Debit Cards vs. the Fraud at Target Stores

With the recent electronic data theft from Target, Neiman Marcus, and others in the 4^th quarter of 2013, many people are looking for an alternative to their bank or credit union issued debit card. We are getting a lot of questions like:

•          How safe is my debit card?
•          What happens if I find unauthorized electronic debits in my bank statement?  
•          How do I get reimbursed for unauthorized usage of my card? How long does it take?

Bank customers and credit union members all over the country have concerns about the safety of their data. Let’s be clear here, your financial institution very likely has the best anti hacking software made today. There has not been a significant breach of banking data since 2011. How often are retail merchants the victim of identity theft hackers? It seems like every month we hear about a new breach! 

The problems really lie with the retailers like Target. Their security was so poor the thieves were able to use common malware that had been used before in other data breaches and the bad guys didn't even encrypt where the money was going! Essentially, Target was broken into by an amateurish gang who left all kinds of evidence of what was happening, but Target’s IT department failed to recognize the danger. (See the article in the Minneapolis Star Tribune  for a story on the methods of the thieves.) 

Target will not be paying for anyone’s monetary losses resulting from the fraud. They won’t be paying the millions of dollars it cost the financial institutions to replace all the compromised debit and credit cards. Retailers have no responsibility to their customers when there is a data breach. For many of you this is a very surprising revelation but that is how it works today. The financial institutions are forced to pay for their customer’s losses after a hacker has broken into the merchant’s computerized payment system. Target’s breach cost banks and credit unions $200 million so far! It cost credit unions in Wisconsin $750,000 alone. The numbers for California are still being calculated.

(Okay, I am done with my “I am so mad at Target’s weak data protection.” screed. Now, let’s talk about Debit Card security.)

The debit card is a viable alternative for paying in store charges as well as preauthorized transfers. When managed properly, it has very strong anti-fraud/anti-theft procedures. The Federal regulation known as Regulation E provides consumer protections for fraud against unauthorized use of a debit card. One has 60 days from the issuance of their account statement in which the problem or error occurred to contact their financial institution and file a Reg E complaint. This is true for banks and credit unions.

Once the complaint is filed it takes about 48 hours for most institutions to issue provisional credit to their clients for the disputed items. Each will have a different procedure so you should make yourself familiar with the procedure at your institution. The reimbursement is pending an investigation into the fraud. Most investigations are completed within 10 days resulting in final credit or revocation of credit. Reg E limits a consumer's liability for unauthorized electronic fund transfers, such as those arising from loss or theft of an access device, to $50; if the consumer fails to notify the depository institution in a timely fashion (>60 days after the statement was issued), the amount may be $500 or unlimited.

The key to this is that customers of banks and credit union members need to keep an eye on their accounts. It is so much easier today than 10 or 15 years ago as we now have online and mobile banking. Our customers and members can keep up on their accounts while on the run and be able to address any inconsistent transactions immediately with their institution. The faster someone reports an unauthorized transaction, the faster the institution can reimburse them.

One of the reasons credit cards are being pushed as a payment alternative is that the credit card companies are pushing this issue and have been for many years. My friends at Visa would want people to pay all their bills and groceries with a credit card and then write one check at the end of the month to pay all. According to the credit card companies this protects your checking account from being exposed to fraud. Of course, the credit card companies would be very pleased if you could only pay a portion of their bill. Then the consumer will be paying interest and that is the issuers’ primary desire!

For domestic payments, I would use my debit card and keep a close watch on my checking account thru my online banking program. I would definitely use a credit card when traveling internationally.

