Q&A: Free credit monitoring won’t prevent identity theft

Dear Liz: I thought I would share some information in light of the Equifax disaster.

Two of my credit card issuers provide free credit monitoring. Capital One scans my TransUnion file and Discover uses Experian. Both send email and text alerts about new activity and a monthly “reassurance” email when no such activity turns up in the previous 30 days.

Along with the credit freeze I placed at Equifax, I feel pretty secure at the moment. I’m sure that other credit card issuers have similar programs in place, and perhaps people should ask their financial institutions if such monitoring is available to them as account holders.

Answer: Free credit monitoring can certainly be helpful, but understand that it can’t prevent identity theft. At best, credit monitoring alerts you after the fact if someone has opened a new account in your name. Only credit freezes at all three bureaus can prevent those accounts from being opened in the first place.

Unfortunately, credit monitoring and freezes can’t help you with the most common type of identity theft, which is account takeover. That’s when someone makes bogus charges to your credit cards or steals money from your bank accounts.

Financial institutions use different types of software to detect fraud, but nothing replaces vigilance on the customer’s part. We should be reviewing transactions on our accounts at least monthly if not weekly. Online access to accounts can help you better monitor what’s going on.

You also can set up alerts that will email or text you if large or unusual transactions happen. (Just beware of a common scam where you’re texted an “alert” that your account has been frozen, along with a link that encourages you to divulge your login information.)

Even if you do everything in your power to avoid identity theft, you still can’t prevent scammers from using your information to file bogus tax returns, get medical care or commit criminal identity theft (by giving your name to the police when they’re arrested, for example). As long as Social Security numbers are used as an all-purpose identifier by businesses and government agencies alike, you can’t make yourself completely secure.

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Get free credit monitoring for a year

TargetTarget’s offering free credit monitoring as penance for its recent massive database breaches. To get it, navigate to https://creditmonitoring.target.com and fill in your email address and name.

Within a day or two, you should get an activation code that allows you to sign up for one-bureau monitoring at Experian. Now, Experian’s a for-profit company, so it will try to sell you upgrades, such as a peek at “your credit score”–actually a PLUS score that isn’t used by lenders. You don’t have to buy anything or give up a credit card number to get the credit monitoring, however.

You will have to cough up your Social Security number and answer some questions culled from your credit report there so Experian will know you’re really you. As always, make sure the URL starts with an “https” before you give up private personal information.

You always need to be wary of credit monitoring offers. Apparently scamsters pretending to be Target are already targeting its customers, so you want to be sure you navigate to the right sites. Don’t click on links in random emails or give out private information over the phone to anyone who calls.

Another hazard has to do with lawsuits. Some companies offer credit monitoring after a breach, but in the fine print you agree to give up your rights to sue the company that suffered the breach or participate in class action lawsuit settlements.

In this case, the fine print requires you to agree to arbitration if there’s a problem with your credit monitoring service, but there’s no mention of giving up your rights regarding any future Target litigation.

I’m generally not a big fan of paying for credit monitoring, but free on-demand access to your credit information–plus alerts of suspicious activity–is a deal worth getting.

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