Credit monitoring won’t help Target breach victims «
After Target /quotes/zigman/253872/delayed/quotes/nls/tgt TGT -0.94% revealed that 70 million customers had their personal information compromised, it offered free credit-monitoring to its customers. It won’t do any harm, credit experts say, but it’s unlikely to do much good either.
Target will give all its customers one year of free credit monitoring through “ProtectMyID” from Experian, which sends an alert when an inquiry has been made to set up a new credit card or loan. Target will also offer identity theft protection, a form of insurance to address the potential financial costs of identity theft, including legal defense fees and expenses, private investigator fees, lost wages and the cost of refiling credit applications. “We want all of our guests to have additional peace of mind,” a Target spokeswoman says. Starting Monday , Target customers have until April 23, 2014 to request an activation code to set up their free credit-monitoring and have until April 30 to register.
The announcement came after the big-box retailer revealed hackers had also stolen information, including a mix of names, email, postal addresses and phone numbers between Nov. 27 and Dec. 15, 2013, in addition to the 40 million debit and credit cards that were compromised. Originally, the company offered free credit-monitoring to the 40 million customers affected, but in an effort to regain the confidence of its customers—and in light of the breach being bigger than announced last month—last week expanded the offer to all U.S. Target customers. “It’s difficult to reestablish the trust of its customers,” says Jody Farmer, vice president of marketing at CreditCards.com, a credit-card news and advice site. “It feels hollow to me.”
Click to Play Credit monitoring won’t help Target breach victimsIf you were one of the 70 million Target customers who had their identity compromised, you are eligible to get free credit monitoring. But how much can that help? Marketwatch’s Quentin Fottrell discusses on digits. Photo: AP.
It may make some consumers feel better, but it won’t help most people who were part of the latest breach, says John Ulzheimer, a credit expert at CreditSesame.com, a firm that provides online credit and debt analysis to consumers. “Credit monitoring doesn’t alert you if someone fraudulently uses your payment information,” he says. “That doesn’t show up on a credit report.” Indeed, credit monitoring only looks for changes on a credit report indicating that someone is using your personal information to open new accounts in your name. In this case, that’s highly unlikely as hackers didn’t steal social security numbers or “out of wallet” information—security questions like details of your mortgage payments or mother’s maiden name. Indeed, Target itself says the “primary risk” will come from phishing: calls, emails or text messages that appear to offer protection, but are really trying to get more personal information from customers.
One year of credit monitoring is also inadequate because it assumes that after 12 months your stolen information is no longer at risk of being abused, Ulzheimer says. That, he says, could give millions of customers a false sense of security for 2015. Most consumers can get credit monitoring indefinitely for around $15 a month, he says. A credit freeze would be a stronger measure for those who are very concerned, he says. A security freeze prevents new credit from being issued in the person’s name, which is generally regarded as stronger protection than simple credit monitoring; the latter only alerts the person after something has already happened. “Free credit monitoring is like someone running up to you after a car accident and telling you, ‘You just got in a car accident!’” he says. Of course, it’s better to know, he says, but many banks, websites and card companies offer free credit monitoring “so they’re not really giving us anything we couldn’t have already gotten for free elsewhere.”
Click to Play Target: Data breach affected 70 million peopleTarget announced that its recent data breach affected as many as 70 million individuals, far more than previous reports indicated. Paul Ziobro reports on MoneyBeat. Photo: Getty Images.
But those who sign up for credit monitoring with Experian should exercise caution, says Chi Chi Wu, staff attorney at the National Consumer Law Center. “If you agree to a mandatory arbitration clause, you are giving up the right to sue credit bureaus over your credit report,” she says. (With such clauses, companies require customers to settle any disputes using a private arbitrator, instead of in the courts.) Credit/debit card numbers are the most critical pieces of information leaked in the Target breach, adds Odysseas Papadimitriou, the founder and CEO of financial website WalletHub.com. For those who are concerned about fraud, change your card numbers, he says, and stay vigilant. “Monitor your email accounts, and perhaps give your banks and card issuers a call just to give them a heads up that some of your personal information may have been compromised.” Keep an eye out for any unknown companies appearing on your bank statements or unusual transactions, she says.