Four Ways to Protect Your Money from Online Banking Fraud

Have you ever checked your online banking account and found some strange charges that definitely didn’t come from you? Ever heard the tale of someone suffering the long-term financial effects of identity theft? Has the threat of your personal data getting out ever made you get a new card or change accounts? 

Even if you answered “no” to these questions, there’s a chance that financial fraud or bank fraud have somehow impacted the life of you or someone you know.  

Fraud comes in many different forms and costs the global economy billions of dollars per year. In fact, fraud is an issue that affects American financial systems more severely than any other country.

🇺🇸 According to the 2020 Nilson Report, the US only accounts for 22.4% of global card transaction volume. But the US reported 35.8% of the world’s fraud in 2020!

😷 COVID-19 has kept customers away from the stores driving more transactions online and increasing card-not-present transactions (CNP). In 2020, CNPs accounted for 68% of all fraud reported by merchants. 

📈 Unfortunately, the Federal Trade Commission (FTC) recorded 4.8 million complaints of identity theft and fraud in 2020. This number is up 45% from the 3.3 million complaints made in 2019. 

Fraud is a fact of life in this age of online banking and online transactions. It’s an issue that has the potential to harm anyone and their finances. 

But don’t despair! There are lots of different steps you can take to help protect yourself from fraud on any budget.

CARD put together this list of six ways you can boost your defenses against online banking fraud and protect your money… 

Common types of fraud

You can’t control thieves and scammers, but you can arm yourself with information. Here are some descriptions of common ways that fraudsters take advantage of victims’ money… 

Account Takeover Fraud

Identity theft has lots of motivations, but when it comes to personal finance and online banking there are two main types: account takeover, and application fraud.

When cybercriminals gain access to your current bank account login information and use it to make purchases, withdraw money, or extract valuable personal data, they’re committing account takeover fraud.

 It’s one of the most common types of both financial fraud and identity theft in the US. In fact, over 38% of Americans report experiencing it in the last 2 years! 

Application Fraud

Application fraud occurs when a bad actor uses a stolen or fabricated ID (social security information + personal data) to open a new financial account. These types of fraudsters can apply for bank accounts, loans, tax rebates, credit cards, etc in the victim’s name. 

Both account takeover and application fraud are bad news. They can cause long-term financial and legal problems for individuals, brands, and businesses. 

Debit and Credit Card Fraud

Credit and debit card fraud occur when a bad actor gets access to your payment information (Card #, CVV, etc) – versus your login information (username and password). 

It is another extremely common type of consumer fraud and can result in equally negative outcomes – erroneous charges, withdrawn cash and stolen personal data.

Common fraud methods

Thanks to modern tech there are endless ways that criminals can access your information. Here are a few common ways that victims get their financial information stolen… 

Phishing, Vishing, Smishing, & Pharming

These words may sound like a bit of nonsense, but they’re actually referring to some of the most common and dangerous ways consumers are being frauded today.

Phishing is the umbrella term you may have heard before. It occurs when a fraudster tries to trick you into giving them personal/financial information using a scam email, text, phone call, or website.

Phishers often weaponize familiarity, spoofing brands or companies that you may regularly receive correspondence from. Sometimes they use urgency – like the threat of closed or frozen accounts, fines, fraud (ironic) – to trick people into forking over their info. 

When this type of fraud happens over text it’s called smishing and over the phone it’s called vishing. The term pharming is used to describe a process in which cybercriminals install malware or code that automatically redirects users to fake websites designed to steal their info.  

Skimming

Unlike phishing which happens online, skimming is an in-person method that fraudsters use to get ahold of credit or debit card information. 

In the past, skimming could look like a criminal taking a picture or photocopy of someone’s card. Unfortunately, today there are sophisticated skimming technologies that are designed to blend into your everyday life…

Skimming machines can be installed anywhere you swipe your card – stores, gas, stations, restaurants, etc. Fraudsters use these devices to glean data from a card’s magstripe

Skimming tech is also commonly used on ATM machines. Cameras and/or touch pads are illegally monitored in order to steal people’s PIN numbers as they unsuspectingly type them in.

Four ways to protect your money from fraud

All of this may sound a bit frightening and overwhelming, but all is not lost! There are a lot of simple steps you can take to create an extra line of defense. 

Here are a few expert-recommended ways to boost your awareness and fight back all types of fraud…

1. Safeguard your personal data

One of the easiest and most important ways to ward off financial fraud is to just make your personal data harder for criminals to find! 

