Skimming ring in 3 states busted

via Skimming ring in 3 states busted

PDF: Card skimming ring

As you gas up your car during holiday trips, the FBI is warning consumers to watch out for credit card skimmers on gas pumps, which could be used to steal your money and identity.

The FBI and a U.S. attorney this week announced they had busted a multi-state ring that had installed skimmers on gas pumps across Kentucky, Ohio and Indiana. Officers collared eight people in an operation that included more than 30 law enforcement agencies across the three states, after the thieves made off with more than 7,000 card numbers and about $3.5 million.

“This form of identity theft is causing untold losses to both financial institutions and individuals who are merely filling their tanks at the gasoline pump. As we begin the busiest travel season of the year, consumers need to pay special attention to where and how they pay for gasoline as criminals are using new and more sophisticated technologies,” noted U.S. Attorney Russell Coleman.

Skimmers are becoming increasingly sophisticated, and thieves have gotten proficient at making them look close enough to the real thing to fool all but the savviest customers. Thieves install the devices over the card-swipe device on the pump, and in some cases, replace the pump’s original card reader. When unwitting customers swipe their cards to pay for gas, the device reads the card number and other information, which is then used to raid the customer’s bank account or steal their identity.

You may recall that police last year found a skimmer installed on gas pumps in the Clinton area, resulting in arrests and indications the activity was part of a larger ring operating across several states.

In the case announced this week, the FBI reported the thieves installed the devices inside the gas pumps, then later retrieved them. The stolen financial information was then re-encoded, transferred, or cloned on to the magnetic strip of other plastic cards that were sold or used to purchase merchandise.

Although skimming is not a new phenomenon, it is getting harder to detect. PC Magazine’s Max Eddy wrote about the technology last year, noting the devices are now smaller than a deck of cards, and can be placed on an ATM or point-of-sale terminal easily. Often, he notes, thieves will also place a camera nearby to record Personal Identification Numbers (PINs) of customers, but in some cases, they have installed fake keypads as well.

Spotting a skimmer is not always easy, but Eddy gives a few pointers:

  • Watch for mismatched colors or styles. If the overall color in the area where you insert your card is black, for example, but the card reader is yellow, that could be a sign that it’s fake. Also, watch for mismatches in lettering or the materials used.
  • Wiggle everything. Since readers have to be hastily installed so the thieves won’t get caught, they don’t usually have much time to make sure everything fits perfectly. Eddy advises pulling at the reader and keypad to ensure nothing moves.
  • Look around. Cover the keypad with your hand, to prevent anyone from seeing your fingers as they enter the PIN. Many devices now have a little shield over the top of the keypad to prevent someone seeing your fingers as they enter the numbers, or recording your movements from a distance. Still, covering the keypad as you enter can prevent thieves from getting the all-important PIN.
  • Use the EMV chip. Since most newer card readers accept EMV (Europay, Mastercard, Visa) chips that require your card to be inserted, this option gives you more security and requires thieves to install devices inside the reader.
  • Pay inside. It’s less convenient to pay inside the store, but generally more secure.

It’s also a good idea to keep up with your purchases. Most banks now have apps that allow you to keep up with transactions, so if you notice any activity you didn’t authorize, report it immediately.

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Western Union fraud victims can file claims to get their money back

via Fraud victims of Western Union scams can file claims, clarionledger.com

PDF: Westernunion relief 1

If you lost money to a scammer who had you send money to them via Western Union’s wire services, you can file a claim to get your money back. The Federal Trade Commission announced this month that consumers have until Feb. 12 to register claims as part of a $586 million settlement between the company and law enforcement agencies.

Back in January, Western Union agreed to pay $586 million to settle charges that the company had turned a blind eye toward scammers who had for years been using the company’s worldwide wire service network to receive payments from unwitting victims. The charges happened as part of a larger revelation that the company had allegedly duped millions of consumers through a company culture that encouraged agents to sometimes participate by getting a cut of proceeds from illegal activities.

In news articles, Western Union has admitted it “didn’t do as much as it should have” to stop scammers from using its services to solicit millions from scams such as fraudulent lotteries, fake family emergencies, advance-fee loans, online dating and other schemes.

