Fighting Credit Card Fraud: Do you Need a Credit Monitoring Service?
As many as 9 million Americans are victims of identity theft every year, the Federal Trade Commission reckons--more than the population of New York City.
Responding to Americans' rising fear about the crime, a variety of companies, including all three U.S. credit reporting bureaus, market services that monitor your credit reports and alert you to any changes, promising to protect you from identity theft. Say, for instance, a scammer applied for credit cards in your name. You'd get an e-mail or a cell phone text, enabling you to nip the fraud in the bud. Some packages provide additional services, such as providing your credit score. The services range in price from roughly $13 to $15 a month.
Some consumer advocates say the services aren't worth the money; $15 a month, after all, adds up to $180 year, and you can take steps to protect yourself for free. Consider the following before signing up:
• First, do your own free credit report monitoring.
If you've been a victim of identity theft, the FTC recommends reviewing credit reports once every quarter in the first year after the theft, and annually thereafter. Everyone is entitled to a free, annual credit report from each of the three U.S. credit reporting companies, Equifax, Experian and Transunion. Some states, such as Georgia, entitle residents to an additional free report.
Most creditors report information to all three bureaus, although some report to just one or two--that's why it's important to check all three credit reports. Consumer advocates suggest staggering your requests for reports, so every few months you receive a free report from one of the credit reporting bureaus. Of course you should also frequently monitor your statements for all of your credit cards.
• Consider a fraud alert or security freeze on your credit reports if you've been victimized.
If you're an ID theft victim, you can place a fraud alert on your credit reports, which requires creditors to confirm your identity anytime a request for credit is made. A security freeze goes a step further and makes your credit reports off-limits to creditors, including credit card companies.
• Read the credit report monitoring service's fine print.
Some services monitor only one of the three major consumer reporting companies.
• Thoroughly check out the credit monitoring service.
Consult your local Better Business Bureau, consumer protection agency and state Attorney General to see if they have any complaints on file about the company before signing up, advises the Federal Trade Commission.
Published 01/17/11 (Modified 07/09/14)