Last Friday, I wrote a little bit about the settlement Equifax reached with the Federal Trade Commission regarding its 2017 data breach. Since that time, there has been a fair amount of discussion online about whether individuals affected should opt for the credit monitoring or the cash payment. There are pros and cons to both options.

First, let's break out what a person is actually receiving. Those people opting for the one time cash payment aren't guaranteed to receive $125.00. Instead, they're opting to receive a pro-rata share of between $400-450 million. If all 147 million people affected submit a claim and opt for the cash, that works out to just a few bucks per individual.

On the other hand, those opting for the credit monitoring may receive that service for up to ten years. For the first four years, consumers selecting the monitoring option will get access to the information appearing on all of the Big 3 (TransUnion, Equifax, and Experian) reports. After that, individuals can opt to receive an additional six years of free access to their Equifax report.

So which one should you choose? At first blush, you may think you're getting more value when opting for the credit monitoring rather than cash option. However, I'm actually recommending people go for the cash for a few reasons:

1. The ability to monitor your credit is already prevalent. Each of the three bureaus are required to provide any individual with a copy of all of the information in their files once per year for free. This is available at www.annualcreditreport.com. There are additional opportunities to get that information if you dispute any of the information on your report or believe you've been a victim of identity theft.

Additionally, many of the major credit card companies provide people with copies of their reports, credit scores, or both simply for being a cardholder. An unexplained credit score plummet is often the first sign of identity theft.

Finally, Credit Karma is a free service online that allows consumers to see what is on their credit reports. While Credit Karma isn't always a perfect reflection of what's on your report (and they monetize their service by advertising credit card offers) it will often provide a good first indication of a credit reporting issue.

1. Credit monitoring doesn't actually prevent identity theft. Instead, it simply alerts someone that identity theft has already happened. If prevention is the goal, then a credit freeze is the route that should be taken. Any person can freeze his or her credit for seven years by notifying each credit bureau in writing of their desire for a freeze. A freeze prevents anyone, including the consumer themselves, from taking out new credit, so it's necessary to “thaw” credit prior to applying for a mortgage, car loan, or credit card.

3. The initial credit monitoring only lasts for four years. After that time, it's likely consumers will have to opt-in to the obtain the remaining six years of monitoring from only one bureau; not all three. This is one more barrier that makes the credit monitoring option less attractive.

1. Finally, as with most class actions, anyone claiming the award has to affirmatively file a claim. As a result, class participation rates are typically in the single digit percentages. While participation in the Equifax settlement should be higher considering the ease of participation and the publicity surrounding both the breach and settlement, it would be surprising to see participation exceed 15%.

While everyone has different preferences and risk tolerances, I recommend taking the money, which I've already done myself. Please email or give me a call if you have more specific questions regarding your own situation.