Target. Home Depot. UPS. With the recent rash of data breaches, millions of consumers have had their personal and financial information compromised. After a data breach, consumers may turn to companies that promise they can “safeguard your finances, credit and good name.” But we think their advertising doesn’t tell you the whole truth about how well they can protect you.
Why should consumers be wary of identity monitoring?
The threat may be exaggerated: The biggest risk when payment card data is stolen is existing account fraud (that’s when crooks buy things on your account). New account fraud (that’s when crooks open up new lines of credit in your name) is much more rare – less than 1% of all identity theft.
It doesn’t address the biggest dangers: These are illicit purchases made to your existing debit and/or credit cards, and phishing attacks, in which scammers call or email to get you to turn over more personal data.
Your information may still be at risk: Once your information is out there, no company can get it back, even if the ads seem to indicate that they can.
It can be expensive — costing hundreds of dollars per year – and may provide no more protection than steps you can take yourself for free or at a nominal fee.
What should you do to protect your identity:
- Regularly monitor your accounts for questionable entries. This will help you spot and stop the most common form of identity theft: existing account fraud.
- Set up text, email or mobile alerts on your accounts. You can do this through your financial institutions at no fee. These alerts let you know about any suspicious account activity.
- Worried about new account fraud? You can do a bunch of free or low-fee things: regularly access your free credit reports at annualcreditreport.com (for information on how, see http://consumersunion.org/news/your-credit-matters/; place a free fraud alert and/or set up a security freeze (to find out how see: http://www.consumer.ftc.gov/articles/0279-extended-fraud-alerts-and-credit-freezes.
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