Is Identity Theft Protection Worth the Cost?
Our generation doesn’t really “do” insurance. There are a lot of things we spend money on, like diamonds and Kimojis. But trying to decide how much protection to get from a given situation—and how much risk you’re willing to live with—is a very personal decision that everyone approaches differently.
Identity theft is becoming a bigger and bigger issue every year, and identity protection services are a fast-growing industry.
What Does Identity Theft Protection Do?
Identity theft protection services like LifeLock®, TrustedID, and ID Shield look for your personal information online and alert you to potential misuses of it. All of them are different, but many of them offer similar services. Most of them watch your credit score for signs of someone opening fraudulent credit in your name. If someone is selling your credit card info or social security number on a black market website, they let you know. Many of them offer either lost wage reimbursement, ID theft insurance, help with the cost of clearing your name, or some combination of the three.
Some of the services offered, like opting out of pre-screened credit card offers, are things you can do for yourself. Others, like LifeLock’s assertion that they scan a trillion data points a day for threats† or covering up to a million bucks out of the cost of fixing the ID theft†††, are things that would be a little trickier to do on your own.
Pro: It Helps With Online Shopping
Spending money to protect yourself from hypothetical problems probably isn’t really the first thing on your mind. On the other hand, everything is online now, and the Pew Research Center says that nearly three-quarters of Americans go online at least daily—we millennials are driving a lot of that. More than a third of us are online “almost constantly,” by our own assessment. Last Thanksgiving weekend (aka Black Friday), more shoppers turned to the Internet for deals than actually visited stores.
Now obviously, companies are storing your information in Internet-connected networks regardless of where you shop, and you can be subject to some pretty horrifying data breaches regardless of whether you prefer brick-and-mortar stores or the Internet. And it’s such a part of daily life that the risk presented isn’t really anything special anymore. But still, shopping online carries some unique risks of your information being intercepted. Enough risk, in fact, that you’re probably better off using a credit card than a debit card when shopping online, just so there’s some distance between your bank account and the website.
As previously mentioned, we’re not spending a ton of money on things that aren’t necessities—it’s not just our generation. It’s sort of a nationwide problem. Last January, Bankrate reported that only 41% of Americans said that they had the money to handle a $500 emergency if they needed to. That means that 59% of us are one bad day away from a spiral toward financial ruin.
Toward the end of last year, they conducted another survey and found that 62% of Americans have less than $1,000 in their bank account, period. Bottom line, there isn’t much financial bandwidth to take an extra monthly hit right now, even if that hit’s only $20/month.
Pro: Peace of Mind
Knowing that people are strapped for cash is a great argument to not spend money on preventative measures you might not even need. Then again, knowing that you can’t afford to fix stuff if things go wrong is a pretty strong argument for paying a little up-front to not have to worry about problems if they occur.
Knowing that someone will be there to help replace your driver’s license, Social Security card, and credit cards if you lose your wallet can provide some much-needed peace of mind. Knowing that you’ll be notified the next time someone steals a ton of debit card numbers out of a major retailer’s server and that you’re covered if someone uses yours is a much-needed comfort as well.
Con: Will They Deliver?
It’s not always as simple as promises made, however. As anyone who’s purchased a home warranty likely knows the fine print is super important, and companies can get pretty damn creative when it comes to finding reasons not to pay up. It’s important to check not just professional reviewers, but places where people gather to complain.
LifeLock has made some bold claims in the past, and they’ve had to pay for them, both in terms of their reputation and in terms of cold, hard cash. They have been turning over a new leaf, and are currently the frontrunner in the industry, but it’s always best to do your homework about a company and see what your comfort level is.
It’s Up to You
In the end, it all boils down to your comfort level. Identity theft is a very real problem that affects millions of people. If you find yourself a victim, it can be a huge, messy process to untangle the effects. But at the same time, the price-per-month might be more than you want to pay for a prophylactic, and that’s understandable, too.