Does Identity Theft Protection Work?

A number of companies offer identity theft protection services, some of them quite costly, and in truth offering protection that has some value but is fairly limited in reality if your identity has been stolen.

Firstly it is important to look at how much of a risk people people are at in terms of having their identity stolen. Bureau of Justice statistics for 2014 estimate that some 7% of US residents were victims of identity theft in that year. By some measures that is quite a high estimate, but it is important to break it down into what it really means.

What is Identity Theft?

Many people have a view of identity theft is quite dramatic, a view often fuelled by companies providing identity theft protection services. The reality is that for most people identity theft is a real possibility, and is more likely to be around theft of credit card numbers etc, as well as the risk of people opening bank accounts in someone else’s name.

There are a number of things people can do to protect themselves, especially in these two areas. It is also important to make a distinction between what people can do to protect themselves against identity theft happening, and the identity theft protection that some companies offer, which is more about dealing with the problem once it has happened.

The cover that these companies offer is normally to do with some type of credit monitoring after the theft has actually happened.

There are also offer some type of power of attorney process that allows them to try and deal with the damage of identity theft in your name. Whilst this may in theory be of some benefit, mentally and emotionally and in your identity over to someone else again what has been stolen may seem quite weird some people.

Preventing Identity Theft

That you can protect whilst no one can guarantee that you can protect yourself against identity theft that are a number of things you can do that can help.

Firstly make sure that your credit card company covers you for an authorised use the card.

Most credit card companies do nowadays. It has fuelled the use of credit cards both online and off-line for people to use for everyday purchases. What it means in reality is that if anyone uses your credit card number however they have got it when it got company will automatically write off the loss and remove the charge from your account.

Most of the major credit card companies are pretty good in this area, and realise that it benefits consumer confidence hugely to know that they are automatically covered without dispute. It is worth checking however with your credit card company that this is their policy.

The other significant area of identity theft is people opening bank accounts and be able to obtain loans  in someone else’s name. There are certain categories of people terms of age and income seem to be more at risk, and it is worth doing some research to see where current identity theft statistics are heading in that direction.

The most important area of prevention and protection lies in good old common sense. In order for someone to steal your identity they really need to have some unique information about you, such as your Social Security number, National Insurance number, passport number and photograph,  driving licence number etc.

The best way you can protect this information is not to share it with anyone online, and make sure that all correspondence involving any sensitive information  is sent and received by normal mail.

There is continual pressure to do everything online nowadays, especially by organisations such as banks which set as a way of cutting costs considerably. Make sure that you keep the option of corresponding and doing business by normal mail, including things such as bank statements.

Whilst paper information can be accessed and hacked by criminals, that to some extent has always been the case. The best way to protect yourself is to make sure that information is not shared online, and make sure that all paper versions of it is shredded prior to disposal.

Home owners insurance

A number of homeowners insurance policies offer some type of identity theft protection either as an add-on or as an integral part of the policy. This to an extent can be a bit of window dressing, but can also include road to useful features.

One of the most common is access to some type of free credit monitoring service which can alert you if they suspicious activity regarding your account, or if something like a bank account is opened in your name.

What these policies offer should be seen in the context of what you yourself can do as well. For example,  virtually everyone has a legal right to see their credit report at least once a year, in order to check it is accurate and have any mistakes rectified. This is a good way of seeing what information is held on you and by whom.

Some insurance policies also provide a degree of financial indemnity cover to help you pursue actions to recover your identity in the event of theft, including monies spent on attorney fees etc.

 

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