“American consumers lost money while Western Union looked the other way,” said FTC Acting Chairman Maureen K. Ohlhausen, in a news release. “We’re pleased to start the process that will get that money back into consumers’ rightful hands.”

So, if you lost money to a scammer who had you pay via Western Union’s money transfer system between Jan. 1, 2004, and Jan. 19, 2017, you can file a claim by visiting http://FTC.gov/WU before Feb. 12, and completing a claim form. (The Department of Justice may have to investigate your claim, so consumers are warned that it could be a year to get your check.) Whether you get all your money back will depend on how many claims are filed, and whether your claim can be corroborated.

“Knowing that its agents were involved in fraudulent schemes — and knowing that it had a legal obligation to detect and report this criminal conduct to the authorities — Western Union failed to act, leading to massive victim losses,” said Acting Assistant Attorney General Kenneth A. Blanco. “Returning forfeited funds to these victims and other victims of crime is one of the department’s highest priorities. I want to commend our prosecutors, the FTC, and our law enforcement agent partners for their hard work that led to vindicating the rights of these victims.”

If you’ve already reported your losses to the Western Union, the FTC or another agency, you should be receiving a mailed form from the claims administrator, Gilardi & Co. The form will have a Claim ID and a PIN number to use when filing a claim online via FTC.gov/WU.

Filing a claim is free, so you should not pay anyone to file a claim on your behalf. No one associated with the claims process will call to ask for consumers’ bank accounts or credit card numbers.

Overdraft coverage costs consumers billions

Source: Overdraft coverage costs consumers billions, clarionledger.com

Long ago, if you didn’t have enough money in your checking account to cover your groceries, you were usually out of luck. Customers who only overdrew their accounts once in a blue moon, caused by a subtraction error or forgetting to deduct funds for an unusual transaction, might get courtesy coverage of the check by their bank the first time it happened. But consumers who crossed the line too often could find themselves with bounced checks, bad reputations, and even criminal charges.

Soon, banks started offering overdraft coverage. Many accounts just included it in their standard checking account packages, and most people didn’t give it a second thought. Many (if they were aware of it at all) thought of it as sort of an insurance policy in case they made a mistake. Sure, there was a cost, but you never incurred it if you were good at managing your checkbook. Banks explained it as a benefit for their customers.

 But for some people, overdrawing their accounts is a habit, and it could be a costly one. That pack of gum bought with your debit card can end up costing you an additional $30 or more if you don’t have sufficient funds in your account. It’s not unusual for people to accumulate hundreds of dollars in fees each day, often being charged a separate fee for each transaction in which their accounts are “in the red.” As of the late 2000s, overdraft fees had gotten so out of hand the Federal Reserve in 2010 started requiring that banks make enrollment optional.
Overdraft coverage goes into effect if your checking account balance goes “into the red” but doesn’t cover transactions such as online bill payments and checks that could push you into overdraft.

Overdraft coverage still costs consumers billions, and Money magazine reported in 2015 that U.S. banks took in $32.5 billion in a 12-month period. Of course, banks argue, having overdraft protection can save you the embarrassment and inconvenience of having your debit card declined (if you don’t mind the fees). If nothing else, it should help encourage people to keep closer tabs on their bank account balances.

It seems there is still a lot of confusion around the issue. A recent NerdWallet study found that about two-thirds of Americans aren’t aware they can choose whether to have overdraft coverage.

Nerdwallet also studied data from the Consumer Financial Protection Bureau, which revealed that about 8 million Americans would be considered “frequent users” of overdraft coverage, costing them, on average, $442 a year. That money, the study authors noted, could be put to much better use to save, or pay off debt, or invest.

“If you’re in danger of getting hit with an overdraft fee, then it’s worth asking yourself if your next purchases are really worth the price that you could pay; often the answer is ‘no,’” noted NerdWallet’s Kimberly Palmer.

 Interestingly, Nerdwallet found, a significant percentage (17 percent) of Americans would actually prefer paying a $35 overdraft fee than having their debit card declined. But whether or not you think you need overdraft coverage, the bank must give you the option to opt in or opt out. You can’t be automatically enrolled, and the bank must give you a way to make your preferences known.

