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Identity Theft Protection

Credit Monitoring and Identity Theft Protection Guide

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

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When credit bureau Equifax announced that the Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers of over 140 million people had been hacked back in 2017, consumers were forced to acknowledge how vulnerable they were to identity theft.

As a result of that breach, a new federal law allowing people to freeze and unfreeze their credit profiles for free at all three major bureaus was passed in September 2018.

To help you protect against identity theft, you should have a plan to:

  1. Prevent identity theft with a credit freeze
  2. Detect identity theft as soon as possible
  3. Resolve identity theft if it does happen

1. Prevent identity theft with a credit freeze

If someone has stolen your personal information, you’ll want to prevent them from being able to open new credit accounts in your name. You can do that in just a few minutes by freezing your credit profiles at the big three credit bureaus.

A credit freeze prevents any third party from obtaining a copy of your credit report. This means that in the vast majority of cases, new credit accounts cannot be opened. There may be rare exceptions — for example, American Express will sometimes approve a new credit card without doing a hard pull of your credit report if the applicant is an existing American Express customer.

If you want to apply for credit after having frozen your credit, you’ll need to unfreeze your credit, which can be done fairly quickly through each bureau’s website or app. You can also set a time frame for how long you want your credit to be unfrozen, like a week or a couple of days, and then the freeze will be reinstituted.

Experian and TransUnion each require a PIN (generated when you freeze your credit) to manage this, while Equifax does not require a PIN. Here’s where to freeze your credit with each bureau:

Another way to protect your financial information is to set up two-factor authentication on all open accounts (especially your bank accounts and email). That means any time you want to access your account or send money, you would need to receive a text message, email or phone call, or confirm via an app.

2. Detect new accounts and negative information

Even if you freeze your credit, you should have credit monitoring in place, especially if you’ve already experienced some type of identity theft. And if you haven’t frozen your credit files, all the more reason to sign up for some type of credit monitoring service. With credit monitoring, you’ll be notified as soon as someone tries to open a new account. In addition, you’ll be notified if new negative information hits your credit report. (Even if you have a credit freeze, someone could still use your Social Security number at a hospital. That medical debt could end up with a collection agency — and on your credit report.)

You can get single-bureau monitoring for free. You have to pay for tri-bureau monitoring. Here are some recommendations for both free and paid options for monitoring your credit:

Free single-bureau credit monitoring

MagnifyMoney’s parent company, LendingTree, offers credit monitoring in partnership with TransUnion. You’ll get access to your free credit score and will be notified of changes to your credit report such as inquiries and new account applications. You can create a LendingTree account here.

The company also partners with IDX to offer identity monitoring at a special price for LendingTree users. For example, get the enhanced service for $8.46 a month or the premium service for $16.96 a month. The premium subscription includes such services as tri-bureau credit monitoring, a report of all names and aliases associated with your Social Security number and monitoring for bank account takeovers and change of mailing address.

Affordable tri-bureau credit monitoring

CreditSesame’s “Pro Credit” plan is $15.95 a month and offers tri-bureau monitoring with alerts. If you’re very concerned about identity theft, tri-bureau monitoring could be worth the cost.

You should also take advantage of AnnualCreditReport.com. By law, consumers are entitled to one free credit report from each bureau every year, and that’s the site where you can get it. Plus, during the coronavirus pandemic, the bureaus has offered free reports on a weekly basis.

Alerts on all active financial accounts

Most banks, credit card companies and credit unions have a feature that allows you to receive an alert (text message or email) to notify you of transactions. Make sure you set these up for all accounts — especially accounts you rarely or never use.

3. How to resolve identity theft after it happens

If you’re the victim of identity theft, you’ll need a game plan for resolution. The best place to start is IdentityTheft.gov, where you can see a checklist of steps to take to ensure you minimize losses and regain control of your identity. If dealing with the situation on your own is daunting, you might want to have help with the resolution process, which is where credit resolution services come in. In a best-case scenario, you give power of attorney to the company and you’ll have a dedicated case worker handling everything (which can take years).

