Would you like to know about the pros and cons of identity theft protection? People are becoming more conscious that they have to protect their identity, which is primarily due to the recent increase in the number of identity theft cases.
As a result of that, identity theft protection services are becoming increasingly popular.
It is established that these services and platforms offer numerous benefits to users, but at the same time, they have their drawbacks.
In this article, we seek to help you determine if such services are worth the investment; we would do that by exploring their pros and cons.
This article is an invaluable tool, especially if you subscribe to identity theft protection services from one of the providers.
As the name suggests, identity theft protection services aim to track and guard your identity from theft and misuse.
These services often include functionalities like credit monitoring, dark web scanning, fraud notifications, and identity-rebuilding services.
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Now, let’s get started.
What Are The Pros Of Identity Theft Protection?
1. Early Detection And Alerts
The first advantage that is offered by the identity theft protection services is the ability to detect the threats at an early stage.
These services also track your data and notify you if there are new accounts, credit reports, or other unusual activities. If this is detected early, then you are in a position to act and avoid further damage.
2. Comprehensive Monitoring
Some offer all-encompassing services for tracking different types of personal data such as your Social Security number, banking accounts, credit cards, medical records, etc.
Certain services also scan the dark web to analyze whether your data has been traded or put up for sale.
3. Identity Restoration Support
Interestingly, several identity theft protection services offer identity restoration services if you are among the victims of identity theft.
This may include helping to contact creditors, report cases to the police, and liaise with credit bureaus to delete fake entries from your credit report.
Doing it yourself takes a lot of time and stress to regain your identity while having professional assistance is much easier and will take less time.
4. Insurance Coverage
Most identity theft protection policies come with some insurance benefits in the form of covering costs involving identity theft restitution, such as legal expenses and lost income, among other costs.
This financial cushion is handy in the case of an identity theft occurrence.
5. Peace Of Mind
The Truth is, this peace of mind comes with knowing that your personal information is being monitored and protected online.
Identity theft protection services give you the security and peace of mind to concentrate on other crucial areas of your life, free from concerns about the security of your data.
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What Are The Cons Of Identity Theft Protection?
1. Cost
When we talk about the cons of identity theft protection services, the cost will be mentioned first, as it is the first obvious drawback.
Although some service providers give free options, they cannot be compared to the comprehensive features paid plans offer.
The paid or premium packages can cost $10-$40 or even more monthly. You might be unable to adequately justify this expense, especially when there are other ways you can monitor and protect your identity.
2. Limitations Of Protection
This is important to understand because identity theft protection services will not keep identity theft from happening.
They can only inform you of any such activity and enable you to act more efficiently. Unfortunately, no service can provide an absolute security against identity theft.
3. Overlapping Features
It is important to note that several identity theft protection services, such as fraud alerts and credit monitoring, are accessible through banks, credit card providers, and credit reporting agencies.
Hiring a service that provides similar products to these free ones might not be the best investment that you will make.
4. Privacy Concerns
It is important to remember that as you choose an identity theft protection service, you are sharing a lot of information with the service provider.
This can mean your social security number, bank account information, and other important information.
To some extent, there is always a chance that this information will be leaked, lost, or become a target of cyberattacks.
5. False Sense Of Security
One major drawback of protection services against identity theft is that it provides a false sense of security.
These services are good to have but should be relied on; some other excellent security measures that people should embrace are using solid passwords, regularly checking their accounts, and being careful with the information they disclose.
Who Should Consider Identity Theft Protection?
- Frequent Online Shoppers
People who shop often, especially those who use the internet, are likely to have their privacy violated, making identity theft protection relevant for them.
- Those With High-Value Credit
For instance, if you possess an extensive credit line or have a lot of valuable financial assets, identity theft protection will ensure you do not lose much.
- Identified Previous Victims Of Identity Theft
If you have ever been a victim of such a crime, getting protection services is a smart move to ensure you are not caught off guard again.
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Why Is Protecting Your Identity Important?
Identity theft is a natural phenomenon that has become increasingly important to combat today. It causes adverse effects in your life, including financial, physical, and other regions.
Knowing why protecting one’s identity is essential serves as a reminder of the threats that exist and the steps that must be taken to mitigate such risks.
Financial Security
The first thing that comes to mind as to why one should protect one’s identity is to protect one’s financial assets.
Some of the things that identity thieves can do are open credit reporting accounts, take loans, and make credit card charges.
Correcting these fraudulent activities can be lengthy and sometimes protracted, involving many legal and financial processes.
Protecting your identity, money, and valuable assets are safeguarded from dishonest individuals and activities.
Credit Health
A credit score is often viewed as one of the most significant factors affecting your financial situation, as it determines your ability to get loans, credit cards, and sometimes a job.
Fraudsters can also negatively impact your credit score by making purchases in your account and not paying for them.
Getting your credit back on track after identity theft is a rigorous task that takes time. Thus, do not allow yourself to become a victim of identity theft, preserving your creditworthiness and possible negative consequences arising from a bad credit score.
Personal Safety and Privacy
Apart from the monetary aspect, identity theft may threaten your well-being and right to individual confidentiality.
It enables thieves to engage in illicit activities, impersonation, or unauthorized access to susceptible information.
This may result in several legal problems and privacy violations that negatively impact your personal life.
Personal identity protection is paramount for financial security, credit standing, and individual safety.
