Identity theft protection (ID theft protection) is one of the fastest-growing benefits offered to employees today. But like many offerings that are relatively new to the market, employees may not fully understand how it works or what features such as “credit locks” and “dark web surveillance” mean. Employers can help.
How ID theft protection coverage works
As a benefits consultant, I often share best practices of organizations that offer this benefit. (Research by Willis Towers Watson found that 36% of employers offer ID protection as a voluntary benefit to their employees now, and 63% intend to offer it by 2020 or 2021). It’s a benefit we offer to our clients, as well as to our own employees through our benefits marketplace. But recently, I had the opportunity to see this benefit in action when I purchased a new car.
Knowing that a car purchase would trigger a credit pull, I was eager to see which ID theft protection vendor would notify me of the credit inquiry first, how I’d be notified, and what sort of action I would need to take to validate that I was, in fact, the auto purchaser.
As expected, the dealership accessed my credit information via one of the three credit bureaus (Equifax, Experian and TransUnion). Each bureau is required to share data with the other two – but this doesn’t occur instantaneously. Each ID theft protection vendor partners with one bureau as its primary, though they also have relationships with the others in their “three-bureau” offering. (A three-bureau offering is largely advised to ensure the most protection and fastest notification should an incident occur.)
ID theft protection vendors also provide the ability to access your credit score at least once a year for free within their app or online tool. This can be very helpful for individuals considering making an expensive purchase such as a home or a car. Knowing your credit score can help you understand what sort of interest rate you may pay on a loan.
Overall, I was pleased with how quickly I was notified by each of the ID theft protection vendors that my credit report had been accessed. I have a stable credit profile (i.e., I have only a few credit cards and pay my balances fully each month) so other than regular notifications of non-activity or that my balances have dropped when I make those payments, I haven’t had a reason to interact with the vendors.
Considerations for choosing ID theft protection
With these products increasing in popularity comes an array of benefit design and program features to consider – including pricing and contribution strategy.
Key elements to consider include:
- Credit bureaus: One bureau or three? Three-bureau monitoring is more costly, but generally preferable to ensure optimal protection. (In my example above, if my vendor worked with one of the other two bureaus as a primary, there would have been a delay in my notification.)
- Scope of coverage: What impacts are covered? Credit monitoring vs. identity restoration services? Protection from unscrupulous activity via the “dark web”? Social media reputation?
Fraud alerts (notifications of suspicious activity) versus credit locks (putting a freeze on your accounts so perpetrators cannot initiate new activity in your name)?
- Family coverage: How is “family” defined? Who is included? And at what level of protection?
- Portability features: What happens when an employee leaves the company? Can they take the coverage with them? For how long? And at what price?
- When to enroll: Only at annual enrollment (or with an eligible life event, i.e., change in family status) or year-round enrollment?
- Use of a discount vendor vs as part of core enrollment: While this option allows employees to enroll at any time, it may not provide the same level of coverage and generally leads to lower participation.
The case for employer-paid ID theft protection
With news of data breaches being reported regularly, the choice to offer identity theft protection as a benefit to employees seems self-evident. Though employee-paid coverage is most prevalent, now more employers are considering funding coverage – either for a smaller cohort of employees or for all.
Since rates are significantly lower for employer-paid coverage, it’s worth considering: Employers believe paying for coverage will provide employees with peace of mind in the short term, as well as provide professional resolution if an incident occurs and an employee has his or her identity stolen. Offering ID theft protection broadly throughout the organization can contribute toward building a culture of financial wellbeing, which can lead to a more engaged and productive workforce. Since the average claim implementation, or restoration of identity, can take 100 hours or more, the benefits to the employee – and their workforce productivity – become apparent.
Much like online reviews about quality and costs can help your narrow down your choice of the right vehicle, careful consideration of ID theft protection coverage for your employees can help you understand which features provide the greatest value and how to define competitive pricing.