Identity Theft Protection: How It Works & Do You Need It?

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Identity theft protection: how it works & do you need it?

There were 1.4 million reports to the FTC (Federal Trade Commission) of identity theft in 2020. This was double the number of reports from the year before. 

Identity theft occurs when your personal information is stolen to commit fraud and used without your permission. Identity theft is often perpetuated for financial gain or to obtain services such as health care or tax benefits. In 2020, identity fraud losses involving identity fraud scams reached over $40 billion

Identity theft can tank your credit score, block your access to government or important services, and cost you a lot of time and money.

To prevent identity theft, you should be aware of the potential scams that bad actors are using to steal personal information. Additionally, it is important to practice good cyber hygiene and keep an eye on your credit score.

An identity theft protection service can help to monitor your credit files, alert you of any suspicious activity, and help you to recover lost money and repair your credit score if you become a victim of identity theft.

What is identity theft?

When someone obtains your personal identity information, often through fraudulent means, this is identity theft. This information can then be used in an unauthorized manner to commit fraud. This is often done for financial gain. 

Sensitive personal identity information can include the following:

  • Your full name
  • Social Security number
  • Address
  • Birthdate
  • Driver’s license information
  • Bank account and/or credit card numbers

Threat actors can gain access to this identity information through physical or digital means. This can involve digging through your trash or stealing your mail to obtain bank and credit card information as well as many other different forms of cybercrime. Identity theft is a serious crime that can damage your credit score, impact your finances, and take a lot of time and effort to recover from to take your identity back.

Types of identity theft

There are several different kinds of identity theft that often involve cybercriminals scamming people out of their credentials to access this sensitive data. This can include receiving an unsolicited email, phone call, or text message asking you to provide personal identity information or logging in to a seemingly legitimate website that is actually an attempt to gain your credentials through fraudulent means. 

Threat actors can also obtain user credentials through data breaches or by hacking your username and password. Outdated, repeated, and weak passwords are particularly vulnerable. 

Once a bad actor has access to your credentials, they can then use this to log in to your accounts, such as your mobile bank account, to find your identity (and often financial) information and use it for malicious purposes. These are common types of identity theft:

  • Financial identity theft:  One of the most common forms of identity theft, financial identity theft involves a fraudster using your personal information for direct financial gain. This can include stealing funds from your bank account, using your bank or credit card information to make unauthorized purchases, or opening new accounts with your identity information, such as your Social Security number, to form a new line of credit.
  • Tax identity theft: This form of identity theft involves a fraudster using your Social Security number to falsify tax returns  (commonly to receive money back) with your state or the IRS. Tax ID theft can get you in serious trouble with the government, often without your knowledge until after it has been done.
  • Medical identity theft: With medical identity theft, a fraudster will use your information to obtain health care services, such as prescriptions for medications or access to medical care, or to obtain medical devices and/or supplies. Inaccuracies in your health care records can impact your personal ability to receive necessary medical care. Medical identity theft can result in reports to your insurance, medical bills you did not personally accrue, and harm your insurance coverage.
  • Criminal identity theft: Criminals can provide stolen identity information at the time of their arrest, which can create consequences for the victim. You may receive a court summons or a bench warrant for your arrest, or can run into trouble when you try to pass a background check as the fraudster’s criminal record can show up as yours.
  • Unemployment identity theft: A threat actor can use your personal identity information to file for unemployment in your name and claim benefits. This can prevent you from being able to receive any benefits you might be legitimately entitled to.
  • Child identity theft: Fraudsters often use the identity information of a minor to open new accounts, commit financial fraud, apply for loans or government benefits, or get a new driver’s license. Children do not yet have credit or financial reports, which can make them targets of child identity theft. This is often not discovered until the child is old enough to apply for a driver’s license or account of their own. At this point, their credit score may have already been damaged by the criminal.
  • Synthetic identity theft: With this form of identity theft, cybercriminals form fake identities using the real identity information of a victim. They can create fake profiles by taking your address, birthday, and/or Social Security number and merging with falsified information. This fake persona can then apply for loans, open new accounts, and commit additional forms of financial fraud that can impact your credit.

Best practices for avoiding identity theft

There are several things you can do to help protect yourself from identity theft, such as these:

  • Be aware of scams, and do not provide your personal information without thoroughly vetting to whom you are providing it.
  • Keep your Social Security number (SSN) secured (not on your person), and only provide it when necessary.
  • Watch your mail for items not addressed to you or for accounts or services you did not sign up for.
  • Keep your mail secure and shred documents that have personal identifying information on them before disposing of them.
  • Know your billing cycles, and contact the company if statements or bills are late.
  • Keep all of your personal information in a secure space.
  • Pay attention to your bank account and credit card statements. Watch for suspicious charges.
  • Review your credit reports at least once per year to check for potential discrepancies.
  • Use the security features on your smartphone, tablets, and computers.
  • Be careful when using public Wi-Fi and use a VPN (virtual private network) for secure access.
  • Keep software and applications up-to-date.
  • Use firewalls and virus detection software on your computer.
  • Create a strong password that cannot easily be guessed.
  • Change your passwords frequently.
  • Do not share your password or repeat it with multiple accounts.
  • Do not click on links within suspicious emails or download attachments.
  • Enable MFA (multi-factor authentication) or at least 2FA (two-factor authentication).

Practicing good cyber hygiene and cybersecurity can help you to avoid identity theft. You can also freeze your credit for free with the major providers, such as EquifaxTransUnionExperianInnovis, and National Consumer Telecom and Utilities Exchange (NCTUE), which can prevent a threat actor from opening a new credit account or utility service in your name.

