Twila Van Leer

EMV Security Technologies Boosts Credit Fraud Protection

June 6, 2014 by Twila Van Leer

Credit card displays new EMV chip technology

Costs of credit card fraud in the U.S. alone are estimated at $8.6 billion per year. One of the ways to combat this problem is through EMV security technologies. EMV chip cards are being added to the arsenal of weapons calculated to help secure the U.S. payments infrastructure. The added protection is important because by October 2015, major networks will shift fraud liability to either the issuer or the merchant, depending on which has the least secure technology. October 2015 is the date that card issuers such as American Express, Discover, MasterCard and Visa are required to update to EMV chip cards, terminals and processing systems.

Key Features

EMV chip technology was developed jointly by Europay, MasterCard and Visa in 1994, to create a global chip specification payment system and prevent financial fraud. The key features of the chip in credit cards are that they store information, perform processing, are a secure element which stores secrets and performs cryptographic functions. They protect against counterfeit fraud through authentication of the chip card and smart phone. They validate the integrity of the transaction through digitally signing payment data.

EMV chip technology is an extremely effective method of reducing counterfeit and lost/stolen card fraud in a face to face payments environment. That is why the PCI Security Standards Council supports the deployment of EMV. EMV chip cards, have advantages over traditional magnetic stripes. The chip’s security code changes with every purchase and the card is much less vulnerable to counterfeiting, experts say. The chip can not be duplicated.

Worldwide Adoption

EMV technology will reduce the chances for fraud, but the evolution to the new technology will take some time. Merchants will have to change equipment to read the chip’s security code. Magnetic stripes won’t disappear overnight. During the transition, cards will still be vulnerable to counterfeiting.

In early June, Sam’s Club introduced a rewards credit card using the chip. Sam’s parent company, Walmart, will follow suit later this year. Target, which was the victim of a huge security breach recently, has opted to add chip-and-PIN technology to its store-branded cards early next year.

The shift to EMV is part of a systematic upgrade of payment security that is being developed to counteract weaknesses that lead to security breaches. Among the budding technologies is “tokenization,” which would substitute a meaningless string of alphanumeric characters and biometrics for current credit card credentials. Anything that will stymie hackers in their pursuit of other people’s personal information is likely to be scrutinized.

Data Breaches

A large-scale data breach, such as those the country has experienced in recent months, could still affect your card, industry leaders say. If Target, for instance, had been already using the chip technology before its system was breached, it would not have protected the company from hackers who infiltrated the company’s database through a third party access credentials. That gave the hackers information on cardholder account numbers and personal information, such as names, addresses and phone numbers that greatly increased the scope for identity theft.

Best Practices

Until the problems of protecting ID are resolved, take a proactive stance. Protect your card against fraud or data breach, as much as possible. Use unique and more sophisticated passwords for online accounts, monitor your bank statements and sign up for available alerts. Report immediately to your financial institution if your card is lost, stolen or compromised so it can be replaced with a new number as quickly as possible. That will save you the hassle of disputing unauthorized charges

Hacking A Serious Problem

May 31, 2014 by Twila Van Leer

Web auction site eBay said it's systems were hacked and client identity information was stolen. (Justin Sullivan/Getty Images) — Web auction site eBay said it’s systems were hacked and client identity information was stolen. (Justin Sullivan/Getty Images)

Hacking is not a minor occurrence any more. This year, those who track the problem report, about half of American adults — about 110 million — will have their personal information accessed by a hacker. Huge data breaches at well-known companies such as Target and Adobe and others are reported too often to ignore.

Ponemon Institute researchers reported that up to 432 million accounts were hacked during the past year. The institute studies issues involving privacy, data protection and information security policy.

The true picture is obscured by policies at some companies, such as AOL and eBay not to divulge the complete details of cyber breaches. But if the exact numbers are elusive, the damage is easy to see. If you are hacked, a thief has access to your name, credit and/or debit card information, email, phone number, birthday, password, security information and physical address.

