Saturday, November 22, 2014

Personal Financial Health Season

As we approach Thanksgiving and get inundated with pleas to spend a lot of money for the upcoming holidays, I declare this the beginning of Personal Financial Health Season. Why? Because this is the time that fraudsters, identity thieves, and other miscreants target our wallets hoping that we we’ll be spending too much money and be too wary to be diligent about our finances. Remember the Target breach of 2013 and use it as a reminder that we as consumers are easy targets this time of year.

The informed consumer is the safe consumer. Before you get wrapped up in the chaos, take some time now to reflect on your financial health and prepare yourself for the upcoming weeks. Here are some suggestions on how to do that now and throughout the year:

  1. Ditch the debit card. Always remember this - your debit card is directly connected to your bank account. When some miscreant is able to capture your card and PIN number, your account will get drained. Banks will tell you that you’re not liable, but that’s only if you catch the activity in time. And, banks are much less willing to give you money back than to simply not pay the charge, which is how credit cards work. If you cannot use a credit card, use cash instead.
  2. Examine your free annual credit reports. Give yourself an hour or two to download and review your annual credit report from AnnualCreditReport.com. This will help you avoid any nasty surprises when you go to apply to finance one of those great new TVs, computers, or vehicles. If you find something that’s out of order, check out my prior Identity Theft posts for instructions on how to dispute errors and clean up your records.
  3. Add charge alerts to your credit cards. In my experience, most credit cards have the ability to alert you via email or text message when they’re used to make a charge over a certain threshold. During most of the year, I suggest setting an alert for large or non-present (e.g. Internet) purchases. In mid-November, I suggest changing the threshold to something very low, like $1. It may be annoying, but it would give you an opportunity to rapidly identify a bogus charge. Many times, miscreants will start with a very small charge to test whether it will go through before committing to a large charge. Also, scammers often hit cards en masse with sub-$20 charges in hopes that those charges get lost in the purchasing noise.
  4. Avoid shopping at unknown Internet sites. Fraudsters love to cash in on holiday spending with sites that lure you in with steep discounts on popular products only to stiff you on the delivery. 
  5. Check your financial statements. When you get past your spending hangover, double check all of your financial statements to make sure that nothing is amiss. Banks love to tell you that your not responsible for fraud, but that only applies if you detect the problem within 30-90 days, depending on the account.

For those with teenage children, consider giving the gift of a free credit report for those 15 and older as well. I suspect that kids will represent big targets for credit fraud as more of their personal information (think date of birth, mother’s maiden name, address, etc.) leaks online. Since they don’t normally expect to have credit records before they graduate high school, most don’t even think about their financial health. However, since many banks will issue debit cards to kids at 16 and some may even let younger kids get credit at earlier ages with a parent co-signer, fraudsters typically have a few years to destroy a young person’s credit without them even knowing. I haven’t heard of this happening, but as a security professional who focuses on how to attack people and systems, I know that the pieces are already in place for youth identity theft to be a big problem.

Be a safe consumer. Stay on top of your financial health.