One affordable option is Zander Identity Theft Solutions, offered by Zander Insurance. The “essential plan” costs $6.75 a month for an individual or $12.90 a month for a family. With Zander, you’re paying for “white glove” service if your identity is stolen, and you’ll also have an insurance policy ($1 million for individuals or $2 million for families) to cover any expenses associated with recovering your identity.

Short version of how to protect yourself

To sum up the above, take the following actions to protect yourself from identity theft:

  • Freeze your credit with all three credit bureaus.
  • Sign up for free one-bureau credit monitoring at LendingTree.
  • Make sure all open accounts have alerts and two-factor authentication enabled.
  • Check your credit reports with all three bureaus for free at AnnualCreditReport.com.
  • Familiarize yourself with the steps outlined by IdentityTheft.gov in the case you become a victim of identity theft.

Next, we’ll go into more detail on what identity theft looks like, how to reduce risk and a variety of products to consider.

1. What are some specific types of 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 often isn’t 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 in two forms:

Account Takeover

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.

Identity Takeover

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 identity has been used to create false medical records, false work documents, criminal charges and unpaid taxes, in addition to financial and credit issues to resolve.

2. How does identity theft happen?

Identity theft can take place through physical and cyber channels, and nearly everyone is at risk. Knowing the most common identity theft scams can help you take steps to mitigate risk.

Account Takeover

  • Data breaches: This is when your account number gets stolen from a large corporate database along with thousands or millions of other people’s account information.
  • Account skimming: This is when a thief steals your card information during a transaction. For example, a device on an ATM could steal your debit card number and PIN during a withdrawal, or one on a gas pump could steal your credit card number.
  • Stolen cards: This is just what it sounds like, when a thief takes your physical card.
  • Unauthorized use: This is similar to a stolen card, but is when a friend or family member uses your card or PIN to make purchases without your knowledge or consent.
  • Phishing: This is when a cyber criminal reaches out to unsuspecting people in hopes of obtaining account information, often by pretending to be part of a trusted institution.
  • Online hacking: This is when you log into an account on a nonsecure wireless connection and cyber criminals are able to steal your account information.

Identity Takeover

  • An identity takeover can happen in some of the same ways that an account takeover can, including through data breaches, unauthorized use (such as a family member using your Social Security number), phishing and online hacking.
  • Stolen tax documents: This is when thieves steal tax documents that can contain your Social Security number, employment information and more. Some of the places where these documents might be stolen from include your mail, trash and digital locations.
  • Other documents: It’s not just tax documents; anything with personally identifiable information should not go into your trash or recycling without being shredded first.

3. How can you protect yourself?

It’s impossible to eradicate all risk of identity theft, but there are some steps you can take to mitigate risk, as well as secure your identity if identity theft occurs.

It’s important to note that friends and family members are often the perpetrators of identity theft — if you’re unwilling to press charges against someone, prevention is even more important.

Steps to take for prevention include:

  • Freeze your credit (it’s free), especially if you suspect someone has attempted to steal your identity.
  • Don’t share your debit card PIN.
  • Use your hands to shield the PINpad when using an ATM.
  • Avoid ATMs at locations that don’t have security footage.
  • Protect your phone with a passcode.
  • Don’t log into financial accounts on public Wi-Fi.
  • Avoid giving out your account information (online, over the phone or in person) unless you’re imminently about to make a transaction, and only give out what’s necessary.
  • If anyone calls you to ask for your account information, don’t give it out. If you think the call might be legitimate, call your bank or issuer at the number on the back of your card.
  • Use strong, unique passwords. A password manager such as LastPass can help.
  • Change passwords for online financial accounts frequently.
  • Shred documents (such as old checks) that have account numbers or other information.
  • Don’t share your Social Security number unless there’s a legitimate financial, tax or employment need. Even for some legitimate requests, there might be other options.
  • Avoid storing your Social Security number on your phone.
  • Don’t access tax documents or tax software via public Wi-Fi.
  • Use antivirus software on all your computers. Consider personal encryption software too.