If you aren’t very good at keeping track of your balance or think you still need some protection, consider linking your checking account to a savings account or line of credit (there will probably be a fee if you use it, but it should be lower than overdraft coverage). Or, you could work to build up a “cushion” of a couple hundred dollars in your account, in case you do make a mistake.

But perhaps the best option is to just know how much money’s in your account. Since most banks have smartphone apps and websites that let you check your balance 24/7, there is no reason to not know how much money you have to spend the next time you go for that coffee.

Survey: Most Americans plan to save tax refunds

1040ez

turbotax

From Tax Refund: Consumers bank on it, clarionledger.com

PDF: saving-tax-refunds

Like clockwork, scammers are attempting to get at Mississippians’ tax refunds again. Each year, more and more people find themselves victimized by a variety of scams designed to steal their identities for the purpose of filing fraudulent tax returns.
Many taxpayers have tried to file their taxes online, only to find out someone had already filed in their name, grabbing their refunds. While not a new phenomenon, the amount of tax-related cybercrime has increased this year in both numbers and sophistication.

Recently, Attorney General Jim Hood warned that Mississippi residents could be targeted by scammers trying to collect data from W-2 forms, in a new twist on a couple of old scams. Hood cited reports from the Internal Revenue Service warning business owners to be careful in providing information about employees.

The scheme works like this: A scammer sends an email to an employee in Human Resources at the business, carefully crafted to look as if it comes from the CEO or another known corporate executive. The message asks for copies of W-2 forms of all employees, and sometimes is followed by a second email requesting money be wired to a specific bank account.

Hood urged Mississippi residents to be suspicious of any such unsolicited emails and to always verify by phone that the request is legitimate.

“We have received calls and reports to our office this week from entities whose employees have fallen for this type of scam,” Hood said. “Employees who would have W-2 information, such as accounting or human resources personnel, are particularly susceptible to this scam. All types of organizations are possible targets, including schools, health care organizations, nonprofits and private businesses.”

Hood noted the scam, which first appeared a year ago, is circulating earlier in the tax season. Some businesses which got the emails last year are being targeted again.

“This is one of the most dangerous email phishing scams we’ve seen in a long time,” IRS Commissioner John Koskinen noted in a news release. “It can result in the large-scale theft of sensitive data that criminals can use to commit various crimes, including filing fraudulent tax returns. We need everyone’s help to turn the tide against this scheme.”

If businesses get such an email, forward it to phishing@irs.gov and place “W2 Scam” in the subject line, and file a complaint with the Internet Crime Complaint Center (IC3), operated by the FBI. In addition, contact the Consumer Protection Division of the Mississippi attorney general’s office at 1-800-281-4418.

Employees whose W-2s have been stolen should visit the Federal Trade Commission’s identity theft resources at http://www.identitytheft.gov,or the IRS’ site at http://www.irs.gov/identitytheft, to learn how to report the theft and get advice on what to do next. They should also file IRS Form 14039, Identity Theft Affidavit, if the employee’s own tax return rejects because of a duplicate Social Security number or if instructed to do so by the IRS.

And, the IRS notes, just because someone isn’t required to file a return or isn’t expecting a refund doesn’t mean they can’t be a victim. In all cases, the best way to avoid becoming a victim of tax refund fraud is to file taxes as soon as possible, before scammers can file and steal your identity and refund.

Scam tarnishes Wells Fargo’s image

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via Bill Moak: Scam tarnishes Wells Fargo’s image

PDF: wells-fargo

Wells Fargo is one of those companies that has always just seemed to be part of the American landscape. For the past 164 years, this iconic American brand has been associated as much with the spirit of American prosperity as with its core business of banking. Even today, the Old West image of the stagecoach can be found on company signage, hearkening to the days of westward expansion.

Until last week, Wells Fargo was considered the nation’s most valuable bank, with market capitalization in the hundreds of billions of dollars and holding nearly $1.7 trillion in assets. But last week, the company’s image was significantly tarnished by a stinging rebuke from the Consumer Financial Protection Bureau.

