Have you been a victim of bank fraud? Or maybe you know someone who has been a victim? It’s no fun when someone gains access to YOUR money. The money you’ve worked very hard to earn.
With the recent and very publicized data breach experienced by Target, customers were placed at risk. Many banks stepped-up and replaced debit cards and credit cards even if their customers were not impacted. It was a preventative action – just in case data was still out there. Banks were trying to minimize bank fraud. Keep in mind, banks have a vested interest in keeping their customers’ assets (i.e., your money) and confidential information secure. For this reason, the banking industry has developed a series of standard security protocols and techniques to prevent bank fraud.
5 Common Fraud Protections (a)
Firewalls — Firewalls are software or hardware-based security systems that create a secure barrier between your bank’s internal network, where your information is stored, and the unsecured Internet. The data “traffic” flowing in and out of the bank’s network is monitored and analyzed to determine its legitimacy.
Encryption — Encryption scrambles information being transmitted between your device and the bank’s network into a code that is virtually impossible to decipher, thereby protecting against unauthorized access. Many financial institutions now use 128-bit encryption, an advanced encryption technology.
Multilayered Authentication — Many online banking/financial systems now require many layers of user identification, or authentication, that only those authorized can provide. For instance, some authentication protocols verify the device the customer is using to access the bank’s website. If the device does not match the bank’s records, additional authentication measures, such as one or more challenge questions, will be presented to the customer. Similarly, commercial online banking also applies a layered security approach whereby two or more identifying factors are required to gain access (e.g., a username and password plus a security token).
Monitoring — Keeping vigilant watch over network operations is integral to the online security policies of most banks. Technology specialists continuously monitor online activity looking for out of the norm customer behavior and/or suspicious activity, particularly at login. For instance, too many incorrect login attempts will signal the system to lock a user out of their account until positive account verification can be confirmed. Transaction amounts (specifically withdrawals) that fall outside the customer’s normal or pre-established limits are also scrutinized.
Industry partnerships — Aside from internal controls, many banking institutions work closely with anti-virus and anti-malware vendors, sharing data they have collected and collaborating on new online fraud prevention techniques. Similarly, banks often work with law enforcement agencies, sharing information that may lead to safer online experiences for their customers.
Compare the above list against the measures your own on-line bank has put in place to keep your identity and money safe.
Even if your bank has sophisticated security measures, there is no substitute for YOU being aware of your money and educated about security measures. So what do you do?
1- Commit to reviewing your bank statement every month – yes, EVERY month.
2- Commit to reviewing your credit card statement EVERY month.
3- Use your credit card in lieu of your debit card (click here to read our post about this topic)
4- Read AND understand the explanation of protections provided, and not provided, by your bank relative to electronic funds transfers. (yes, I understand it’s easier to “happy click” this information online or throw out the small print sent via mail – but it is IMPORTANT to read.)
5- Understand under what, if any, circumstances and through what means your bank may contact you on an unsolicited basis and request confidential account-related credentials.
It’s YOUR money. You’re responsible for keeping track of it. Follow us on Twitter every Tuesday for personal financial tips.
(a) Information provided by the Financial Planning Association® via Wealth Management Systems Inc. Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.
Source: The Federal Financial Institutions Examination Council (FFIEC), “FFIEC Supplement to Authentication in an Internet Banking Environment,” June 29, 2011.
ABOUT THE AUTHOR:
Niv Persaud, CFP®, CDFA™, CRPC®, is the Founder of Transition Planning & Guidance, LLC. Her firm bridges the gap between financial planning and coaching. As a Transition Consultant, she offers sage advice in all aspects of life – financial, personal and professional. Niv does not manage money and does not sell financial products. Her services include spending plan development, divorce financial review, life strategy and professional progression. Niv actively gives back to her community through her volunteer efforts. She believes in living life to the fullest by cherishing friendships, enjoying the beauty of nature and laughing often — even at herself. Her favorite quote is by Erma Bombeck, “When I stand before God at the end of my life, I would hope that I would not have a single bit of talent left and could say ‘I used everything you gave me’.”