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Do you need ID theft insurance or credit monitoring?

Pay a third party or do it yourself, just make sure it gets done

You'd have to be living under a rock not to be concerned about identity theft. It seems like every other month there's a new report about another massive data breach somewhere in the world.

Not surprisingly, a thriving industry has sprung up around helping to protect consumers from identity theft. Most of these services are pretty expensive and many consumer organizations argue that they merely take actions you could easily carry out yourself for free. But if you don't have the time or wherewithal, you may want to enlist a professional to help unravel the mess.

Following are some of the identity theft prevention services being marketed, as well as questions to ask when considering them.

ID theft insurance is commonly offered as a rider to homeowners or renters insurance and typically costs $25 and $60 a year. Note: it doesn't protect you from being victimized in the first place nor does it cover direct monetary losses resulting from identity theft. Rather, it reimburses costs associated with reclaiming your financial identity (e.g., phone calls, making copies, mailing documents, wages lost when pursuing resolution and hiring an attorney).

Questions you should ask:

What are the policy's limits?

Is there a deductible?

If lost wages are covered, what limits apply and what triggers this coverage?

If legal fees are covered, what limits apply and must the insurer pre-approve the work?

How much personalized assistance will you get -- will they assign a case manager to execute on your behalf or merely give you a checklist to follow?

Credit monitoring services track your credit reports and contact you whenever key changes occur, things like new accounts opened in your name, address changes, credit inquiries and increased credit limits. They usually cost from $10 to $30 a month and services provided are all over the map. For example:

Some monitor and provide credit reports from all three major credit bureaus; but some only track one.

More expensive plans provide additional services including monitoring public records, black market website surveillance, and computer protection programs like antivirus and keystroke encryption software.

Some provide one or more free (or low-cost) credit scores.

Keep in mind when considering whether to buy credit monitoring:

Many creditors report information to all three credit bureaus, but some only report to one, so your three credit reports may contain different information.

Because many lenders only report activity to credit bureaus monthly, it could take weeks before your monitoring service spots fraudulent behavior.

Ask how you'll be notified of flagged changes (email, text and/or mail) and how frequently (daily, weekly, monthly).

You can order one free copy of each credit report from www.annualcreditreport.com per year, so by staggering them, you could get a different report every four months.

If you know, or fear that an account has been compromised but don't want to fully block access to your credit reports through a credit freeze, you can place a free, 90-day initial fraud alert with the three credit bureaus. This means businesses must verify your identity with you before opening new accounts.

You can renew the alert after 90 days. If you don't want to be bothered remembering, some monitoring services will file your renewals for a fee.

For more tips, see the Federal Trade Commission's "Privacy and Identity" page at www.consumer.ftc.gov/topics/privacy-identity.

Bottom line: Do you want to monitor your own credit (which is free but time-consuming) or hand off the task to a third party and pay hundreds of dollars? Either way, make sure it gets done.

Jason Alderman directs Visa's financial education programs. To Follow Jason Alderman on Twitter: www.twitter.com/PracticalMoney/

Comments

Like this comment
Posted by Must be!
a resident of Vineyard Hills
on Nov 3, 2014 at 12:52 pm

I must be living under a rock because I am NOT at all concerned about the made of threat of "identity theft."


Like this comment
Posted by Citizen
a resident of Another Pleasanton neighborhood
on Nov 11, 2014 at 12:14 pm

Enjoy your debit cards and especially the phone pay apps!!


Like this comment
Posted by get smart
a resident of Downtown
on Nov 11, 2014 at 12:40 pm

Put away your debit cards! Those are the prime ones for info theft. Never heard of the theft of CREDIT card info at the gas pump, but it happens all the time with DEBIT cards. If you are so careless that you cannot carry cash (hello? using your debit card for a $3 cup of coffee???) then maybe you just need to do without those little purchases. The merchants would love to get your cash since the fees for credit cards are high enough and debit cards are even higher.

Pay for gas, groceries, whatever, with CREDIT cards if you must but stop using debit cards everywhere. Your exposure will be cut dramatically. Pay off the credit cards in full every month and it works just like the debit card. You cannot spend what you don't have in the account.

I have used one of three credit cards for hundreds of thousands of dollars of expenses from travel, to remodeling supplies, to regular monthly billings like the phone company. I regularly make purchases from numerous online companies. I have been doing this for decades and have NEVER had my CC info stolen. Just put down that debit card, that's where the biggest risk is.


Like this comment
Posted by Roadkill Sally
a resident of Another Pleasanton neighborhood
on Nov 11, 2014 at 4:22 pm

Get Smart,
Not using debit cards is a great idea, because you have little protection - the crooks can clean out your bank account. You are wrong, if you think your credit card information cannot be stolen and charges made to your card. In fact, these days that happens fairly frequently. However, the credit card holder is generally not liable for over $50 of those charges if they report the charges to their card company promptly (and rarely have to pay the portion under $50).

And of course, as we now hear frequently, credit card numbers with personal information is being stolen by hackers on a major scale (millions per company hacked).

Bottom line, you need to close monitor your credit card statements and your credit reports to make sure charges are not being made to your account(s) and that your personal information has not been stolen and that you are not being looted.

Regarding insurance, check with your agent to learn what would losses would be covered. Often you will find it is half a loaf.


Sorry, but further commenting on this topic has been closed.

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