That makes it easy for people you’d rather didn’t know those details about your life to find you. An abusive ex-spouse, for instance. Not to mention the financial havoc that can be generated by stolen credit card data.

The revelations about huge corporate breaches have become so common that people have become numb to them, researchers say. The numbers are so frequent and the damages so astronomical that they’re hard to assimilate. Among recent instances:

Target, with 70 million customers’ personal information compromised, including 40 million credit and debit cards. Adobe, with 33 million user credentials in the wrong hands, along with 3.2 million stolen credit and debit cards. Snapchat, with the account data of 4.6 million users stolen. Michaels, with 3 million payment cards compromised. Neiman Marcus, breach of data from 1.1 million cards. AOL, data from “a significant number” of the company’s 120 million accounts stolen.
eBay, with possible theft of information on 148 million customers

Americans are increasingly moving more of their lives online. They do shopping, banking and socializing online. Merchants use the Internet to conduct and process transactions. Your data is everywhere: your phone, laptop, work PC, website servers and countless retailers’ computer networks. How vulnerable does that make you feel?

And the deeper the well of information gets, the smarter the hackers become. Their weapons are numerous and they have learned to roam inside corporate networks virtually at leisure before triggering alarms. The pierced, Goth malcontent of the past is gone. Large-scale theft is targeted with militaristic precision. Hackers work in teams and they are able to create malware that attacks specific targets.

Too often, these experts in cyber theft are pitted against underfunded volunteers whose job is to protect the Internet. People who use outdated software that no longer receives security updates are easy prey for the hackers.

“It’s becoming more acute,” said Larry Ponemon, who heads the institute. “If you’re not a victim of data breach, you’re not paying attention.

The headlines announcing heavy-duty breaches have become a modern phenomenon. Watch for more.

Credit Card Problems Can Ruin Vacations

May 14, 2014 by Twila Van Leer

vacations-1 — Let’s get this vacation started!

Using a credit card (or two or more) while traveling is just a fact of modern life. And nothing can put the skids on a vacation faster than confronting the loss of your card or some other glitch that leaves you stranded. The answer is to plan ahead for any of the possible problems, according to financial wizards who give advice on such matters.

Notify Credit Card Companies

Begin by calling your credit card company before you start, especially if your travel plans will take you out of the country. If charges begin popping up in places the company is not used to, your account may be flagged as being suspicious. The company could try to contact you to verify the out-of-area transactions. Or they could simply freeze your card. They do that, of course, to protect you in the case of card theft, but it can play hob with your travel plans. It could cut you off from the source you expected to use to finance your travels and cause more consternation than you’d care to deal with away from home.

Some card issuers have provisions for you to notify them online. Log onto the account and look for “travel notification” or other tab that allows you to alert them to where you will be and for how long. Some companies are aware of the frequent travelers they serve and don’t require notification for every trip. But, as the old saying goes, “Better safe than sorry.” A few minutes of precautionary effort could save a lot of headaches.

Lost Cards

In case of a lost or stolen card, have your card company’s toll-free customer service number available. Put it in a place separate from your wallet or purse so if there is a theft or loss you will have the number you need. It would be wise to provide the number to a friend or family member as well. Carrying two credit cards gives you a backup if one is lost or stolen.

Use Rewards Offered

Some credit card issuers provide perks specifically for traveling. Be aware of what your card offers. They vary from one company to another, but could include such conveniences as free referrals to legal or medical services (for which you would, of course, pay) or to such improvements in amenities as hotel room upgrades.

Coverage for lost or damaged baggage would be a very desirable perk and the card companies tend to pay up to $500 more than what your airline might offer (most airlines pay up to $3,400 to recompense for lost luggage.) If you put an expensive camera in your checked luggage and it gets lost, some cards will pay up to $250 per lost item, not likely to cover the cost, but a start on replacement.