*   *   *

Our Next Free Teen Financial Education Class:
Real World Budgeting for Teens and College Students
Saturday, March 22, 2014 - 10:00 -11:00 a.m.
Chesbro Financial Center, San Jose, CA

Attend this FREE, fun and interactive class made just for teens! Various life scenarios involving everyday finances are covered:

• Learn how to make wise money decisions when starting an "adult life".
• Learn tips and find out the steps on how to rent that first apartment.
• Learn the best tricks for making ends meet when you are on your own.
• Find the hidden costs of being on your own.
• Learn how saving money can improve your lifestyle.
• Learn how your down payment on your first car can effect your payment and interest rate.

Teens, learn what it's like to be on your own in the real world!

Parents are also welcome to attend.

RSVP today to Greg Meyer, Community Relations Manager - gmeyer@meriwest.com or call (408) 365-6328

What do you know about Identity Theft?

With the recent news about Target and Neiman Marcus getting their customer records hacked, we thought it was the right time to focus our blog on identity theft.  

Today we present some important statistics about identity theft. As you read some of these frightening numbers, I hope you will take some extra time to consider what you and your family are doing to prevent yourselves from being victims. 

Recent Identity Theft Statistics

Compiled from the FBI and U.S. Bureau of Justice Statistics 

·         As many as 12 million Americans are victims of identity theft annually. That’s over 32,000 victims per day.  

·         About 15% of ID theft victims don’t find out for four years.   

·         85% of incidents involved the fraudulent use of existing account information, such as credit card or bank information.  

·         Nearly $250 billion a year is lost by businesses who are victims of identity theft.  

·         14% of victims experienced an out of pocket expense of >$1. About half of those experienced losses of more than $100.  

·         On average, a victim of identity theft will lose between $2,000 and $14,000; victims will subsequently spend an average of $851 to $1,400 in expenses related to their case.  

·         If 14% took losses of some sort, then 86% were victimized and had to have, at minimum, a new checking account and/or a debit or credit card re-issued for them. The costs of these replacements are generally born by the financial institution.  

·         Over 50% of victims have most of their issues solved after 24 hours. About 29% spend about a month resolving problems.  

·         The total average of time spent repairing the damages realized through identity theft is approximately 330 hours.  

·         50% of identity theft victims experience trouble getting loans or credit cards as a result of identity theft.  

·         20% of victims will experience higher credit card rates, while 16% of identity theft victims have higher insurances rates because of the theft.  

·         72% of identity theft victims will have trouble resolving or terminating the negative information left on their credit reports or other information left on their personal records.

WHAT TO DO IF YOU'RE A VICTIM OF IDENTITY THEFT

Step One: Contact the fraud department of the three major credit bureaus

·    Experian (TRW) 888-397-3742

·    TransUnion 800-680-7289

·    Equifax 800-525-6285

Step Two: Contact the account issuer in question

·    Ask for the fraud/security department of the compromised or fraudulent account issuer.

·    Notify them by phone and in writing.

·    Close all tampered or fraudulent accounts.

·    Ask about replacement cards.

Step Three: Contact your local police department

·    Notify the police department in the community where the identity theft occurred.

·    Obtain copies of all police reports made.

Keep a detailed log of all contacts:

·    Location called.

·    Name of person(s) you spoke to.

·    Title and call back number with extension.

• Ask and write down what the procedures are for that entity.

*    *    *

The Credit Myths Workshop provides you with information on the top ten myths of managing credit. Join us to bust some myths and catch up on the latest methods of managing and protecting your personal credit.  

Our next FREE Credit Myths financial education workshop will take place:

January 22^nd 6:30 pm 

Meriwest Credit Union Main Office Training Room

5615 Chesbro Ave

San Jose CA 95123 

To RSVP, please contact Greg Meyer at gmeyer@meriwest.com or 408-365-6328

Money Scams – Everyone wants your Money!

There are a lot of scams out there. People use them to separate you from your goods and money. One of the latest in the San Francisco Bay Area is the “Snake Scam.” This is where a nice looking lady in an Animal Control uniform appears at your door and tells you that there is a snake infestation in the neighborhood. She needs to show all the members of the household where she will set the traps. Once the lady has you in your backyard, her associate is pillaging your home for cash and jewels. They can also present themselves as a gas & electric worker or a cable TV installer. Ask for ID from anyone attempting to enter your home to perform services. If you are suspicious, call the company and check on them before allowing them in. If they are scamming you, they will run away.