In its announcement of the findings from a review of Wells Fargo records, the CFPB alleged the company encouraged representatives to create up to 1.5 million phony bank and credit card accounts, allowing Wells Fargo to collect unearned fees and enabling employees to inflate their sales figures so they could take home unwarranted bonuses. In addition, the CFPB charged Wells Fargo with allowing its representatives to submit unauthorized credit applications for “ghost accounts,” which then generated annual fees, interest charges and overdraft-protection charges. Among the alleged nefarious actions were creation of fake personal identification numbers and fabricated emails. Wells Fargo announced last week that it had settled the cases and this week added that all sales goals in retail banking will be eliminated at the end of the year.

“Wells Fargo reached these agreements consistent with our commitment to customers and in the interest of putting this matter behind us,” the company said in a news release. “Wells Fargo is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request.”

In the settlement, the CFPB will pocket $100 million, with an additional $85 million earmarked for various restitution funds (and a $5 million pool specifically for customer refunds). For its part, Wells Fargo announced it had fired 5,300 employees over the past few years for engaging in questionable behavior and has mandated ethics training.

“Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses,” CFPB Director Richard Cordray noted in a news release. “Because of the severity of these violations, Wells Fargo is paying the largest penalty the CFPB has ever imposed. Today’s action should serve notice to the entire industry that financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences.”

Just this week, with the drop in the company’s valuation, it lost its crown of “nation’s most valuable bank” to rival JPMorgan Chase. And it’s likely this story will continue; several sources report members of Congress are already calling for an accounting of the alleged fraud and whether it had a disproportionate effect on seniors.

So, what does it mean to you, if you’re a Wells Fargo customer? For starters, if you lost money from creation of an unauthorized account, you may already have gotten a refund. Wells Fargo reports it’s already issued $2.6 million in refunds to customers earlier this year. If you haven’t, you should contact the bank to investigate it. Identity theft is another concern on the minds of many who might have been affected. Many experts suggest checking your credit report frequently by visitinghttp://annualcreditreport.com.

Checking accounts may have hidden fees

cnnmoney

cnnmoney.com

via Consumer Watch: Checking accounts may have hidden fees, clarionledger.com

PDF: Checking Accounts have hidden fees

If you have a traditional checking account, you could be paying hundreds of dollars in fees each year. According to a new report by the consumer finance website Wallethub.com, the average consumer incurs around $522 in fees every year, with some consumers paying more than $800 — and more —from up to 49 different fees.

Wallethub’s 2016 Checking Account Cost & Transparency Report, released Wednesday, give a snapshot of some common — and not-so-common — fees incurred by consumers through their checking accounts at 35 major financial institutions (including five credit unions). According to the study, the average checking account has about 22 different ways to incur fees, ranging from the familiar ones (overdrafts, ATM withdrawals) to newer ones, such as getting paper statements instead of through email.

The study also looks at how well banks and other financial institutions do when it comes to transparency in their fee disclosures; for example, whether consumers could easily view fee information and whether that information was clear and easy to understand. Interestingly, Wallethub conceded it was difficult to make “apples-to-apples” comparisons between checking accounts at different banks because of the fee-generating activities at banks. “The sheer number of different fees associated with checking accounts prevents effective product comparison,” noted the report, “and decreases the likelihood that consumers will find the best checking accounts for their needs.”

The study’s other key finding was this same lack of uniformity in how fee structures are revealed can “inhibit” efforts by consumers to shop around for accounts that will have the least effect on their pocketbooks. According to SNL Financial, the nation’s three largest banks collected $6 billion in 2015 from fees charged for overdrafts and ATM withdrawals; that’s not counting other fees collected.

Of course, most of us are familiar with the fees we pay every month, and may even consider them a cost of just having the security and convenience provided by a checking account. But you may not, for example, realize you might be charged a fee to check your balance at a non-native ATM, to get a cashier’s check or even to deposit loose change.

If you are shopping around for a low-fee checking account, Wallethub recommends checking out credit union and online-only banks (which don’t have to pay for bricks-and-mortar branches). On the downside, you will lose the valuable personal touch you get from your local bank branch; that by itself makes paying fees worthwhile to some folks. Credit unions, though, didn’t make it through the study unscathed; Wallethub noted that credit unions it surveyed fared worst when it came to whether they disclosed fee information in a transparent and clear way.

