I’m often asked what one can do to avoid becoming the victim of “identity theft” – actually identity fraud, the use of one’s personal information to impersonate, typically in the financial services world.
My advice is usually “not very much,” and I specifically recommend against any of the credit or ID theft monitoring services. My rough cost-benefit analysis of these services is that it isn’t worth $8 or $10 per month to avoid the relatively low risk of being a victim of any kind of serious identity fraud. Credit card fraud is the most common form of ‘identity theft.’ It threatens no liability and only a little bit of inconvenience to most consumers in the United States – consumers that are prudent, anyway. And I’ve never understood what these services would or could do to prevent or mitigate a true impersonation fraud.
The one thing they might do is place “fraud alerts” on your identity with credit bureaus, but that’s burning the village to save it. Anticipatorily sullying your own credit file may reduce your likelihood of being a subject of identity fraud, yes, but it destroys the benefit of having good credit in the first place – that’s what you’re trying to protect.
Now comes news that LifeLock, one of the most prominent purveyors of “proactive identity theft protection,” is being sued in several states. The allegations cluster around . . . oh, I’ll put it this way: B.S.ing people into paying them money. I don’t know whether the specific allegations are merited, or whether selling people assurance about something they needn’t fear is actionable, but my gut is that LifeLock is closer to a scam than a real service. It’s certainly not worth $100+ a year.
Check your bank and credit card statements when they come. You might get a copy of your credit file from each of the major credit bureaus if you’ve got a big financial transaction like a mhome purchase or refinancing. Other than that, my advice is to relax and have a good time. You’re not going to avoid being a subject of identity fraud using these services, and only in the rare, exotic case will being a victim of identity fraud cause you a great deal of harm.