Minimize any financial losses and trouble if your accounts are compromised.
The use of websites and phone apps has made banking and finance much quicker and easier compared to the days when you had to visit a banking location in person. Unfortunately, it has also become increasingly common for thieves to break into online accounts, as well as make fraudulent credit card transactions.
This article will present two scenarios or strategies for hardening accounts to help minimize financial losses and trouble. It does not cover the important basics of online security, such as using long, unique passwords, Multi Factor Authentication, OOB or Out Of Band communications, and other important security techniques that can be found in other articles, some of which are listed at the end for further reference.
To start, let’s look at how thieves are gaining access to accounts. The two most common methods thieves use to gain access to financial accounts are to steal account details such as a credit card number & details, or to trick someone into giving them login information.
Thieves will also attempt to get payment by check, gift cards, or cryptocurrency such as Bitcoin. In the case of checks, there have been instances of thieves requesting scans or pictures of checks. If they can get such a photo, they can use the routing number and other details to create fake checks and charges, draining checking accounts. Checks should only be used rarely, and only for people and organizations you are confident you trust. Gift cards should never be used for payments; it is a sure sign that thieves are attempting to secure untraceable funds. Most people should avoid cryptocurrency for the same reason.
Stealing a credit (or debit) card’s information can be as simple as taking the card at a restaurant and taking a photo of it, or setting up a card “skimmer” at a gas station that copies the unencrypted swipe data when you make your purchase. Fake websites also harvest card data, and thieves break into websites to steal credit card details of all site customers. Even if you personally do everything right, there is no way to always protect your card short of never using it. That said, the new tap-to-pay terminals, either with an enabled card or with the Apple or Google Pay apps, are much more secure since the vendor never gets unencrypted data from your card. Whenever possible, use tap to pay or cash.
If your bank or someone calls or texts you to “warn” you of a security issue, you should hang up & call the number on the back of your card or from the bank’s website. Caller ID can be faked, and this type of scam is only going to become more convincing with voice AI systems.
Here are two scenarios for minimizing financial losses and trouble if your accounts are broken into.
Scenario One: Banking with the use of a credit card
It is best to have at least two credit cards from different institutions. This way, if one card is compromised just before a trip or some important event, you can use the backup card while recovering the primary. You can switch usage of primary and backup occasionally so one does not fall out of use, but you should not use both all of the time.
Neither should be connected to your bank where you have your checking account that is used for direct deposit and paying bills. You also should never use the debit card from this checking account anywhere except to get cash from the bank’s ATM. This provides a few protections.
If you get someone calling to tell you there are unauthorized charges on your debit card, you will know that it is a scam because you do not use that card.
If your credit card is compromised, there are good processes to reverse and remove charges. In comparison, if your primary checking account is compromised, you may or may not get your funds back. Your direct deposit will need to be changed, as well as your auto-pay accounts. Bills set to auto-pay may bounce and produce penalties.
Scenario Two: Banking without a credit card, just debit cards
Some people avoid the use of credit cards as part of their plan for fiscal responsibility. In this instance, one could get a second checking account at a second bank. Use your primary account only for direct deposit and bill pay. Transfer funds as needed from the primary to the secondary account. All debit card usage is from the secondary account. If that account is broken into, you will have fewer disruptions while you close that account and replace it with a new one.
Conclusion and Further Reading
I have heard from more than one victim of identity theft who had their life upended by thieves breaking into their financial accounts. Bright, well-educated people have had all of their funds stolen from their checking, savings, and retirement accounts, all of which were at the same financial institution. It all started with a phone call pretending to be from the bank. By following one of the strategies in this article, you can build some resilience into your finances to help protect yourself should one of your accounts become compromised.
While these suggestions might help build financial resilience, it is critical to first take care to secure your accounts. Especially important is the use of strong, unique passwords that are NOT shared between accounts. The use of MFA (Multi Factor Authentication), password safes, OOB communications, and other important security practices is critical. Please be sure to read your bank’s safety tips, and consider some of the further articles below.
Keep Your Accounts And Cell Phone Secure
https://txlcms.org/keep-your-
MFA – Multi-Factor Authentication
https://txlcms.org/security-
Avoiding Scams
https://txlcms.org/security-
Freeze Your Credit
https://txlcms.org/security-
Keep Your System Safe Endpoint Security Part I
https://txlcms.org/keep-your-
Keep Your System Safe: Endpoint Security Part II
https://txlcms.org/keep-your-
FTC: Report Fraud
https://reportfraud.ftc.gov/
FTC: Online Privacy and Security Guides
https://consumer.ftc.gov/