Here are three of Wallethub’s other recommendations for choosing a checking account; read the complete list here:

  • Read the fee schedule thoroughly: “Absence of a fee from the product page does not necessarily mean the fee is $0,” Wallethub notes. “Consumers should always review the fee schedule before opening an account to avoid any surprises in the future.”
  • Remember — not all fees are disclosed: Don’t assume, just because there is a published list of fees, that they are all disclosed. So watch out for language like: “A full/complete fee schedule will be provided after sign-up.”
  • Use other accounts, too: It might be a good idea to “strategically supplement” your checking account with an attractive savings account and/or credit card offer to make your financial management as efficient and rewarding as possible. And consider other options, like prepaid cards. Having a diversified set of financial institutions can help you save money if you find the right ones to meet your habits and lifestyle.

ATM Skimmers on the rise

via Moak: Crooks target ATMs, clarionledger.com

PDF: Skimming

mainatmsafetytips

Bankofutica.com

Recently, media across the nation covered a story that should strike fear into the heart of anybody who uses an ATM card to withdraw cash from automated teller machines. Thieves have learned to use “skimming” technology to great effect, enabling a six-fold increase in the amount of ATM fraud in just one year.

Moak: Millennials are card smart

The phenomenon had been reported by FICO Card Alert Service, part of the organization behind those ubiquitous credit scores. According to the organization, the one-year increase was the biggest since it started keeping tabs on ATM fraud. FICO Card Alert Service monitors hundreds of thousands of ATMs across the nation.

“Criminals are taking a quick-hit approach to ATM theft and card fraud,” said T.J. Horan, vice president of fraud solutions at FICO, in a blog post. “They are moving faster to make it harder for banks to react and shut down the compromises. They are targeting non-bank ATMs, which are more vulnerable — in 2015, non-bank ATMs accounted for 60 percent of all compromises, up from 39 percent in 2014.”

ATM skimming isn’t exactly new; it’s been around for at least a couple of decades. The technology has gotten better and harder for most of us to detect, but it usually involves placing an illegal card-reading device on an ATM. Consumers unwittingly swipe their cards through the reader, capturing the card’s electronic information. Then, tiny cameras hidden nearby record consumers’ fingers as they enter their personal identification numbers. Equipped with those two pieces of information, crooks can then create fake cards, which can then be used to drain your bank account.

According to FICO, the most vulnerable ATMs were located in places like bars and convenience stores (these machines saw a 10-fold increase in theft from 2014 to 2015.) Often, consumers don’t pay a lot of attention to the ATM itself, and assume the machine is secure. And if it’s in a loud place with dim lighting — like a casino, bar or busy restaurant — it might be harder to determine the presence of skimming equipment. In some places, the lack of video surveillance may encourage crooks to target that location.

And while many consumers have been — or will soon be getting — new cards with “smart chips” that are usually more secure, most cards still use the old magnetic-strip technology that’s easier to compromise. If you have been a victim, you generally can get your money back, but you need to report it as soon as possible so your funds can be restored quickly.

Moak: Banks better at thwarting fraud

To avoid being victimized by skimming fraud, FICO Card Alert Services suggests the following:

  • If an ATM looks odd, or your card doesn’t enter the machine smoothly, consider going somewhere else for your cash. A location inside a bank branch is less likely to have been compromised, although some have been.
  • Contact your card issuer if you have completed a transaction and suspect that your card or PIN may have been compromised.
  • Check your card transactions frequently, using online banking and your monthly statement, and quickly challenge anything you didn’t authorize.
  • Ask your card provider if it offers account alert technology that will deliver SMS text communications or emails to you in the event fraudulent activity is suspected on your payment card.
  • Update your address and cellphone information for every card you have so you can be reached if there is ever a critical situation that requires your immediate attention.

How to control overdraft fees

no-more-overdraft-fees

moneyramblings.com

via Moak: Banks pulling in billions in overdraft fees, clarionledger.com, 3/7/2016

A generation ago, overdrawing your checking account could mean big trouble. Writing a check you couldn’t cover would subject you not only to fees from the merchant, it could also mean embarrassment, shame and possibly legal trouble. Those things are still true, but some consumers in recent years have been using a different approach — paying the bank to “cover” those overdrafts, whether unintentional or not.

