Question: A year ago this very month, my mom got “free credit monitoring and identity theft protection” from Target because she shopped there when that big data breach happened.
I guess Target offered it as a PR move, but for the past 12 months, my mom has been bugging me to pay for the service on my own — because she’s convinced it kept her from being ripped off. Thing is, she doesn’t even know how it works, and when I Google the topic, I get a lot of noise.
For instance, what the heck is “enhanced identity theft protection”? How is that different from “daily credit monitoring”? These things cost under $10 a month to more than $25. Help! I don’t want to get ripped off paying for something so I don’t get ripped off.
— Mike in Las Vegas
Howard Dvorkin CPA answers…
Your mother was smart. After the big Target data breach in December 2013 — when cyber-crooks had a chance to steal 40 million credit and debit card numbers — Target offered the free credit monitoring and identity theft protection you mentioned.
Sure, Target did that because, as you say, it was a good PR move. It was also a responsible move, because it gave shoppers peace of mind. If those crooks had tried to actually use your mother’s credit or debit card, the free service would have notified her immediately, and she’d be able to quickly put a stop to it.
When it comes to explaining how these services work and the differences between them, things can get complicated. Let’s simplify them.
“Credit monitoring” vs. “identity theft protection”
What’s the difference? Not much, really. Cut through the terminology, and nearly all of these companies offer the same services:
- monitoring activity in your accounts every day
- notifying you of account activity via email or text alerts
- placing fraud alerts or freezes on your credit reports
- deleting your name from marketing mailing list
- offering ID theft insurance, usually $25,000 to $1 million
The term “enhanced” is just a marketing term. Basically, you’re paying more for a few more services above.
For instance, the service I recommend is called Credit Power, and if you look at their pricing plans, the “Protect Plus” and “Protect Max” categories would be considered enhanced. LifeLock, the best-known service, calls theirs “Advantage” and “Ultimate Plus.”
I wrote about these two services a couple of months ago (What’s The Best Credit Score Monitoring Service?) but if you don’t want to read the details, here’s the bullet:
Because these services do the same thing, cheaper is better. That’s why I like Credit Power. It’s not as well known as LifeLock, but it also doesn’t have a national advertising campaign to support, so its prices are the lowest.
You can do this yourself
I hope this helps, Michael. Here’s something else you should know: Most of what these services do, you can do on your own. to quote from the Federal Trade Commission:
Many people find it valuable and convenient to pay a company to keep track of their financial accounts, credit reports, and personal information. Other people choose to do this on their own for free. Before you pay for a service, evaluate it and its track record before you pay any fees.
I compare it to doing your own taxes or hiring an accountant to do them for you. If your taxes are straightforward enough and you have the time, why pay someone else?
However, if you’re busy and you have multiple credit and debit accounts that you use frequently, it’s worth the peace of mind, free time, and ID theft insurance.
Whatever you do, Michael, I urge you to read How Can I Protect Myself From Identity Theft? That was a question from a reader who already had his identity stolen. I look forward to the day when no Debt.com reader ever has to ask me a question like that again.
Have a debt question?
Email your question to firstname.lastname@example.org and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.
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