If you have the bad fortune to be involved in an accident with a rental car, some cards will help pay for the damage if it occurs in the United States. The benefit would kick in after you filed a claim with your usual vehicle insurer. If an accident occurs outside the U.S. and your own insurance doesn’t cover such an occurrence, the credit card fall-back may be your only chance to recoup costs. Some card companies also offer small amounts to compensate for delayed flights. The trick is to carefully go over the details of your service agreement so you don’t miss available perks.

Some credit card issuers have dropped the additional charges (usually 1 to 3 percent) on purchases outside the U.S., but some are still in effect. Again, check carefully to see what your card offers. If you have more than one card, use the one with the lowest charges for overseas buying.

Use Approved ATMs

Using ATMs in foreign countries can involve charges as high as $5 per pop. Check with your card companies to see if they have partnerships with ATMs in the countries you intend to visit. Or use a credit union card, which usually has fees lower than a bank card. Debit cards also pose lower fees for cash withdrawals, as a rule. Get reasonably large amounts of cash on each ATM visit to minimize fees. Avoid airport kiosks or currency exchange offices, which have significantly higher charges for providing you with cash.

Microchips

A microchip embedded in your card is an additional security option. Older cards tend not to have them, and thieves can more easily extract your information if they get their hands on your cards. By October 2015, microchip security will be required for all American cards. Europeans have had that extra safety measure for some time. Check with your card issuer to see if a microchip is an option.

Keep Payments Current

Before you fly off to parts far from home, remember to keep your credit card payments current. That way you’ll avoid the shock of late fees you forgot to anticipate. If you expect to add significantly to your credit card balance, make a payment ahead of time or set up an online payment before you leave. Request an increase on your credit limit if there is a chance you’ll exceed your current limit. And monitor carefully as you travel to avoid the embarrassment of surpassing the limit.

Bottom line: Your credit card can be your best friend on vacation, but only if you take the necessary safeguards and do the homework before you head out the door.

Numerous Bank Fees Can Be Decreasing Your Assets

May 8, 2014 by Twila Van Leer

Banks and Fees: They Go Together

That little extra twinge you feel when you tote up your bank account is likely the added fees you pay for the privilege of banking. Typically, there may be some you didn’t even know about. Banks, according to a Market Watch article in the New York Times, aren’t always up front about such things.

The average checking account is subject to some 30 fees, but some institutions have lists of up to 50. That’s according to a 2013 survey by WalletHub.com, a financial website. And, the survey found, about 20 percent of the banks contacted don’t provide prospective customers a list of these charges when they submit an online application. Only two of the banks included in the survey earned perfect scores on the WalletHub quest for full transparency. Fewer than half – 48 percent – had direct links on their product pages to alert customers to the full gamut of fees.

It may or may not make you feel better to know that airlines are worse, with up to 150 potential fees. The list for banking fees is long an varied but may include a fee simply to have a checking account. (In 2009, some 76 percent of banks offered free checking. By 2013, the number was down to 39 percent.) Then, you may pay a fee to use a competitor’s ATM. And the list goes on.

Some of the fault lies with banking consumers. Only one in three makes the kind of annual assessment that would advise them of the fees they are paying. Only 15 percent reported ever having looked into fees at their particular financial institution, Kasasa found when it surveyed 1,000 adults. (Kasasa is a new financial institution devoted to creating communities by uniting small credit unions and small banks.) Federal regulations now require that such information be available, but it’s up to you to find it.

Banks have been more forthcoming in recent years, but there has been a commensurate increase in the number of fees. But to get the information specific to your bank account, you may have to plow through an average 44 pages of information, which still may be incomplete.

Five things to look for:

1. Banks are allowed to change the order of processing checks and electronic transfers. That means that if you have a $50 purchase and another for a minor item (a cup of coffee, perhaps) the larger item is processed first, increasing the bank’s potential to collect overdraft fees on a greater number of smaller purchases. The number of banks that do this has decreased in recent years. About 22 percent of the largest banks no longer do it and the percentage of those that do has gone from 51 percent to 49 percent.

