After a major data breach, it’s hard to know whether your information has been compromised and how to protect yourself afterward. Businesses have cropped up that offer credit monitoring services—peace of mind for a price. But should you pay for them, or even sign up for a free trial?
What Are Credit Monitoring Services?
Credit monitoring services, like LifeLock or Identity Guard, offer a range of monitoring “plans” that run from $10 to $30 a month. While these different plans come with different perks, they all do one basic thing—routinely check your credit reports and alert you when there’s suspicious activity. That’s right; credit monitoring services don’t prevent your identity from being stolen, they just let you know when it’s been stolen.
If you assumed that premium credit monitoring services existed to protect your identity proactively, then you’re not alone. Businesses that offer credit monitoring seem to intentionally trick customers into believing that 120+ dollars per year will protect them from fraud and identity theft. They do this by conflating credit monitoring with services that sound high-tech and relatively mysterious, like antivirus software or dark web scans. But antivirus software isn’t going to prevent your identity from being stolen, because hackers are targeting the databases of giant corporations, not your computer. And services like dark web scans are genuinely just nonsense meant to give you a false sense of security.
Businesses that offer credit monitoring also tend to offer forms of monetary reimbursement, because, you know, they can’t actually prevent fraud from happening. Like car or health insurance, an inexpensive credit monitoring “plan” will only reimburse you for a small amount in damages, while a more expensive plan will pay out for a larger amount. Well, that sounds nice, right? You might be tempted to sign up for a monitoring service so that you don’t have to pay for fraudulent charges. You might even be tempted to sign up for an expensive plan that offers a larger reimbursement, just in case.
Here’s the thing. You already have a legal right to reimbursement under the Fair Billing Act. As long as you report a fraudulent charge within 60 days, you’re only liable for a maximum of $50. Fraudulent charges to debit cards are a bit trickier, but you still have a right to full reimbursement if you report a fraudulent charge promptly. If you check your credit reports once a month (which is easy to do for free), then you’ll never incur a significant loss for a fraudulent charge.
Whatever You Do, Never Sign Up for a Free Credit Monitoring Trial
Let’s pretend that you’re the owner of a business that was just hit by a massive data breach. Millions of your customers have been compromised, and many of them will remember the company that let their information fall into the wrong hands. There’s no way for you to protect these millions of identities—they’ve already been stolen! But you can offer people the next best thing: peace of mind.
How do you offer your customers peace of mind? Well, you can set up call centers, shoot out millions of emails, and offer free trials to credit monitoring services. It’s a nice sentiment, but there’s a caveat. Have you ever signed up for a free trial to Netflix or Xbox Live, only to be quietly charged with a renewal fee? Well, the businesses that volunteer a free trial to their credit monitoring services after a data breach are banking on the fact that people will either choose to continue their service or simply forget to cancel it.
Some businesses offer free trials that don’t require debit or credit information, so you don’t have to worry about them automatically renewing. For example, the WebWatcher service that’s currently being offered by Marriott doesn’t require any card information. In fact, there’s no premium version of the WebWatcher service; it’s paid for by Marriott. But you should still keep in mind that Marriott is only offering the WebWatcher service to mitigate the media fallout. WebWatcher won’t protect you from fraud; it’ll only tell you if your identity has already been stolen.
Trying a credit monitoring service after a breach may seem like a good way to quickly check your credit status, especially if you’ve never checked your credit reports before. But, you can monitor your credit by yourself, for free, and it doesn’t take nearly as much time as you might expect.
You Can Monitor Your Credit Yourself, For Free
Businesses that offer credit monitoring services tend to target consumers that they can mislead. That includes people who need immediate protection from data breaches, and people who don’t know how to avoid or to manage the impact of identity theft. They know that people are willing to pay for peace of mind, especially when they don’t know how to monitor or freeze their own credit.
Well, you might be glad to know that it’s easy to monitor your own credit through services like Credit Karma and FreeCreditScore.com. They’re free, easy to use, and you can access them from your phone or computer.
When you sign into Credit Karma or FreeCreditScore.com, you’re shown a lot of useful personal data. You can see how many accounts are open in your name, how much money you owe to lenders, and you can even see how many hard inquiries have been made under your name. A quick glance at this information every month is enough to tell you whether you not your identity has been stolen. You can also set up these services to email you when there’s any change to your credit reports, which is exactly what a paid service does.
Don’t forget that monitoring your credit won’t prevent people from opening new credit in your name. You’ll know that someone has stolen your identity, but only after the damage has been done. The only way to prevent people from opening new credit in your name is to freeze your credit.
If You Want Protection, Then Freeze Your Credit. It’s Free.
If you want to protect yourself from identity theft, then you might want to freeze your credit. The freezing (and unfreezing) process is relatively easy, and it’s now totally free.
Freezing your credit prevents anybody, including yourself, from opening new credit in your name. It sounds like an inconvenience, but it’s the only way to keep criminals from borrowing money under your name. Plus, it’s easy to temporarily unfreeze your credit, in case you need to apply for a credit card or a loan.
We recommend that you freeze your credit and avoid paying for any type of credit monitoring service. Again, credit monitoring services don’t protect you from identity theft; they just alert you after it’s already happened. While we don’t recommend paying for a credit monitoring service, we suggest that people regularly view and monitor their own credit through websites like Credit Karma and FreeCreditScore.com. These services show you how many accounts are open in your name, along with a bunch of other useful information. Just remember that a credit freeze is the only thing that will prevent criminals from opening accounts in your name.