ($29.95 per month) provides 24/7 restoration assistance with identity theft experts, and they promise to hire lawyers, investigators and legal case managers on your behalf if you need legal help. However, some of the resolution burden continues to rest with the consumer.
Guaranteed Full Resolution:
These companies promise to do all the work necessary to restore your identity on your behalf.
Zander Insurance ($6.75 monthly) is one of the top names in restoration services. They assign a US based case worker directly to your case and promise to do all the heavy lifting associated with restoring your identity. They boast a 100% success rate in identity recovery, have an A+ rating with the Better Business Bureau, and overwhelmingly positive online reviews.
Prosper Daily, formerly BillGuard, ($6.99-$9.99 monthly) Fraudulent charges on credit cards can be resolved directly through the Prosper Daily App. However, in more complicated cases a dedicated case specialist will file an identity theft affidavit and letters of dispute to banks, creditors, and credit bureaus that were affected. Since opening in 2010, Prosper Daily has had no complaints registered with the Better Business Bureau, but it is unrated at this time.
ID Shield ($9.95 per month) promises that a licensed private investigator will be assigned directly to your case, and provide you with complete resolution. They are not rated by the Better Business Bureau, but they have very positive online reviews.
ProtectMyID ($15.95 per month) provides offers a US Based identity fraud specialist who will work with you directly to resolve any issues associated with identity theft. Equifax has an A+ rating with the Better Business Bureau, but there were very few online reviews.
Determining the Right Products for You
Best overall free strategy
- Use AnnualCreditReport.com to review your 3 bureau credit report once per year.
- Use ChexSystems to check for accurate checking and savings information once per year.
- Use CreditKarma to access two of three credit bureau reports on a weekly basis.
- Set up transaction alert s for open credit accounts.
- Review debit and credit transactions at least monthly.
- Keep your information secure and private.
- Freeze your credit if you fall victim to identity theft.
- Follow the FTC steps to resolve identity theft.
Cheapest Way to Maximize Resolution
- Purchase Zander Identity Theft Protection Insurance for complete resolution services: Total Cost $6.75 per month
For a little more money:
- Purchase Prosper Daily and receive three credit bureau monitoring, cyber monitoring, and transaction monitoring in addition to resolution services: Total Cost $6.99-$9.99 per month
- Purchase ID Shield and receive personalized resolution services from a Kroll Private Investigator (especially helpful in complex identity takeover situations) along with single bureau credit monitoring: Total Cost $9.99 per month
Cheapest Way to Maximize Monitoring
- Purchase Prosper Daily for three credit bureau monitoring, cyber monitoring, and transaction monitoring to linked accounts: Total Cost $6.99-$9.99 per month
Cheapest Way to Limit the Cost of Resolution
- Purchase Zander Identity Theft Insurance and receive up to $1M in identity theft insurance including recovery of up to $10K in unauthorized electronically transferred funds along with recovery services: Total Cost $6.75 per month
For a little more money
- Purchase Prosper Daily and receive up to $1M in identity theft insurance including recovery of up to $10K in unauthorized electronically transferred funds along with recovery services and three credit bureau monitoring, cyber monitoring, and transaction monitoring: Total Cost $6.99-$9.99 per month
Best Coverage That Money Can Buy
Offering the best combination of monitoring, limiting the costs of resolution, and resolution services Prosper Daily ($6.99-$9.99/month) offers the best all around identity theft product on the market
However, for those who are willing to sacrifice a bit in the way of resolution services for additional monitoring, myFICO Ultimate 3B ($29.99/month) offers acceptable resolution services combined top insurance and the best monitoring services on the market.