A couple of decades ago, banks began offering services to “protect” account holders from the embarrassment of having to explain yourself to the neighborhood grocery store or drugstore. For the privilege of having the bank provide this service (known as NSF, or non-sufficient funds services), banks began charging fees — sometimes, steep ones. Our bad money management or math errors, it turns out, can cost us a lot.

According to a new report detailing NSF revenue during 2015 from the Consumer Financial Protection Bureau (CFPB), the nation’s 628 largest banks took in $11.16 billion in overdraft fees during 2015, amounting to about 8 percent of their net income. (That doesn’t count fees charged by many smaller banks or credit unions.)

According to the CFPB, institutions are required to file detailed quarterly public financial statements, known as Call Reports, with the Federal Financial Institutions Examination Council (FFIEC). “Until last year, banks did not break out consumer overdraft and NSF fee revenues; they combined these fees with other fees into what is called “deposit service charges,” noted the CFPB’s Gary Stein in a blog post. “For the first time in 2015, banks with over $1 billion in assets and that offer consumer deposit accounts began also reporting certain categories of fees — including overdraft and NSF fees— earned on consumer accounts separately from other deposit service charges. For the fourth quarter of 2015, there were 628 banks subject to this new requirement.”

Strictly speaking, an overdraft occurs when your account lacks the funds to cover checks, electronic debits, ATM withdrawals or other transactions that hit your account. For example, if you have $50 in your checking account, and you use your debit card to buy $35 worth of gas, then $20 in groceries, your account will be overdrawn by $5. The bank can choose to “cover” that overdraft — and if it’s a rare occasion for you, may elect to do it as a courtesy. But banks can and will charge you fees for NSF services, and it could get expensive (in some cases, much more than the amount of the overdraft). You may incur the fee several times in a day, resulting in hundreds of dollars of fees in a single day in some instances. Controversy (and class-action lawsuits) have arisen over the way fees are charged, even the order in which charges hit the account.

In 2010, new regulations went into effect, requiring that institutions get your consent to provide NSF services, and allow you to “opt out” of these programs if you want. According to the law, if you have opted out, you cannot be charged for most overdraft transactions using your debit card; it will just be declined when you try to use it. However, if you’ve written actual checks, or allow merchants to make automatic withdrawals against your account, you can still be charged fees for those items if they hit your account and there aren’t available funds. If the bank chooses not to cover them, you will still likely be charged fees (in addition to whatever the merchant charges you.) For more on this, visit https://www.fdic.gov/consumers/overdraft/.

To help consumers reduce or avoid overdraft fees, Stein offers this advice:

  • Consider opting out. “Your bank or credit union can’t charge you a fee for an overdraft with your debit card or at an ATM unless you “opt-in” to overdraft coverage for these transactions,” Stein notes. Remember, though, your debit card will be declined if there isn’t enough in the account; you’ll need to decide which is worse; the embarrassment or inconvenience of having your card declined, or being charged the overdraft fees.
  • Link your checking account to a savings account. If you overdraw your checking account, your bank will take money from your linked savings account to cover the difference. You may be charged a transfer fee when this happens, but it’s usually much lower than the fee for an overdraft. (And the law also restricts the number of such transfers, so it’s not an option you can use often.)
  • Apply for a line of credit or linked credit card. You may have to pay a fee when the credit line is tapped, and you will owe interest on the amount you borrowed, but this is still a much cheaper way to cover a brief cash shortfall.
  • Track your balance. If your account balance is consistently low, it’s a good idea to sign up for low-balance alerts. Make sure to account for automatic transactions, such as a recurring withdrawal by a utility or insurance company. You also need to know when the funds you have deposited become available for your use.
  • Shop around. Bank fee programs vary, and smaller, community-based banks or credit unions may offer better fees to get your business. Banking is a highly-competitive business, and there are lots of options.

Ultimately, the best way to avoid overdraft services is not to need them at all. Awareness of your available funds, protected by a “cushion” in case you make a mistake, means that you won’t have to worry about it in the first place.

 

 

Banks better at thwarting fraud

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via Moak: Banks better at thwarting fraud, clarionledger.com, 2/3/2016

PDF: Banks getting better at fighting fraud

Banks are usually pretty peaceful places. Visit a local branch, and you will probably find a calm environment, hopefully with friendly people and nice surroundings. But behind the scenes of most banks, a constant battle against fraud is raging. Constantly, people are attempting to commit all types of bank fraud, and all banks work hard to ensure most of these fail. And fail they do, most of the time.

