Identity theft is a growing concern, with nearly a third of U.S. residents having experienced it in some form.1 Whether it involves credit card fraud, tax fraud, or other malicious activities, the consequences can be severe. Many consumers turn to identity theft protection services to help provide reassurance, but are these services truly worth it?
The role of identity theft protection services
Identity theft protection services aim to monitor your accounts, alert you to suspicious activity, and assist in recovery if your identity is compromised. However, these services do not prevent criminals from targeting you. They primarily focus on responding to incidents after they occur.
While these services can be helpful, they’re not a substitute for proactive measures like using strong passwords, enabling multifactor authentication, and regularly monitoring your accounts. Some consumers may find value in services that provide tools like VPNs, password managers, or data removal from broker sites, but it’s essential to evaluate the specific features and costs before subscribing.
What to look for in a protection plan
If you’re considering an identity theft protection service, prioritize plans with practical and proven features:
- Password managers: These tools securely store and generate unique passwords, reducing the risk of compromised credentials.
- VPNs (Virtual Private Networks): A VPN hides your IP address and encrypts data, offering additional security when browsing.
- Credit monitoring: Look for plans offering real-time alerts and the ability to freeze or lock your credit files quickly.
- Data removal services: Some services, like DeleteMe, help reduce your online risk by removing personal information from data brokers.
Be cautious of flashy features that may not deliver real value, such as identity theft insurance, which typically covers recovery expenses but not financial losses.
Free identity theft protection options
There are effective alternatives to paid identity theft protection services. By taking advantage of these free resources, you can save money and still help protect yourself from identity theft:
- Sign up for free credit monitoring: Use services like Credit Karma or Credit Sesame to monitor your credit. These tools alert you to changes in your credit report, ensuring no unauthorized accounts are opened in your name.
- Freeze your credit: Contact Equifax, Experian, and TransUnion to freeze your credit. This step prevents criminals from opening accounts in your name, addressing one of the most damaging aspects of identity theft. Credit freezes are free and help protect against unauthorized credit activity.
- Financial institutions: Many credit card companies, like Mastercard and Visa, offer free monitoring and fraud alerts.
- Employer benefits: Some employers provide identity theft protection as part of their benefits package.
- Insurance policies: Renters and homeowners insurance may include identity theft protection.
- Identity Protection PIN: You can request an identity protection PIN (IP PIN) from the IRS. This six-digit number prevents someone else from filing a tax return using your Social Security number or individual taxpayer identification number. The IP PIN is known only to you and the IRS and helps verify your identity when you file an electronic or paper tax return. The ID PIN can be obtained online, by applying via mail, or in-person at a local Taxpayer Assistance Center.
Additionally, take advantage of free credit reports available weekly through AnnualCreditReport.com to monitor your accounts for unauthorized activity.
The importance of good cybersecurity habits
One of the most effective ways to help protect your identity is through consistent preventative actions, including:
- Using unique, complex passwords for every account and store them in a password manager.
- Enabling multifactor authentication wherever possible.
- Regularly updating software and devices to patch security vulnerabilities.
- Avoiding clicking on unsolicited email links or attachments that could contain malware.
- Setting up credit freezes with all three major credit bureaus to prevent unauthorized credit activity.
For many, identity theft protection services offer reassurance and helpful tools, but they are not a replacement for good cybersecurity habits. Evaluate your existing resources and consider whether a paid service aligns with your needs. For more information on how Mercer Advisors protects your information and practical tips to help shield yourself from cybersecurity threats, read our Insights article.
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1 Howarth, Josh. “30+ Identity Theft Statistics for 2024.” Exploding Topics, 5 December 2023.
Mercer Advisors Inc. is a parent company of Mercer Global Advisors Inc. and is not involved with investment services. Mercer Global Advisors Inc. (“Mercer Advisors”) is registered as an investment advisor with the SEC. The firm only transacts business in states where it is properly registered or is excluded or exempted from registration requirements.
All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Some of the research and ratings shown in this presentation come from third parties that are not affiliated with Mercer Advisors. The information is believed to be accurate but is not guaranteed or warranted by Mercer Advisors. Content, research, tools and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. The services and third-party links are presented for information and educational purposes only. Mercer Global Advisors Inc. is not affiliated with, does not guarantee nor does it endorse any of the applications or services mentioned in this article. Utilizing the services and subscriptions mentioned above are at the total discretion of the individual and are not included with any service or fee offered through Mercer Global Advisors Inc. For financial planning advice specific to your circumstances, talk to a qualified professional at Mercer Advisors.