Benefits of an identity theft protection service

Another key tip for preventing identity theft is to use an identity theft protection service. These services offer the ability to monitor your credit files and alert you about any activity. If a new account is opened that you did not open personally, for instance, you can quickly act to shut it down and report the issue before the financial loss or credit damage is amplified. 

Identity theft protection services can also alert you whenever your personal information is used, such as when a threat actor attempts to open a new credit card or bank account in your name. This is helpful since a lot of the time victims are unaware of identity theft until debts are high up or the damage to their credit is extreme.

Most identity theft protection services also offer high insurance policies. In the event that your identity is stolen and used fraudulently, they can help you repair your credit and recover money that was lost. 

9 top identity theft protection services

Identity theft protection services can vary, and it is important to choose a plan that suits you and works to provide you with coverage that fits. Some of the top identity theft protection services are as follows:

  1. LifeLock: Norton 360 with LifeLock can help you both detect and recover from identity theft. It boasts a password manager, alerts on suspicious activity, monitoring of all three major credit bureaus, ID verification monitoring, stolen wallet protection, optimal computer and device protection, and legal assistance and stolen funds reimbursement when necessary. Plans vary, and the more comprehensive services requested, the higher the price.
  2. Identity GuardUsing IBM’s Watson computer system — an artificial intelligence (AI) — to scan the dark web, social media, and millions of articles for your personal information, Identity Guard can also provide you with safe browsing tools to protect your online presence. Every plan includes an anti-phishing mobile app to identify potential phishing attempts. 

Credit files from all three credit bureaus can be monitored, but your credit report is only provided annually. There are a variety of plans to choose from.

  1. IdentityForceThis tool offers comprehensive identity theft protection, guarding against cyber fraud, medical identification fraud, and 2FA fraud. It also offers less common features, such as the ability to opt out of junk mail. Plans include social media monitoring and a credit score simulator, and children can be added for a small fee. 

This service also monitors public information record changes and illicit identity-sharing websites that often share illegally obtained identity information. IdentityForce offers both individual and family plans.

  1. PrivacyGuardThis service offers plans for identity theft protection and recovery and/or credit reporting and monitoring. They allow you to choose which options work best for you.

This service monitors public records, provides daily credit monitoring of all three credit bureaus, updates credit scores monthly, and offers a yearly public records report. Plans can include monitoring of children’s Social Security numbers, but there is no specific family plan.

  1. ID WatchdogOffering three credit bureau reporting, monitoring of social media and financial accounts, a password manager, a personal VPN, and identity theft recovery services, this service also provides the unique feature of helping you recover from pre-existing identity theft experiences under specific circumstances. There are both individual and family plans available.
  2. IDShieldThis service provides social media monitoring, a family plan that allows up to 10 dependents, three-bureau credit monitoring, and security and privacy monitoring. What sets this service apart is their use of private investigators to help provide consultation and restoration services. A member can request this service through the mobile app at any point. There are a variety of plans to choose from.
  3. IdentityIQAll plans include the $1 million identity theft insurance, and with the Secure Max plan, families are included at no cost. This service offers dark web monitoring, reporting from all three credit bureaus, and credit score refreshing every month, as well as daily credit monitoring and alerts. The ScoreCasterIQ allows members to see how each credit account will impact their credit score. Various plans are available.
  4. IdentityWorksRun by Experion, this service monitors all three credit bureaus as well as the dark web and your Social Security number. To prevent fraud, members are able to lock and unlock their Experian credit reports. There are family plans and individual plans available.
  5. McAfee Identity Theft ProtectionMcAfee is primarily an antivirus company; however, they also offer several plans for identity theft protection. Services include the $1 million identity theft coverage, premium antivirus software, a secure VPN, and identity monitoring. McAfee Identity Theft Protection can constantly scan your Experian credit file for credit activity and offer alerts when there is suspicious activity.

Key takeaways

Identity theft involves stealing your personal identity information and using it to commit fraud, usually for some kind of financial or personal gain. 

Identity theft is extremely common. It can happen when a threat actor gains access to your online credentials and is able to log in to your accounts and steal your personal sensitive information. They can then use this identity data to open fraudulent accounts, steal your money, apply for loans in your name, make fraudulent charges, file fraudulent tax returns, or access services, such as health care, or set up utilities.

Identity fraud can cost a consumer thousands of dollars and significantly damage their credit score. Identity theft can often go unnoticed until the damage is extreme. 

You can protect yourself from identity theft by practicing good cyber hygiene and securing your personal documents and information. It can also be beneficial to use an identity theft protection service.

Identity theft protection services can monitor your credit for suspicious activity and alert you when something is off. This can allow you to take swift action to minimize the potential repercussions. 

An identity theft protection service can also provide you with identity recovery services and help you to recover lost money and repair your damaged credit score. There are a number of identity theft protection providers offering various plans, so you can find a solution that works for you.


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Total Identity Fraud Losses Soar to $56 Billion in 2020. (March 2021). Businesswire.

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Take Control. Your Credit, Your Identity. (2022). Equifax.

Be in the Know With TransUnion – See Your Credit Score and Start Credit Monitoring Now. (2022). TransUnion Consumer Interactive.

Get Your Free Credit Report and FICO Score. (2022). Experian.

Welcome to Innovis. (2022). Innovis.

Analyze. Innovate. Empower. (2022). National Consumer Telecom & Utilities Exchange (NCTUE).

Protection for Your Digital Life. (2021). NortonLifeLock, Inc.

Aura Identity Guard. (2020). Aura Company.

IdentityForce a TransUnion Brand. (2022). IdentityForce.

Your Privacy is Personal. PrivacyGuard.

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McAfee Total Protection. (2022). McAfee, LLC