How to protect yourself from identity theft

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The recent Equifax breach may require multiple layers of protection

Equifax's massive data breach, disclosed nearly a month ago, has prompted millions of consumers to consider taking additional measures to guard their identities.

In that breach, more than 145 million consumers' names, birth dates, and Social Security numbers were exposed to hackers.

Equifax has announced that it will provide a year of free credit monitoring to all consumers. Additionally, it says it is developing a tool that will allow consumers to freeze and unfreeze their Equifax credit report as many times as they want at no charge.

Consumers who want to freeze their credit reports must deal directly with all three credit bureaus and, unless Experian and TransUnion follow Equifax in waiving the fees, incur a cost each time they do so.

Not a bulletproof solution

Many security experts say a credit freeze is the only way to prevent identity theft from taking place, but others point out that it doesn't work 100 percent of the time.

Gerri Detweiler, education director at Nav, a privacy protection company for small business owners, says a credit freeze may stop thieves from opening a new credit account in your name, but it won't prevent them from using one of your existing accounts if they have your personal information.

Your personal information could be used in phishing schemes, to submit fraudulent medical bills, and to file fake tax returns in your name.

"You have to be vigilant and carefully monitor your accounts, even with a freeze in place," Detweiler said. "A credit freeze doesn't mean you can set it and forget it."

Business is booming

A second option that consumers can turn to is credit monitoring. It won't prevent someone from stealing your identity, but it can limit the damage by alerting you immediately to fraudulent activities. There are many companies that offer this kind of service.

Lifelock is among the largest credit monitoring services, and it reported that its business surged in the wake of the Equifax breach. The company offers three levels of service. The basic plan costs $9.99 a month with increasing levels of service at $19.99 and $29.99 a month.

Another company, Privacy Guard, says it monitors customers' credit reports at all three credit bureaus. The company says it alerts customers when it sees changes in their credit reports, including credit inquiries and derogatory information. Like Lifelock, Privacy Guard offers three levels of protection at $9.99, $19.99, and $29.99 a month.

ID Shield, a division of Legal Shield, offers a similar credit monitoring service by using the Experian credit report. However, it has one price -- $9.95 a month. In addition to alerting customers to suspicious activity, ID Shield uses the Kroll detective agency to investigate any cases of customers' identity theft.

Evolving with the threat

Identity Guard started out two decades ago as a provider of basic credit reports, but has since evolved with the growing threat of identity theft. It provides three different monitoring plans, with the top two providing $1 million in insurance and stolen funds reimbursement.

The credit bureaus themselves -- Equifax, Experian, and TransUnion -- also provide credit monitoring services. In addition, consumers who want to freeze their credit reports must deal directly with all three credit bureaus and, unless Experian and TransUnion follow Equifax in waiving the fees, incur a cost each time they do so.

You can research the companies providing privacy protection services in the ConsumerAffairs Buyers Guide.

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