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Tuesday, December 18, 2018

Will Credit Monitoring Services Protect Me After a Data Breach?

After a major data breach, it’s hard to know whether your information has been compromised and how to protect yourself afterward. Businesses have cropped up that offer credit monitoring services—peace of mind for a price. But should you pay for them, or even sign up for a free trial?

What Are Credit Monitoring Services?

Credit monitoring services, like LifeLock or Identity Guard, offer a range of monitoring “plans” that run from $10 to $30 a month. While these different plans come with different perks, they all do one basic thing—routinely check your credit reports and alert you when there’s suspicious activity. That’s right; credit monitoring services don’t prevent your identity from being stolen, they just let you know when it’s been stolen.

If you assumed that premium credit monitoring services existed to protect your identity proactively, then you’re not alone. Businesses that offer credit monitoring seem to intentionally trick customers into believing that 120+ dollars per year will protect them from fraud and identity theft. They do this by conflating credit monitoring with services that sound high-tech and relatively mysterious, like antivirus software or dark web scans. But antivirus software isn’t going to prevent your identity from being stolen, because hackers are targeting the databases of giant corporations, not your computer. And services like dark web scans are genuinely just nonsense meant to give you a false sense of security.

Businesses that offer credit monitoring also tend to offer forms of monetary reimbursement, because, you know, they can’t actually prevent fraud from happening. Like car or health insurance, an inexpensive credit monitoring “plan” will only reimburse you for a small amount in damages, while a more expensive plan will pay out for a larger amount. Well, that sounds nice, right? You might be tempted to sign up for a monitoring service so that you don’t have to pay for fraudulent charges. You might even be tempted to sign up for an expensive plan that offers a larger reimbursement, just in case.

Here’s the thing. You already have a legal right to reimbursement under the Fair Billing Act. As long as you report a fraudulent charge within 60 days, you’re only liable for a maximum of $50. Fraudulent charges to debit cards are a bit trickier, but you still have a right to full reimbursement if you report a fraudulent charge promptly. If you check your credit reports once a month (which is easy to do for free), then you’ll never incur a significant loss for a fraudulent charge.

Whatever You Do, Never Sign Up for a Free Credit Monitoring Trial

Let’s pretend that you’re the owner of a business that was just hit by a massive data breach. Millions of your customers have been compromised, and many of them will remember the company that let their information fall into the wrong hands. There’s no way for you to protect these millions of identities—they’ve already been stolen! But you can offer people the next best thing: peace of mind.

How do you offer your customers peace of mind? Well, you can set up call centers, shoot out millions of emails, and offer free trials to credit monitoring services. It’s a nice sentiment, but there’s a caveat. Have you ever signed up for a free trial to Netflix or Xbox Live, only to be quietly charged with a renewal fee? Well, the businesses that volunteer a free trial to their credit monitoring services after a data breach are banking on the fact that people will either choose to continue their service or simply forget to cancel it.

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