2. The bank may hold a transfer for several days, increasing the institution’s potential for interest income. It may take several days, for instance, for payments to utilities to clear. For the customer, it may make a difference of only a few cents, but with millions of customers, the bank may see a significant advantage. No federal regulations are in place to force a bank to speedily process your payment.

3. Though many banks have created standard disclosure boxes, financial experts say there still is “vast room for improvement.” Making comparisons bank-to-bank is hard because of the length and different ways of identifying the same fees. Pew’s Model Disclosure Box has been adopted by 56 percent of the country’s banks, making it easier to make comparisons. The Consumer Financial Protection Bureau has proposed such mandated disclosure for prepaid cards, but has announced no plans to do the same for banking accounts.

4. Fees for overdrafts are the bank’s biggest money-makers. Such fees make up 60 percent of their fee income, according to the CFPB. More than half of bank customers don’t even know if they have overdraft protection or what their particular coverage consists of. Recent figures show that the number of involuntary closures of accounts based on overdraft issues is rising. It is possible to opt out of the service, with written confirmation of their choice.

5. About three-quarters of banks will let you go into overdraft at ATMs or at points-of-sale with your debit card. But each such transaction will push your account further into the negative, with a fee charged in each instance. The purchase amount will be pulled from your next deposit, along with the fees. Fees for overdrafts have increased steadily and now stand at $35 to $37 per instance at most banks. A transfer from another account at the same bank (savings, for instance) to cover the overdraft is usually about $10.

There. A word to the wise for those who don’t want to be fee-d to death.

Run On China Bank Gives Consumers Food For Thought

March 29, 2014 by Twila Van Leer

When The Rumors Aren’t True

Keeping close tabs on our money is an American fact of life. In general, we like to be able to deposit what we have in what we believe to be a secure holding institution and then relax.

three-day-run-china-bank — Customers getting money out of the Jiangsu Sheyang Rural Commercial Bank

But what happens when an alarm is sounded and there is the possibility that we relaxed too soon? How do we react when there is even a hint that our particular financial institution could be in trouble and that our share of the money being held could be in jeopardy?

Fortunately, the United States has built safeguards into its banking systems, including federal deposit insurance, and the likelihood of a “run” today is miniscule. But a recent story out of China shows what can happen when rumors run rampant and cool heads do not prevail.

How The China Bank Run Started

A customer in Yancheng, China, went to his bank and requested a withdrawal of 200,000 yuan, the equivalent of $32,200 in American dollars. The story goes (and the details have not been clearly defined) that when the customer’s request couldn’t be immediately honored, he assumed that the bank had run out of money and panic ensued.

Panic Rampant

Soon, depositors arrived in droves, by any and all means of transportation. Though regulators and spokespersons for the central bank assured the bank’s clientele that their money was safe, the flood of customers demanding their full amount kept arriving. The beleaguered bank stacked piles of yuan on its counters to create the appearance of plenty, but even that ploy and the sight of armored cars bringing cash to aid the besieged institution didn’t immediately quell the tide of anxious customers. The run continued for three days.

Customers’ concerns were probably magnified by China’s failure to meet a domestic bond recently. The default was a first in the mega-country’s current financial history, but it lent itself to ongoing itchiness about all aspects of the country’s financial security.

Lessons From The Bank Run

There are many versions of what happened in Yancheng, but the lessons for Americans are the same.

The news of this story spread quickly. All it took was one customer who used a twitter like service to notify his circle of friends. From that point hundreds of people heard about the customer’s experience and soon it gained world wide attention. The Chinese people have a heritage of fearing for the safety of their money. Older generations of people experienced government confiscation of property and wealth. It is no wonder that panic resulted.

So what is the lesson American people can gain from this? When rumors start, don’t panic. Check other sources for the truth to the rumor. Give yourself some time to make the best decision for you and your family. Though time would be of the essence in a real bank failure, it is foolish to over-react.

The bottom line is to look before you leap. Trust in the safeguards that have been built around the country’s financial practices. Certainly you are justified in making immediate inquiries if there is a suggestion that something is wrong, but don’t just assume that the rumors are true. Often, they are not.