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Paying With Your Privacy: Do Free Credit Monitoring Services Work?


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You are not a customer. You are not a client. You are a product.  

There is no such thing as a “free” credit monitoring service. Everyone pays; you just happen to be trading your privacy instead of your cash. Is the tradeoff worth it? Let’s take a look.

How free credit monitoring services work

There are many free credit monitoring services on the market, but they each function similarly.

First, you enter your personal data — name, address, Social Security number, and more. Soon, the credit monitoring service provides you with a copy of your credit report — generally from just one of the three major credit bureaus — along with a credit score. Depending on the service you select, you get updates on a weekly or monthly basis.

No strings attached, right? Think again! These companies and services couldn’t exist if they weren’t generating a profit. So, how do companies like Credit Karma and others give away these tools and still make money? By selling your private information.

Almost immediately after signing up, you’ll see ads and offers— some more cleverly disguised than others. You’ll see offers for credit cards featuring your approval odds, recommendations for loans you don’t need, options to refinance your existing debt, and other suggestions that help these companies make a profit.

Some services sell your data to third parties, and the ones that don’t serve you so many ads it’s difficult to tell the difference. Sadly, this is nothing new. Credit bureaus make the majority of their profits by selling our personal details to banks, credit card companies, and any other lender with enough money to foot the bill.

Credit monitoring services aren’t enough

The worst part of this tradeoff is that traditional credit monitoring programs — whether paid or free — have never been enough to combat the threats of our digital age. In fact, they may be liabilities to our privacy.

We are living in a new reality where we must always be vigilant and take proactive steps to protect our identity and privacy. However, credit monitoring services typically only alert you when one of the major credit bureaus report a change to your account. This means it could take months for the service to alert you to a new development, and even then you may not receive a fraud warning.

If you want to truly protect yourself or your family from the risks of identity theft, you should sign up for an identity protection service that offers more complete coverage. While there are many solutions on the market, the service you select should include the following features:

  • An account protected by two-factor authentication
  • Proactive alerts that notify you of applications for credit cards, wireless carriers, utility accounts, and non-credit accounts
  • Monitoring of high-risk identity activity such as password resets, fund transfers, unauthorized account access, compromised credentials, address changes, and public record alerts
  • Tools to monitor and preserve your reputation across social networks
  • A dedicated advocate to guide and manage your full recovery process, restoring credit, identity, accounts, finances, and your sense of security in the event identity theft does occur
  • Identity theft insurance to cover your lost wages, legal fees, medical records request fees, CPA fees, child care fees, and more

How do I get started?

If you’re looking to protect yourself and your family from hackers, identity thieves, and cybercriminals of all types, you should begin by speaking with your human resources department. Identity theft protection as an employee benefit is growing in popularity, and many companies are now offering the service as part of their employer-paid or voluntary benefits.

If your company does provide this benefit, sign yourself and your family up immediately. If your company doesn’t yet offer identity protection, you may want to share our complimentary resource, “Why Companies Should Care When Their Employees Have Their Identities Stolen.

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