On Wednesday, the American Bankers Association issued an amazing statistic: During 2014, U.S. banks stopped more than $8 of every $10 of attempted deposit account fraud. That information was included in a report with the ponderous title of the 2015 American Bankers Association Deposit Account Fraud Survey Report.The survey included data from 101 banks nationwide.

According to the ABA, fraudsters attempted $13 billion in bank fraud, and bank security measures were credited with stopping $11 billion which might have been stolen.

“Banks’ sophisticated fraud prevention systems and customer vigilance successfully stopped 85 percent of fraud attempts in 2014,” said Doug Johnson, senior vice president, payments and cybersecurity policy at ABA. “We saw an increase in fraud losses in 2014 most likely due to the number of large-scale retailer data breaches, which resulted in a significant increase in attempted debit card fraud.”

Since banks bear much of the financial responsibility when fraud occurs, it’s a big problem. Even with an 85 percent success rate, fraud against bank deposit accounts cost the industry $1.9 billion in losses during 2014, an increase from $1.7 billion in 2012.

Much of that fraud (66 percent) was incurred on debit card accounts, such as counterfeit cards, card-not-present transactions, and lost or stolen cards. Paper check fraud still accounted for nearly a third of the remainder, even though the use of paper checks is declining as electronic transactions increase. The most common check fraud categories were counterfeit checks and return deposited items. The rest involved wire and other types of electronic banking.

Apparently, though, online security is getting better. Even as thieves attempted to defeat online security measures, they were thwarted more often, leading to a “significant” drop in losses during the year; your chance of being affected by online banking fraud is fewer than 1 in 1,000.

“Banks recognize that many customers are moving online to perform banking transactions and have invested billions of dollars to create very effective online fraud prevention systems that include features like multi-factor authentication and monitoring IP addresses,” Johnson noted.

To help make sure you don’t become a victim of bank fraud, the ABA recommends these tips:

  • Don’t share your secrets. Don’t provide your Social Security number or account information to anyone who contacts you online or over the phone. Protect your PINs and passwords and do not share them with anyone. Use a combination of letters and numbers for your passwords and change them periodically. Do not reveal sensitive or personal information on social networking sites.
  • Shred sensitive papers. Shred receipts, bank statements and unused credit card offers before throwing them away. (A number of organizations periodically offer community shredding events, in which they’ll destroy your documents for free.)
  • Monitor your accounts regularly. Rather than waiting for your monthly statement, use online banking to monitor transactions on your account regularly. If you see a fraudulent transaction, notify your bank immediately.
  • Sign up for text alerts. Sign up for text or email alerts from your bank for certain types of transactions, such as online purchases or transactions of more than $500.
  • Protect your mobile device. Use the passcode lock on your smartphone and other devices. This will make it more difficult for thieves to access your information if your device is lost or stolen. Before you donate, sell or trade your mobile device, be sure to wipe it using specialized software or using the manufacturer’s recommended technique. Some software allows you to wipe your device remotely if it is lost or stolen. Use caution when downloading apps, as they may contain malware and avoid opening links and attachments — especially for senders you don’t know.
  • Keep an eye out for missing mail. Fraudsters look for monthly bank or credit card statements or other mail containing your financial information. Consider enrolling in online banking to reduce the likelihood of paper statements being stolen. Also, don’t mail bills from your own mailbox with the flag up.
  • Monitor your credit report. Order a free copy of your credit report every four months from one of the three credit reporting agencies at annualcreditreport.com.
  • Protect your computer. Make sure the virus protection software on your computer is active and up to date. When conducting business online, make sure your browser’s padlock or key icon is active. Also look for an “s” after the “http” to be sure the website is secure.
  • Report any suspected fraud to your bank immediately.

For more on stopping bank fraud, visit http://www.aba.com.

