What Is Identity Theft Protection?
Identity theft occurs when someone steals personal information and uses it for fraudulent purposes. Scammers can do this in various ways, from hacking user devices to obtaining physical documents with sensitive data thrown into the garbage. In other cases, personal information ends up on the dark web after being leaked in a data breach.
Scammers can use stolen personal information in various ways, all of which can be highly damaging to the owner of the data:
- Opening a credit card or loan in the name of the stolen identity
- Purchasing medication or medical procedures using a stolen identity
- Withdrawing funds from financial accounts belonging to the stolen identity
Identity theft protection services can help prevent identity theft. These services include monitoring credit reports and producing alerts when suspicious activity is detected. In addition, some identity theft protection services include identity theft insurance, which helps victims of identity theft pay the cost of identifying and correcting stolen personal records.
This is part of a series of articles about identity verification.
Related content: Read our guide to identity fraud (coming soon)
In this article:
- 4 Free ID Theft Protection Tools
- 3 Identity Theft Protection Services and Solutions
- Safe Practices to Prevent Identity Theft
- Identity Theft Protection with BlueCheck
4 Free ID Theft Protection Tools
Here are several methods that can help you protect against identity theft:
You can freeze your credit reports to prevent others from opening fraudulent accounts under your name. A credit freeze cannot prevent data theft, but it does limit the information a threat actor can steal. It is a free method anyone can and should use.
A credit freeze prevents lenders and businesses from accessing your information. It ensures that the lender cannot view your credit report when unknown entities apply for credit in your name and deny the application.
In the US, the Fair Credit Reporting Act (FCRA) gives citizens the right to freeze their credit reports with TransUnion, Experian, and Equifax for free. However, you need to contact each credit bureau to freeze your reports.
A fraud alert can help prevent third parties from issuing new credit cards under your name. In addition, you can set up a fraud alert when your personal information was stolen or compromised during a data breach or otherwise.
Fraud alerts require businesses to verify their identity before issuing a new credit under your name. There are two types of fraud alerts—a seven-year alert and a one-year alert. Both of these alerts are free, as required by the FCRA, but only victims of identity theft are eligible for a seven-year duration.
You can place a fraud alert on all three of your credit reports by contacting just one credit bureau. For example, you can contact Equifax, and the company will instruct Experian and TransUnion to add fraud alerts on the rest of your reports.
Extended Fraud Alert
An extended fraud alert makes it harder for third parties to open a new credit account under your name. Like fraud alerts, comprehensive fraud alerts require businesses to contact you before issuing new credit cards. Here are three additional protection extended fraud alerts provide:
- Removal from marketing lists requires credit bureaus to take you off marketing lists that offer unsolicited insurance and credit offers for five years. However, you can ask the bureaus to keep you on these lists.
- Free copies of reports allow you to request a free copy of individual credit reports from the three credit bureaus. You can make the request twice within a single year from the time you set up the alert and review your credit report six times within a year.
The FCRA grants US citizens the right to dispute incorrect information on their credit reports. If an account on your credit report is the work of an identity thief, you can inform the credit bureau. The credit bureau is required to block this item from your file within four business days.
In addition to issuing a credit dispute, you need to provide the bureau with proof that you are indeed a victim of identity theft. You can use an official identity theft report completed at IdentityTheft.org or a police report as proof.
3 Identity Theft Protection Services and Solutions
Here are several types of solutions that can help prevent and protect against the negative consequences of identity theft.
Related content: Read our guide to identity verification services for businesses
Credit monitoring tracks activity on one or more credit reports and notifies the customer when unusual changes occur. This may include changing contact information, opening a new account, or increasing the credit limit.
Because credit monitoring only applies to credit accounts, it cannot protect against fraudulent activities involving bank accounts or social security information. Also, this service cannot prevent identity theft—instead, it notifies the customer after a theft has already occurred.
Identity Recovery Services
These services help customers connect with the appropriate agencies and creditors, prevent further losses, and write letters to creditors and debt collectors.
These services include advising on the correct requests and documents to submit to creditors and, where permitted, fully representing the customer in all communications with the relevant authorities.
This service can help remediate the situation after identity theft has occurred. It involves activities that victims of identity theft can carry out independently but may not have the time or energy to do so.
Identity monitoring services scan web information, public databases, and credit reports for unusual activity and notify customers when suspicious activity occurs. For example, an unusual activity could include the customer’s social security number appearing on a payday loan application.
Identity monitoring typically costs only a few dollars a month, but customers should identify what information is being monitored, how often, and whether there are additional fees.
Safe Practices to Prevent Identity Theft
In addition to commercial identity protection services, consumers should develop safe habits to prevent identity theft. These include:
- Storing documents safely—any document containing personal or financial information, both online and in hard copy, should be safely stored and destroyed when no longer needed.
- Monitor credit reports regularly—checking for reports of unusual or unfamiliar activity.
- Do not accept prescreened credit offers—getting these offers can allow fraudsters to intercept credit offers by email or find them in the trash. Consumers can use the website optoutprescreen.com to opt-out from prescreened credit offers for five years.
- Use multi-factor authentication (MFA)—always turning on MFA for financial accounts, using strong passwords, and leveraging a password manager to enable unique, strong passwords across multiple accounts.
- Read emails carefully—never sharing financial information online, and carefully determining the source of emails that ask questions involving any personal information.
Identity Verification with BlueCheck
BlueCheck helps businesses verify identity to protect their customers against identity theft.
BlueCheck’s industry-leading identity verification infrastructure enables merchants to grow their business faster. As we serve a wide variety of industries, our solutions are custom-tailored to the unique needs of our customers, including PACT Act and eCommerce compliant offerings.