With giant hacking incidents at major companies dominating recent headlines, it may feel like data breaches are becoming part of daily life. No doubt you're wondering what the consequences really are. How likely is it that your credit or debit card information will end up in the hands of thieves?
Experts are just starting to sort out how widespread the impact of these hacking incidents is on consumers. Despite the fact that news of these events are becoming routine, the consequences can be very real. More than 20% of data breach victims in 2012 became fraud victims, according to a report from Javelin Strategy & Research, a leading research firm focusing on customer transactions. That number is expected to increase as these events continue.
As a result, retailers, banks, credit and debit card issuers and security experts are taking steps to counteract the hacking mania. And consumers need to take action, too. Here are some of the latest advances that may help protect your financial information along with advice on what you can do to avoid data breach problems.
1. Consider switching to a chip card for in-person purchases
When you shop at a brick and mortar store, you face a specific type of hacking that entails thieves getting hold of your credit or debit card information from the stores' computers. Chip cards are designed to avoid some of that risk. In the coming year, experts expect many banks in the U.S. to replace debit or credit cards with versions that have tiny computer chips embedded in them. These chips encrypt your card information with a special code during each transaction that makes it harder for thieves to steal your account information. Current cards rely on magnetic strip technology that can be more vulnerable to hacking.
A handful of major banks have already begun to issue cards with chip-enabled technology and many others have announced plans to do so. The chip technology is widely used overseas and is considered the global standard.
Even if you switch soon to a chip card, you'll still need to be careful. Most retailers do not have payment terminals that accept the cards and experts don't expect chip-compatible readers to become common until October 2015. As a result, most chip cards are being issued with the magnetic strips as well so consumers can use the cards in the interim.
2. Look for security-minded online retailers
Online shopping poses its own risks. Because chip cards protect against fraud only when you're shopping in a store, the encryption device will not work for online shopping. Some experts believe there may be a higher incidence of online fraud when chip cards become more popular. As a result, online stores are considering additional protections.
Some sites already send a special code to your mobile phone that must be used to complete a purchase. This process is called two-factor authentication. Many credit cards use this also — for instance, when you are asked to provide your ZIP code when making a purchase. Many email, social media and other online accounts use two-factor authentication as a way of protecting your account information. You may want to patronize online retailers and services that make this extra security push.
3. Replace your credit or debit card after a breach
In many cases, if your data has been compromised in a major breach, your bank or credit card issuer will notify you and let you know a new card is on the way. If you think you've been affected by a major incident and don't hear from your card issuer, call them directly and ask for a new card. This will shut down your old account and avoid fraud.
Be sure to change your PIN on any new debit card and change the passwords for any email address or online account associated with your card. In big hacking incidents, all of your information, not just your card number, may be captured by thieves.
Replacing your card means you'll need to update all of your accounts in which automatic payments are made. Keeping a complete list of all these accounts in a secure place can help make this process easier.
4. Monitor your accounts closely
Not all hacking incidents make the headlines, and, even when they do, the announcements happen weeks or months after the data has been stolen. That's why it makes sense to check your credit and debit accounts for unauthorized charges as often as every few days. And, don't rely only on your account statements to keep track of your purchases. You need to keep your own account of charges and payments so you can tell quickly when something is wrong. Even a small charge of a dollar or two can signal big problems because thieves often test account information with small purchases before committing larger fraud.
Consider signing up for email alerts when a purchase is charged to your account. Many banks and credit card issuers offer this service free of charge. In addition, retailers often provide free credit report monitoring services to victims of data breaches. Be sure to take advantage of this offer if you're eligible. Many credit card companies also offer paid credit monitoring services. You may want to consider signing up for one of these services.
5. Beware of unusual emails
Thieves who engage in phishing scams love to capitalize on headline-making data breaches. Beware of emails asking if you've been a victim of a recent high-profile hacking scam and offering help. Never click on a link included in these or other suspicious emails. Best practice: Always delete any emails you receive from unknown senders.
Dan Dobbs
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