Monitor your accounts and credit

When it comes to identity theft, the best defense is the early detection of fraudulent activity. If you detect fraudulent activity early, you can often prevent full account takeovers, quickly get reimbursed for fraudulent charges and deal with less paperwork as you unravel the effects of identity fraud. Here are some steps you can take to monitor your accounts and credit reports:

  • Set up transaction or balance alerts on all open accounts.
  • Review transaction history before you pay your credit card bill.
  • Sign up for free single-bureau credit monitoring, such as what LendingTree offers.
  • Check your free credit reports from each bureau on AnnualCreditReport.com.
  • Make it a habit to monitor your checking and savings accounts regularly.
  • You can opt to pay for a service with tri-bureau credit monitoring and other services such as dark web surveillance, change of address alerts and Social Security number monitoring.

Restore your identity after theft

If you’ve discovered that you’ve been the victim of identity theft, 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. Below are steps you should take, depending on the type of theft:

Account Takeover

  • Call your financial institution and have them close the existing product and replace it.
  • Make sure that fraudulent charges are reported and removed and your money has been restored.
  • If instructed by your bank, file an identity theft affidavit and a police report.
  • If necessary, follow the Federal Trade Commission’s steps for resolving identity theft.
  • If you’re paying for identity theft resolution services, report the identity theft to your company so they can complete necessary resolution steps on your behalf.

Identity Takeover

  • Visit IdentityTheft.gov. This website will walk you through the steps needed to take back your identity. You can also speak with real people. Some of the steps are outlined below.
  • Place a fraud alert and get your credit reports.
  • Report identity theft to the 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.
  • Make use of any existing identity theft resolution policy you might have.

Consider a subscription service

Paying for credit monitoring and/or identity theft resolution might be a worthwhile investment if you’re concerned your information has been compromised. Some options available include:

  • Equifax (the credit bureau) offers Equifax Complete™ Premier for $19.95 a month. This includes access to dedicated ID restoration specialists. After collecting a limited power of attorney from you, a restoration specialist can work with creditors, the IRS, merchants, banks and other third parties on your behalf after you’ve suffered identity theft.
  • PrivacyGuard offers plans for $9.99 a month (the “Identity Protection” plan) and $24.99 a month (the “Total Protection” plan) that include a dedicated ID fraud resolution agent.
  • Zander Insurance offers two identity theft protection plans. The “Essential Plan” costs $6.75 a month for individuals, while the “Elite Plan” costs $9.99. Zander advertises a team of recovery specialists based in the United States who’ll “take over the work to restore your identity to pre-theft status, providing white-glove service in every situation.”
  • IDShield offers single-bureau monitoring at $13.95 a month for an individual plan and tri-bureau monitoring at $17.95 a month for an individual plan. Both include access to in-house licensed private investigators who will work under a power of attorney to handle everything needed “to restore your identity and reputation to its former position.”

The bottom line

Although laws exist to limit financial loss for consumers, identity theft resolution tends to have some out of pocket costs. These include liability losses (when using a debit card, your losses should be limited to $50 if fraudulent charges are reported within two days or $500 if reported within 60 days, but you could be responsible for the full amount lost if reported after that), 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.

It’s also worth noting that you’re better protected against fraud when you’ve used a credit card than when you’ve used a debit card. Legally, you shouldn’t be held liable for more than $50 if there’s fraud on your credit card — but credit card issuers typically go beyond that and offer $0 fraud liability, meaning you won’t be liable for any fraudulent charges on your card.

By taking reasonable precautions such as freezing your credit, setting up alerts on your accounts, regularly checking all your accounts and credit reports, or using a credit monitoring service, you can increase your chances of detecting fraud early and being able to fix the situation swiftly.

And although it costs money, subscribing to a service that offers identity theft resolution can provide support in a worst-case scenario and reduce the amount of work you have to do to get your life back on track. But look carefully at what exactly you’re getting before you sign up — some services will handle virtually everything for you, while others might provide resources but leave you to handle the heavy lifting.