Another popular scam used on older people is the “Lottery Ticket Scam.” Two people approach the “Mark” and one will say he has the winning lottery ticket. He will have a ticket with the winning numbers purchased on the date of the lotto drawing. However, the time is after the drawing, but the victim does not usually see that. The scam is that the person with the ticket is an undocumented alien and cannot cash the ticket and needs a citizen to cash it for him. The victim is asked to put up thousands in “good faith” money in cash. Yes, eventually the bad guys disappear with the good faith money and the Mark, our victim, is left holding a worthless lottery ticket.

Let’s not be victims. Let’s do some things that will protect us. Sometimes, little things make a big impact.

1. On all debit and credit cards, take a permanent marking pen and write, “Ask for ID” in the signature portion on the back of all your cards. Don’t sign it. You are only giving the bad guys an example of your signature to copy and forge. The idea is when a thief is buying a big ticket item he gets stopped when asked to present ID. Per Visa, a merchant may ask you to sign the card, but cannot refuse your transaction if you produce valid government identification such as a Driver’s License or State ID Card.

2. Utilize a good firewall and antivirus program to protect your computer and any data from hackers and spammers. A good firewall makes your computer anonymous to the internet, meaning your computer and your transactions cannot be seen by hackers. Good internet security software might cost as much as $60. Never download or click on links from someone you do not know. What is your peace of mind worth today?

3. Consider electronic banking and bill pay to avoid ID Theft. -Paying your bills with a check provides a thief with your name, address, bank routing number and your account number, as well as an example of your signature. Online Bill Payments are electronic and leave nothing like that to be used against you. Plus they save on the cost of checks and postage.

Utilize e-statements instead of a paper statement mailed to your mailbox. It’s easy for thieves to access your mailbox during the middle of the day. E-statements provide access to your account transactions and details quicker and are more secure. Not to mention they save on paper and postage, so you’re helping the environment. And if you need a copy, you can download and save your statements or print them from your home computer.

Consider “Alerts” with online banking. Setting up alerts can provide you with information on what’s happening to your accounts at any time, including transfers, withdrawals and deposits.

4. If you don’t want to use online banking, don't mail your bills by sticking them in your mailbox to be picked up by the postman. Thieves patrol streets on the 3rd thru the 5th of the month and after the 15th to fish for money in bill payment envelopes. Mail your bills in a U.S. Postal mail box or at the post office only!

5. Shred old banking documents you no longer need. It keeps your personal data away from thieves. If you don’t have a shredder, I would bet your local credit union branch will help you by taking a small stack of documents and adding them to their secure shredding. Also, many office supply stores offer secure shredding at low prices.

*          *          *

Free Financial and Business Workshops presented at Meriwest Credit Union

Writing an Effective Business Plan and Access to Business Capital

• Write a business plan that gets noticed!
• Gain an understanding how lenders view business loan applications

Sept. 12^th – 6 PM

Meriwest Credit Union Main Office

5615 Chesbro Ave

San Jose CA 951123

Please RSVP with Dan Golding at dgoldin@meriwest.com or 408-632-4180

Real World Budgets for Young Adults

• For Teens and College Students: Learn about money while building your post college budget!
• Start managing your money today!

Sept. 18^th – 6:30 PM

Meriwest Credit Union Main Office

5615 Chesbro Ave

San Jose CA 951123

Please RSVP with Greg Meyer at gmeyer@meriwest.com or 408-365-6328

                   

Credit Myth and Repair

• Learn the Top Ten Myths of credit that are not necessarily true!
• Learn how to correct errors on your credit report.

