Their popularity and reach should come as no surprise given the sheer scale of the problem. The FTC’s Consumer Watchdog Network, which monitors fraud, ID theft and related issues, received 6.47 million reports in 2024 alone – the highest number ever. The average loss was $497, with more than 124,000 reports claiming losses of $10,000 or more.
When it comes to ID theft protection, details matter. “I will tell you that not everyone is created equal,” says Tracy (Kitten) Goldberg, director of cybersecurity at Javelin Security & Research. “Some are very valuable, and some are not worth the investment.”
ID is security insurance
The most important thing to understand about ID Protection is that it is an insurance product.
Most ID protection services also offer monitoring services, but the main service you are purchasing is an insurance policy that protects against loss from ID theft.
In this sense, the term “ID security” is arguably misleading. This implies an active effort to protect your identity from people who want to steal it. The truth is that most ID protection services are reactive. They provide compensation for any losses incurred after an ID is stolen.
This is important to understand because, like most insurance products, the devil is in the details. ID protection services often provide key figures about total losses covered, but the language surrounding that coverage is important and includes various sub-benefits.
For example, NordProtect promises up to $1,000,000 in reimbursement for eligible expenses. But “lost wages and child/elder care” expenses for the time it takes to address identity theft are limited to $5,000. This type of warning is common, and I still recommend NordProtect overall. But if you thought the $1,000,000 headline figure would compensate you if the stress of the event put you out of work for a few months, you’d be in for a surprise.
Pay attention to scams, extortion and bullying
Goldberg says you should pay attention to the types of ID theft covered, as coverage is often less than you might expect. “You have to read between the lines a little bit,” she says. “If you’ve been the victim of what’s defined as a scam, a social-engineering attack, where you’re forced to give up information about yourself, you probably don’t have protection.”
Scams aren’t the only type of cyber crime that is often exempt from ID theft policies. Other common exemptions include cyber extortion (which usually includes ransomware), cyberbullying, and title fraud. I think most people would describe these incidents as ID theft generally speaking, but ID theft services may disagree.
Each policy will define a qualifying ID theft incident, and the ones I reviewed focused most on financial transactions like unauthorized bank account transfers and fraudulent accounts or loans set up under your name, as these are the crimes that cause the most widespread harm.
Here, too, the details can be tricky. For example, LifeLock’s current Aadhaar policy documents exclude digital currency entirely. If someone cleans out your Bitcoin wallet, or anything else considered a digital currency, you’re out of luck – unless you also have LifeLock’s cybercrime coverage, which protects against the loss of digital currency.
Despite the flaws, ID protection is still worth it
Many of the exemptions available in ID protection policies are a hassle. But like other forms of insurance, that doesn’t mean ID protection isn’t worth the effort. Home and renters insurance policies also include pages and pages of discounts, but most people still find the coverage worthwhile.
And unfortunately, ID theft is a common problem even for people who guard their personal data closely. Goldberg points out that even people who are careful today were not so careful in the past. “The digital persona I project today is different from 15 years ago. I used to share a lot more information about myself and the people I connected with,” she says.
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