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When Banks Can Refuse to Refund Fraudulent Debit Card Charges

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.

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ATM

Typically, debit cards that are used as “credit” are offered the same protections as credit cards. This means that if you use your debit card in a store and choose “credit” instead of entering your PIN number, you should receive the same protections as if you used an actual credit card. However, we do encourage you to double check the fine print your bank provides on this matter before assuming your debit card will receive those protections.

But here’s a scenario where your debit card is riskier than your credit card. If you withdrawal money at an ATM (or any store doing cash back) using your PIN number, you have additional risk. If someone steals your pin number with a skimming device at an ATM, then he has direct access to your money. This isn’t like credit card fraud with obnoxious charges you need to dispute. This is your hard-earned cash being taken directly out of your checking account. And if you aren’t careful, you might not be able to recoup your losses.

So, what can you expect if you are a victim of debit card fraud?

Timeline for Being Able to Get Your Money Back

If you are a victim of debit card fraud, you are responsible for the following:

  • $0 if you report the loss or fraud immediately and the card has not been used,
  • Up to $50 if you notify your bank within 48 hours of your lost or stolen card,
  • Up to $500 if you notify the bank with 48 hours and 60 days of your lost or stolen card, and
  • All of the fraudulent charges if you don’t notify the bank until after 60 days.

It’s important you don’t delay in reporting the fraud to your bank if you want to be able to get all of your money back. If you were the victim of theft because the crook skimmed your info and used your PIN, then you may be on the hook for the $50 because you couldn’t report to the bank before the card was used. You didn’t know it had happened until the strange transaction showed up!

It may seem unfair to be responsible for charges that you did not actually charge yourself, but to avoid that scenario and protect yourself, consider taking the following precautionary actions.

What You Can Do To Protect Yourself

To protect yourself against debit card fraud, you should do the following:

  • Only use an ATM inside a bank (this will lesson the likelihood that a scanner is on an ATM)
  • Cover your hand when you type your pin into an ATM (to protect yourself against any devices attached to the ATM from getting your PIN)
  • Set up text alerts for each transaction over $0.01 on your card. This way you’ll be immediately alerted if a bogus charge is made
  • Monitor your bank on a regular basis (so you can give notice of fraud immediately)
  • Report stolen funds immediately (so you’re not responsible for the charges)
  • Check-in annually with your bank as to the policies regarding debit card theft (know whether your debit card is specifically protected and to what extent)

While you can notify the bank by phone, it is best to get everything in writing. For purposes of the time requirement, notice is considered given when you put the letter in the mail. It’s even better if you send the mail certified. You can, of course, send notice by mail and call. Whatever you do, keep a record of your communications you have with the bank. This will put you in the best position if you have to escalate your problem.

Remember that if you take the actions listed above, you will be more protected than you otherwise would. Even if you didn’t do anything wrong, like in the example above, you can still find yourself stuck with fraud charges that your bank won’t reverse. These specific steps will help you protect yourself, even when you’re not at fault. This is particularly important if you use your debit card frequently.

Don’t want to use a credit card? Learn how to survive with just debit cards here. 

Debit vs. Credit: How to Decide

Using a debit card forces you to keep your spending in check because you cannot spend more than you have in the bank. However, it may be riskier than using a credit card for the reasons described above. Discover, for example, now offers a Freeze It® on/off switch for your account. If you’re concerned because you’ve lost your card, you can temporarily freeze your account and Discover will not authorize new purchases, cash advances or balance transfers.

If you’re not sure which is best for you, ask yourself what do you value more – your spending being limited or the additional protections from fraud. If you can control your spending, then you may be better off with a credit card. If you are a spender, however, then take the additional steps listed above to make sure you fully understand your specific liability in the event of debit card fraud. If you feel your bank is behaving unethically and should be refunding you, then reach out to the Consumer Financial Protection Bureau to file a complaint.