Sept. 25^th – 6:30 PM

Meriwest Credit Union Main Office

5615 Chesbro Ave

San Jose CA 951123

Please RSVP with Greg Meyer at gmeyer@meriwest.com or 408-365-6328

Moving and Credit

There are some things that can happen to our credit when we move and it can be very troubling. Lost or misplaced statements may mean missed bills. On utilities it is not so bad as we typically have a couple of months to pay our cable or water bill. However, our credit runs on a 30 day cycle and missing a payment on a Visa card can hurt our FICO score pretty dramatically. There are some tips below for getting your mail forwarded properly.

  

When we move, we buy a new home and may go to multiple lenders to access a loan at good terms or we may have multiple inquiries for rental housing. Typically, those multiple inquiries from home lenders will be treated as one inquiry for our scoring. They will appear as multiple inquiries on our credit report and will remain there for two years but only have an effect on our score for one year. Inquiries comprise only about 10% of our total FICO score.

Another thing we do when we move is close accounts. A bank may be a regional bank, but its Visa or Mastercard is accepted worldwide. There is seldom a need to close a VISA or M/C unless the terms are unfavorable. Closing these cards reduces one’s credit score and your borrowing capacity; sometimes eliminating years of experience from a record. Be selective and careful when considering closing a credit card. Consider closing a card if a card has a small line of credit or is related to a regional or specialty store that is not available in your new town.

Clean up your old records before you move. This is a good time to shred old records and prevent ID thieves from getting their hands on them.

Here are some mail forwarding tips:

Before you move:

1. File your forwarding address with the post office at least two weeks before you move. Not only does this get your bills and statements sent on to your new home it prevents identity theft. Old statements in a mailbox are like candy to an ID thief. The post office will mail a letter to your old address to verify this change.
2.  While you are at the post office, get a change of address kit from them. Sit down at home that night and send a change of address to every company that sends you a statement or a bill. Some statements only come quarterly so be sure to check. Make sure you have the effective date of your move correctly entered. With some bills, creditors and financial institutions, you may be able to change your address online or over the phone. Note on your list who you called and to whom you sent a notice.
3. During your move: Ask a neighbor, landlord, or friend to check your mailbox to ensure the forwarding and address changes went thru and pick up any mail that does not get forwarded.
4. After your move: Contact the new tenants or homeowners and provide them with you contact data in case any of your mail fails to get forwarded in the future. 

*     *    *


Our next financial workshops are:
Oct. 17th  - 6:30pm
Real World Budgets for Teens and College Students
Sunnyvale Financial Center at Fair Oaks and El Camino Real in Sunnyvale. 
RSVP with Gmeyer@meriwest.com


Oct. 24th  - 6:30pm
Credit Myths and Repair
Sunnyvale Financial Center at Fair Oaks and El Camino Real in Sunnyvale. 
RSVP with Gmeyer@meriwest.com

Financial Self Defense - ID Theft and Technology

 A recent study put together by The Javelin Group has some disturbing findings: The incidence of identity theft in 2012 was up 13 percent, compared to the previous year. The total amount stolen was about the same, but the thieves successfully scammed more people.

Facebook, Google+ and LinkedIn users take heed: The study found that there were specific factors that put social media users at elevated risk of getting scammed:

• 68 percent of social media users publicly shared their birthday.
• 63 percent shared the name of their high school.
• 18 percent shared their phone number.
• 12 percent shared their pet's name.

All of the above information represents the kinds of things a company would use to verify your identity, according to the study's authors. In some cases, scammers have been known to bluff their way through customer service representatives to get access to other important information - and even wipe out entire accounts. When young or vulnerable people share this information, it could make them more susceptible to stalkers or sexual predators.

The Smartphone Factor

The study also found that smartphone users were a third more likely to be victims of identity theft than non-smartphone users. This doesn't mean, necessarily, that smartphones are to blame. But it does seem to indicate that the people who use smartphones are doing something to make them more vulnerable or attractive to scammers.

