Credit Monitoring Services – Are They Worth It?

It   is common, if not automatic, for companies that have their information systems breached to offer credit monitoring services, and this includes medical record breaches.  Consumers can also pay companies like Lifelock to provide the same services.  The question is do they work and the answer is, for the most part, not really.

Brian Krebs has written two columns on the subject (here and here) that you can read to get more detailed information.  To be fair, these services do help in one particular area, but it is not timely in my personal experience.  Also, different services offer different features, so if you are going to purchase one, compare before you buy.  Also, some insurance carriers are starting to offer identity theft insurance for a very nominal fee, so you may also want to check with your insurance carrier.

What is below just hits the highlights, so please read the linked articles if you want more details.

• I got a service from AllClearID as a result of one of last year’s big breaches.  I opened a new credit account at a retail store a few months ago.  60 to 90 days after I opened it, I got a number of emails, texts and automated phone calls from them alerting me to the fact that I, or someone in my name, opened the account.  When I finally called them, they asked if I opened it and I said yes.  The delay is not their fault – it is the fault of the system where it takes a couple of months for the store to report to the credit bureau – if they report at all.  After all, there is no law requiring that.
• None of these services will detect charges on your existing credit card – it would drive you crazy if they sounded alarm bells every time you used your credit card.
• Likewise, they do not alert if you use your debit card or write a check on an existing account for the same reason.
• Of course, you can and should watch for charges on existing accounts – I get a text message from my bank when any number of events occur and that is all free – you just need to turn it on.
• A security freeze (which Lifelock used to do until they got sued for doing so) generates a warning to any credit grantor that that there is the possibility of credit fraud.  You can put it on for free, but, except in special circumstances, it expires after 90 days and you have to remember to renew it.  Also, credit grantors do not have to pull a credit report to grant credit, although most do, and they do not have to respect the credit freeze, but again, most do.  If you have a freeze on and you want to apply for credit, you may have to remove the freeze, for which the bureau charges you, and then put it back on.
• A fraud alert is similar in that it alerts the merchant that there is a chance of fraud and they should take extra care.  Again, voluntary on their part.
• You can get a free copy of your credit report, but not your credit score, from each bureau once a year.  There are actually 4 major bureaus, not 3 (people usually forget about Innovis), so you can and should get 1 free report every 3-4 months and look for anything that does not belong there.
• You can also contact ChexSystems for a report.  That is the company that stores and banks use to look for check fraud.
• If you freeze your credit, your existing creditors will not be able to pull credit reports on you – they typically do this every month – and they MAY suspend your accounts – it depends.
• Gartner has their own list of woes including:
• Most of these services will not tell you if a new wireless account is opened or cable service turned on (they may not report to the bureaus)
• They don’t, as I said above, monitor existing credit, debit, checking, brokerage, retirement, loyalty and other accounts.
• They do not stop a bad guy from using your information for non financial transactions like getting a fake drivers license.
• Crooks who get fake IDs and then wind up in prison can cause YOU untold hurt including you getting arrested and thrown in jail (the cops don’t know what is going on, so they arrest people and let the system figure it out).  It has also caused SWAT teams to break into people’s houses for the same reason.  It is very messy and expensive to fix.  This is one reason, that, if you plan on getting a program, to get one that provides payment to fix this and make sure what it will pay for (like an attorney) and what it won’t pay for.
• They won’t stop tax fraud
• Finally, they will not stop medical care fraud.

So now, if you are completely paranoid, join the club.  It is part of living in the 21st century, so take a deep breath and hope you don’t have to deal with most of these issues.

Sorry.

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