First of all, create unique passwords for all your financial accounts and don’t share them with anyone or write them down.

The longer your password, the harder it is to crack. If you have trouble keeping track, do some research on an encrypted password management software

Never ever send card numbers, passwords, or social security info over email. If it’s an absolute necessity, look into purchasing extra encryption services to protect your data.  

Routinely go through your inbox (including the spam folder) and delete emails asking for personal information (phishing!). Only click on or interact with secure web pages – look for “https” versus “http”, or check for the lock icon next to the url in your browser. 

Always double check the legitimacy of a site when making an online purchase – poke around, visit the homepage, do some googling.

2. Keep a close eye on your accounts

You can never look at your financial documents too closely. Carefully review every bank statement you’re sent.

 At least once a year, request a credit report and flag unexpected credit denials, loan documents you don’t recognize and other suspicious activity. 

Try and check your online bank account’s transaction records every single day to look for charges you didn’t incur. Manually checking is important, but most online bank accounts offer alerts that can let you know when something nefarious is afoot. 

Definitely turn on the notifications designed to alert you to fraud. But also consider getting alerted every time a large transaction (usually over $500 or $1000) occurs.

This way you don’t have to rely solely on your bank or financial company to keep fraudulent activity from falling through the cracks. 

With the right alert settings in place, you can find out about fraud on your accounts within minutes. 

3. Recognize the red flags

These days it’s important to be able to spot the signs of phishing, skimming and other fraud methodologies. Once you know what to look for, you can’t be fooled 🥸. Trust your instincts – if something feels off, it usually is. 

If a text, phone call, or email is unsolicited (meaning you didn’t reach out first), it may be phishing. Most banks and financial institutions will not reach out to you requesting personal information for no reason.

The details make a difference! Oftentimes phishing correspondence will have inconsistencies in domain names, email addresses and links. Other telltale red flags include misspelling and grammatical errors, suspicious attachments, and too-good-to-be-true offers. 

This is what it comes down to: If you aren’t certain, do not respond, and definitely don’t give out any information. 

When it comes to skimming, believe it or not a quick visual assessment can save you from having your card number stolen. 

When you get to the ATM or gas pump, compare the card-reader to those around it. Does the reader stick out from the machine more than others? Does the panel underneath appear dislodged or have ripped/broken security tape? Wiggle the card-reader – does it easily lift out of place?

If the answer to any of these questions is yes, don’t use the machine! 

4. Protect your tech

We can all admit that personal finance (and life in general) is super reliant on our technology. From our phones, laptops and tablets, to the wifi and data networks that support them. 

Rule #1 is never use public or free WiFi to log into your bank account or send financial information. The nature of public WiFi (in that it’s accessible without a password) makes it way easier for fraudsters to use it to steal your data. 

The FTC assembled this master list of do’s and don’t when it comes to using public WiFi. Some highlights include: 

  • Don’t use mobile apps that store your information on public wifi. Research has shown that many apps don’t properly encrypt your data. 
  • Do use your mobile data instead of public wifi if at all possible – it usually offers better protection.   
  • Do change your phone’s WiFi settings so that it doesn’t automatically connect to public networks. 

Another easy way to protect your tech is simply by logging out of your accounts as soon as you’re finished. 

You may think that because you closed the app or browser window that you’ve been logged out. That isn’t always the case! Manually click “log out” when you’re finished to make it harder for hackers to access your account. 

Lastly, simply pay attention to software and spyware updates. When tech companies send out software updates, what they’re often fine-tuning is cybersecurity measures. 

When prompted, update your phone and tablet’s software and keep any spyware or monitoring services up to date on your laptop. 

Recap

While there may not be a way to completely insulate yourself from fraud, there are lots of ways to add extra layers of protection. 

Knowledge is power, and simply getting up to date on what types of fraud are out there is a great first step

🛡 Protect your passwords and scroll through your transaction history regularly. 

🔍 Become an expert at spotting scams by paying attention to small details and inconsistencies. 

🦹🏼‍♂️ Take measures to ensure your tech remains your superpower and doesn’t become your kryptonite! 

Fraud prevention takes a bit of extra effort but has the potential to shield you from thousands of dollars in losses and drawn-out legal proceedings. 

👀 Keep your eyes open and your guard up. No matter your starting point or budget you can start protecting your money today!

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