Fraud, ID theft top consumers’ nightmares, studies find

Clarionledger.com, 9/28/2015

PDF: Studies – Consumers fear fraud, ID theft

Americans are gearing up to do battle on their doorsteps this weekend. The foe takes the form of tiny superheroes, movie baddies and zombies demanding candy. It’s OK, though; we know that underneath the masks are sweet kiddies, not real monsters. But increasingly, many people are worried about the real threats that lurk under the bed – ghouls who can take your life savings with a keystroke, derail your carefully-laid plans for retirement or your kids’ education, or even destroy your reputation.

Within the past week, news of two separate studies (from Bankrate.com and the American Bankers Association) hit my inbox, highlighting the fact that Americans are worried about their financial and information security and feel vulnerable to predators.

Much of the angst stems from recent data breaches, which have exposed the security vulnerabilities in a system trusted to protect vital information. Hardly a day goes by that we don’t hear about some new breach, whether it’s customer contact information, credit card numbers, or embarrassing publication of names from sites like Ashleymadison.com. All this bad news is eroding our trust in the financial system at a time in which technology should be giving us more security than ever.

According to Bankrate’s study, nearly eight in 10 Americans worry about having their identity stolen. Nearly a quarter of consumers described themselves “very frightened” about the prospect of identity theft.  Then there’s this shocking claim: about half of Americans (46 percent) report that they’ve either been a victim of identity theft or know someone who was. That’s up significantly (12 percent) from just a few years ago.

While about one in five consumers (many of them Millennials) appear oblivious to or unconcerned about the threat, many have taken it seriously. Many in the Bankrate.com study say they aren’t checking their credit reports regularly, and 41 percent say they conduct banking and other sensitive tasks on unprotected Wi-Fi networks that don’t require a password. Both of these activities could help detect fraud, or prevent it from happening in the first place.

“When asked where cardholders feel most vulnerable to fraud following a credit card purchase,” the ABA’s study concluded, “64 percent say they are most concerned about hackers breaking into retailers’ computer systems, compared to just 16 percent who cite physical card theft and 13 percent who cite “phishing” scams.”

Similarly, the ABA study found that many worried consumers are holding the system responsible. Nearly eight in 10 consumers believe the government should “hold retailers, banks and other companies involved in the payments system to the same security standards.”

“Millions of Americans have had their most sensitive information compromised in retailer data breaches, so it’s understandable that consumers are concerned that retailers aren’t doing more to prevent future hacking incidents,” said Doug Johnson, ABA’s senior vice president of payments and cybersecurity policy. “These survey results reaffirm what we’ve believed all along.  Retailers need to join with banks and payment networks to combat fraud and focus on the future by updating their payment security systems and proactively working to address emerging threats head-on.”

The recent card conversion was part of a “liability shift” for credit and debit-card fraud, in which merchants could bear the cost of fraud if they don’t take sufficient steps to secure the data. Previously, such liability was borne almost exclusively by banks and the financial system.

That’s especially true with the recent conversion to new card reader (EMV) technology; the messy transition has confused customers and reinforced existing security concerns. “Following high-profile data breaches at major retailers including Target and Home Depot, 94 percent of consumers say it is important for retailers to upgrade their security controls, and 70 percent say retailers should be installing EMV chip-enabled card readers as soon as possible,” the ABA noted.

But many merchants and industry groups have protested that the new technology – while a step in the right direction – is vulnerable because it doesn’t take full advantage of the security features available, besides being expensive and difficult to implement. For example, the new EMV cards still in many cases don’t require the use of a PIN, a feature which could enhance security.

The National Retail Federation (NRF) and other industry groups have been vocal about these concerns. “EMV is all new to me, and banks and the networks are not contacting small businesses to help the transition in any way,” noted small business owner Keith Lipert, who recently testified before Congress on behalf of the NRF to protest the new requirements. “No one from my bank, processor or existing supplier even contacted me about the need to add a new EMV device, let alone a deadline by which to do so.”

The NRF’s David French recently stated that credit and debit card fees are the second-largest expense for many small businesses after labor, and that the card industry imposes “a multitude of complex rules on small businesses.” Chip-card readers and installation can vary from “a few hundred dollars to thousands of dollars” per terminal, he said, with an industry average of $2,000.

Whatever the outcome of this battle will be, consumers are looking for a hero to protect them from the very real monsters that wait to prey upon their livelihoods, identities and futures. So far, said hero remains out of sight.