Is it important to have identity theft protection? Learn why it matters

What is identity theft protection?

Identity theft protection is a service that monitors your personal information for signs of fraudulent use, alerts you to suspicious activity, and guides you through the recovery process if your identity is stolen. Most people only realize their identity has been compromised after significant damage has occurred. Identity theft protection helps address this problem by providing continuous, automated monitoring.

These services actively scan public records, credit bureaus, and the dark web. Many also offer identity theft insurance benefits or support to help cover the costs and effort involved in restoring your identity.

Identity theft protection services use three approaches to help detect and respond to identity theft:

• Monitoring personal information. Identity theft protection services check if your details show up on the dark web or in data breaches. They also watch for new accounts opened in your name or changes to your address that you didn’t make.
• Detecting unusual credit activity. Identity theft protection services monitor your credit reports and bank accounts for suspicious activity, such as unknown credit cards or unauthorized transactions.
• Assistance with identity recovery. If your identity gets stolen, many identity theft protection services connect you with experts who walk you through fixing the problem. Some also include insurance to help pay for recovery costs like legal fees.

Identity theft protection services are valuable because they offer an easy, reliable, and consistent way of monitoring your activity for signs of identity theft. 

Why is it important to have identity theft protection?

While identity theft protection services can’t prevent identity theft, they improve your response and recovery.

Early detection of stolen data

A key feature of most identity theft protection services is dark web monitoring, which is done regularly to scan for your personal information. These services alert you if they find your data (such as Social Security numbers, credit card details, or bank account information) on the dark web, so you can take action to prevent fraud or identity theft.

Prevention of unauthorized credit accounts

Identity theft protection services also provide credit monitoring by combing through your credit report. Credit monitoring services typically work with the major credit bureaus: Equifax, Experian, and TransUnion. They may also provide credit score tracking by checking your FICO score or VantageScore (the two main types of credit scores) on a regular basis.

Reduced financial damage

Some identity theft protection services help you freeze your credit, which stops anyone from opening new accounts in your name. They can also set up fraud alerts that warn banks to double-check your identity before approving new credit cards or loans.

Faster response to data breaches

When data breaches happen, identity theft protection services help you respond quickly. These services monitor whether your personal data has been leaked and send instant alerts, so you can act fast. Since phishing attacks and data breaches often lead to identity theft, a quick response time can prevent bigger problems.

However, no single solution is 100% effective, and some phishing attack types can be highly sophisticated and difficult to defend against. These services can help, but combining them with safe online practices provides a stronger defense.

Lower recovery costs and expenses

Identity theft protection services help catch fraud early, so it doesn’t cost you as much money. Many also include insurance to help pay for recovery costs if your identity does get stolen. Quick alerts and recovery help can prevent a small data breach from becoming a financial disaster.

Better control over personal data

These services keep an eye on your personal information online and send you alerts when something looks suspicious. This feature gives you time to take action before small problems become big ones. Services like NordProtect scan for data breaches so you can respond quickly if your information gets leaked.

Prevention of legal and credit problems

Identity theft protection services watch your credit and accounts, then alert you to suspicious changes so you can act fast. Quick action helps prevent bigger problems like damaged credit or having to prove you didn’t commit crimes someone else did using your identity.

Do you need identity theft protection?

It’s easy to fall into the trap of thinking that you’re not a target because you’re not wealthy or high profile. But the reality is that identity protection is crucial for everyone. It works as an effective contingency plan and guides you through recovery if your identity is ever compromised.

A good way of checking if identity theft protection is especially relevant for you is to see if any of the following statements apply to your situation:

Your personal data was leaked in past data breaches

Identity thieves don’t need important documents like credit card statements or bank transactions to target you. Any personal details or sensitive information can give them access to your accounts. If your personal data (such as an email address) has been exposed in a previous data breach, identity theft protection provides an added layer of security to safeguard your information.

You have multiple online financial accounts

Account security becomes increasingly complex the more accounts you have, particularly for banking and other financial accounts. Many people reuse login credentials across accounts. So if a thief obtains access to just one set of credentials, they could potentially access multiple accounts and cause significant financial harm. 

You don’t have time to monitor everything manually

It’s time consuming to manually track bank statements from multiple accounts or reports from credit card companies. Also, identity thieves can move fast in the case of a successful breach. Identity theft protection services continuously and automatically scan your credit reports and other accounts for unauthorized activity, helping you stay on top of potential threats.

You want guidance if identity theft happens

Above all else, identity theft protection services provide guidance when your Social Security number is leaked, bank credentials are stolen, or sensitive documents end up at the wrong address. They help you respond effectively to these situations, giving you a clear plan and some peace of mind if you ever fall victim to identity theft.

Is identity theft protection worth it?

While your specific circumstances influence how much identity theft protection is worth it, these services ultimately function as a form of cyberattack insurance. They can help offset financial losses and other consequences that can result from identity theft.

While they can’t return stolen funds or destroy databases where your personal information has been leaked, identity theft protection services help limit access to your personal information, reducing the potential damage and impact.

Pros and cons of identity theft protection: What should you know?

Identity theft protection comes with some considerations — mostly, the fact that it isn’t free. However, its advantages often make it worth the price.

Can you stay safe without identity theft protection?

It’s possible to protect yourself from identity fraud or theft without the use of identity theft protection services, but doing so requires careful, ongoing effort. And even then, you may not detect threats as quickly as automated services can. 

Here are some key measures you can take to protect yourself manually:

• Freeze your credit in case of suspected identity theft. If you get a fraud alert, a credit freeze will prevent new creditors from accessing your report and opening new accounts. 
• Enable 2FA. Turn on 2FA for every account that offers it, especially for sensitive accounts like banking, email, and social media. 
• Review your credit reports. Review your credit reports regularly for unfamiliar accounts or debts, and report any discrepancies immediately. If you find an error, contact the company or creditor involved to report the issue.
• Be wary of phishing. Be vigilant against phishing attempts. Never click suspicious links or attachments, and avoid providing your personal information to unverified entities. You should also practice good online habits and know how to spot a phishing email.