With identity theft cases on the rise, preventive measures like closely scrutinizing accounts, choosing complex passwords, and enlisting identity theft protection services are essential.
In this way, you avoid identity theft’s severe and permanent consequences.
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Can You Lose Money From Identity Theft?
As simple as it may look, the effects of having your identity stolen and used for fraudulent purposes can be devastating.
Often, it leads to substantial financial losses. We will explain how identity theft can lead to huge financial losses and why you must protect your identity online.
Unauthorized Transactions
The first direct monetary loss you are likely to experience from identity theft is through the fraudulent purchase of goods.
Identity thieves can make purchases, Take out cash, or send money using your credit card or bank account information.
Such cases can quickly wipe out your entire savings and leave you stranded with overdraft charges or credit card bills already at their limit.
Fraudulent Loans And Accounts
Most identity thieves apply for new credit cards or loans in your name. Such scams can involve you becoming liable for a large amount of debt.
Because the bills and statements for such accounts are sent to different addresses, you may only know what happens once the creditors come after you for non-payment.
Failure to clear these debts can severely affect one’s financial health and credit rating.
Legal And Recovery Costs
The process of restoring identity theft is lengthy and also costly. The victims undergo legal costs when contesting the charges and reclaiming their credit.
Moreover, expenses are incurred to close adulterated accounts, open new accounts, and availing identity theft protection services.
Some of the victims may require periods of leave to deal with the aftermath, which comes with earnings loss.
Long-Term Financial Impact
The consequences of identity theft often entail long-term financial damages. Bad credit scores have effects such as high interest rates, inability to secure a house, and sometimes inability to secure a job.
Re-establishing credit and financial status may take some time and impact your financial plan.
Identity theft does cost a considerable amount of money; the victim may lose money due to fraudulent transactions and may have to spend more to reclaim his identity.
The financial losses can be severe and may persist for a long time. Thus, timely detection and prevention of identity theft are crucial in minimizing the damage to your finances.
Who Is Financially Responsible For Paying If Your Identity Is Stolen?
When your identity is stolen, figuring out who is on the hook for the unauthorized charges and the debts that come with them is anything but straightforward.
In general, the degree of liability varies with the type of fraud, timeliness of the reporting process, and even the policies pursued by the respective banks/financial institutions.
- Credit Card Fraud
In case of unauthorized credit card charges, the Fair Credit Billing Act (FCBA) places your liability at $50 per card, and most credit card companies do not take this fee from you if you inform them about the theft immediately.
If you can report the fraud before any charges have been made, you are not liable to pay any amount.
- Bank Account Fraud
The Electronic Fund Transfer Act (EFTA) regulates fraudulent withdrawals from your bank account. If you report the loss within two business days, your losses will be at most $50.
Failure to report within 60 days makes you liable to a fine of $500. After 60 days, many credit card companies or merchants may hold you liable for all unauthorized transactions.
- New Accounts And Loans
In case identity thieves manage to open new accounts or apply for loans in your name, you may not be held responsible for the debt.
However, you must show that the accounts were opened fraudulently. This can take a lot of time, as it involves filing police reports and contacting any creditor and the credit bureaus to clear the name.
It is essential, however, to act fast because legal statutes such as the FCBA and EFTA only protect you up to a certain extent from unauthorized transactions.
Informing financial institutions and credit bureaus as soon as possible reduces your liability and helps solve identity theft problems more quickly.
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How Do I Find All The Accounts Linked To My Name?
To correctly manage your financial status and prevent possible identity theft, it is essential to identify all accounts associated with your name. Here are some effective methods to identify these accounts:
Check Your Credit Reports
The best way to identify the exact accounts associated with your name is by checking your credit reports. Through AnnualCreditReport.com.
The three main credit bureaus, Equifax, TransUnion, and Experian, offer free yearly credit reports.
These reports show all credit references, such as credit cards, loans, or credit lines, and explain their current status and balance.
Examine Your Credit Card And Bank Statements.
Look for unfamiliar accounts or transactions on your recent bank and credit card statements. It assists in distinguishing between accounts that you may have left inactive and alerts you in fraud cases.
Use Account Aggregation Services
Many web-based tools like Mint or Personal Capital combine your financial data. These services link your accounts so you can have a broad picture of your finances, and in this way, any possible account you might have overlooked is easily seen.
Contact Financial Institutions
Contact the banks, credit unions, and other financial organizations you have previously done something with. They can give you details of any account linked to your name and Social Security number.
Check Your Post And Email
Be vigilant of any correspondence related to accounts or financial products in your name. This may include account statements, bills, or offers that help identify active or inactive accounts.
Looking at the credit reports, analyzing financial statements, account aggregation services, and contacting the financial institution allows you to discover all the accounts associated with the name.
This vigilance is essential to avoid loss of money and identity theft.
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Final Thought
Now that we have established Identity Theft Protection Pros and Cons, we also note several benefits of using identity theft protection services: early alerting, constant tracking, speedy identity repair services, insurance, and security.
Nevertheless, they also have disadvantages, restrictions, and privacy issues and can create an illusion of protection.
Thus, whether it is necessary to purchase services that protect against identity theft is relative to the person and the level of his fear of such problems.
Some are willing to pay for the convenience of having a secure browser, while others can use free options and be more cautious.
Making the best decision about identity security will be made possible by being aware of the benefits and drawbacks.