Online Banking Security Depends on Institutions, Consumers
By Margarette Burnette
Financial institutions are under constant threat of data breaches, with attacks happening about once a week, according to the Identity Theft Resource Center. And when you consider news about a breach at the Federal Reserve Bank of St. Louis this year and a massive JP Morgan Chase computer hack in 2014, it’s enough to make consumers question the strength of online banking security.
About 74% of U.S. adults use online banking, according to the Federal Reserve. If you’re one of them, it’s important to know the steps financial institutions take to keep your accounts secure and how you can help.
• Consumers can reduce risks
• Overall identity theft is decreasing
• Security technology efforts are increasing
Consumers have a role in security.
Data breaches get publicity, but criminals can also work on a smaller scale by going after consumers directly. Fraudsters may use a phishing scam, for example, in which they send an email pretending to be from a financial institution. The email might ask for information such as a bank password or Social Security number. If you reply, the criminal could then use the data to illegally make purchases or withdraw money.
You generally aren’t responsible for unauthorized charges if you report them within 60 days of the transaction first appearing on your bank statement. But the best option is to avoid any unauthorized charges at all.
Try these steps to avoid scams:
• Change your passwords regularly. Use combinations that are difficult to guess, such as a mix of upper- and lowercase letters, numbers and symbols. Passwords that are hard to figure out offer good protection from hackers.
• Make sure anti-virus software is up to date on your home computers and mobile devices to help guard against attacks from hackers.
• Check that the network and website are secure. It’s a good idea to bank online from the security of your private home network. With public Wi-Fi, you can’t really be sure who sees what you send online, unless each page you visit is encrypted. If you have to log in while away from home, consider using your cellular data plan instead of Wi-Fi, or a virtual private network, known as a VPN. However you choose to log in, check for Web page encryption by making sure the address on the browser starts with “https.” The “s” signals that the page is secure.
• Consider using two-factor authentication on your accounts. Many banks and credit unions offer this login process to help you securely access your accounts. Instead of entering only your username and password, you also have to provide a second piece of information. It could be a passcode that the bank sends to your smartphone as a text, or even your own fingerprint.
• Don’t respond to suspicious emails that could be phishing attempts to steal your identity. Instead, contact your bank at a phone number or website address you trust.
Identity theft has decreased.
Hackers continue to successfully access records in high-profile data breaches. But Javelin Strategy & Research reports that cases of identity theft — in which the data was used to harm people financially — were down 3% last year from a 2013 high.
The study’s authors suggest that news of recent breaches has caused financial institutions and consumers to be more careful with security, and this vigilance may have helped lead to the decline. But still, 12.7 million consumers were affected.
Because of identity-theft fears, some consumers, like Bruce Brown, a marketing consultant in Los Angeles, simply don’t bank online.
“I’m a former private investigator, and in that line of work I met a lot of computer hackers,” Brown says. “Talking to the hackers and seeing how they were able to get into accounts made me sufficiently paranoid about online banking.” Instead, he banks in person at branches, ATMs and over the telephone.
Experts suggest if you take steps to protect your accounts, the risk of identity theft decreases. But even so, some people shy away from banking online because of security concerns.
Banks are increasing security technology.
According to American Banker, a bank technology publication, more than 70% of technology executives plan to boost their budgets next year. Many of the increases will go toward strengthening and expanding security technology.
Standard measures include firewalls, anti-virus protection on bank computers, fraud detection systems and website encryption, which scrambles data so only the intended recipient can read it.
If you plan to bank online, ask your financial institution about its security measures to be sure it’s using best practices.
Online security is important for banks and consumers alike. It’s important to take steps to protect your accounts while making sure your bank uses industry-standard security technology. Then you can enjoy the convenience of online banking while also reducing the risk of fraud.
Margarette Burnette is a staff writer at NerdWallet, a personal finance website.
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