ID Theft Monitoring Is a Ripoff

Free credit reports? No. It's actually a monitoring service in disguise.

Unlike fraud alerts which are a complete waste of time, credit monitoring promises to alert you when there's activity on your credit file and that's exactly what they do. But what are you actually getting for the money?

• Activity alerts are trivially cheap to send – Every day I get regular activity alerts from email, banking, and social sites; often so many that I have to change my preferences to shut them up. Besides, Experian alone made about ~900 million in 2018 from their data brokering business using your data, my data, and that of hundreds of millions of others. I think they can afford it.
• Credit report activity is (relatively) rare – Unlike Facebook posts that can come 30 or more a day, credit activity happens only when I (or a thief) is doing something. In theory, your bank or landlord or other creditor could check now and then, but when researching people's experiences with monitoring online, every example people listed was of receiving alerts for their own activity only.
• And, most importantly, it doesn't do anything.

ALERT! Your care has overheated.

(Image is in the Public Domain)

Early detection systems like those in a home security system, email and device access alerts, and so on can help to show you someone is targeting you and you should take precautions. Monitoring is like that, but where the thief always has your key or password and is inside before you receive the alert. Credit activity is nearly always as a result of an approved credit transaction, not a test one, and (because fraud alerts don't work) not a blocked one.

I'm not saying monitoring your credit is pointless, but is it worth hundreds a year when you can do decent job on your own anyway? Per the FTC recommendation:

Monitor your credit reports for free. Federal law requires each of the three major credit bureaus to give you a free credit report — at your request — each year. Visit "AnnualCreditReport.com" — the only authorized website for free credit reports. If you want to monitor your reports over time, you can spread out your requests, getting one free report every four months.

Before you pay…

The type and variety of monitoring services out there is innemerable and they have varying extras like monitoring all three CRCs and addons and gimmicks etc which you will have to evaluate on your own to determine that it's worth it, but there are two reasons I don't bother:

First, the CRCs caused the ID Theft crisis and should take responsibility. Even if alerting you wasn't trivially cheap to do, the loose controls on credit information of the CRCs have made the credit-base ID Theft problem accelerate even after decades of ever-increasing regulation. It's their fault and I'll be gobsmacked if I'm going to entertain their racketeering scheme to pay them for protection.

Second, and more importantly, there's a better way and it costs nothing: credit freezes.

Spoiler alert: Credit freezes are the best defense you have, but we'll get to that in a later lesson.

Exercise

Exercise by Nick Youngson - Alpha Stock Images

(Image used under: Creative Commons 3.0 [SRC])

Do you really know what you're paying for with monitoring? If you have a monitoring service:

1. Log into your service and take a look around. Make some notes about what they're actually providing to you.
2. Rate each from 1 to 10 on two factors: 1) how well do you understand the feature, and 2) how valuable/important is it to you.
3. Take a moment to see if you have access to that same information elsewhere. For example, some banks and credit unions offer free credit scores as part of their service.
4. Look through your email for messages from your monitoring service. Write down the number of emails received and, out of those, how many had important and worthwhile information.

Don't do anything yet, but keep these notes handy for the end of this lesson after I've shown you some alternatives.