What can you do to avoid being a victim?

• Password protect your phone.
• Don't use credit cards for Internet transactions over public networks. Thieves have "sniffers" that can extract that data.
• Don't store credit card numbers or bank account information on your laptop.
• Use different passwords for mobile banking apps on your phone than passwords you do for your phone and email.
• Promptly report any suspicion that your sensitive personal information has been compromised.
• Keep documents that list Social Security numbers off of your laptop, or encrypt that data if you do store there.
• Keep private information private. If any company uses specific information about you to verify your identity - your mothers' maiden name, pet names, birthdays, etc., keep it off Facebook and any other social media site.

Tip:

Is your mother on your Facebook page? Does she use her maiden name? You are vulnerable.

Pro tip: If your mother is on your Facebook page, and you share your date of birth, you are a prime candidate for ID theft.

  

Preventing ID Theft

Preventing ID Theft is not difficult. Some may have you think that you have to see your credit report on a daily basis to be safe. They appeal to the very paranoid among us with offers of free 24/7 access to your credit report for a nominal monthly fee. Does 24/7 access to your credit report really prevent ID Theft? NO. It does not prevent anything. It does not stop anyone from using your credit card number. It does not stop computer hackers from accessing your PC through the internet. It does not stop anyone from stealing your wallet and using your identity.

Being able to view your credit report on a daily basis only gives you warning AFTER someone has committed an identity crime. By the time an identity thief has built a credit account in your name and it has posted on your credit report, the damage is already done. At that point you need to file a complaint with your credit card issuer and file a fraud hold with the credit reporting agencies.

There are some things that are very difficult or even impossible for you to prevent, such as a hacker accessing your personal data from a third party’s files or if someone placed a debit/credit card skimmer at your favorite gas station or market. Both of these issues have happened to me. I have been hacked and skimmed. In both instances, I found out at least 60 days after the fact. That’s an awful long time for someone to have my data and, luckily, nothing happened. My financial institution took action as soon as they knew about it and cancelled and replaced my Debit Card each time. Not everyone is as lucky as I was.

Some of the best ID Theft prevention can be done right in your own home. Having solid anti virus protection and a good internet firewall solves a myriad of issues. For a lot of people, the firewall that is included in Windows does the job. If you are an “at risk” websurfer, meaning you wander off the regular beaten internet pathways, you might want to have something stronger than the Windows version. There are a lot of good commercial firewalls and anti virus programs available and some can be had for free.

A lot of ID theft happens when someone’s wallet or purse is stolen. Even in a paperless world, there are a lot of important papers and cards in our wallets and purses. How do we protect our cards if our wallet is taken? One simple fix is to take a permanent marker and write, “Ask for ID” in big block letters on the back of all of our credit and debit cards. Not all clerks at check out counters will check identification, but with this on the back of your card, you will see an increase in the number of stores that ask for it.

If you are notified of an ID Theft situation on your cards where your personal info is compromised or suspect it has happened, you can take some actions to prevent further losses. The first thing is to check your credit report for any recent activities that might indicate someone has your information. Go to WWW.AnnualCreditReport.com to access a copy of your credit report from all three credit bureaus. Check each report for suspicious entries. If you don’t see anything but still suspect something may come up in the near future, please contact the three major credit bureaus and place a 90 day Fraud Alert on your account.

• Equifax: WWW.Equifax.com or 800-525-6285;
• Experian: WWW.Experian.com or 888-397-3742;
• Trans union: WWW.Transunion.com or 800-916-8800

Make sure the bureaus have your proper contact data. If anyone tries to use your credit in the next 90 days without your knowledge, you will be contacted by your bureau to verify the credit inquiry. If you did not initiate the inquiry, you can stop it immediately and authorities will be notified of the fraud.

You can also place a “Credit Freeze” on your account. A “Credit Freeze” is another tool the bureaus have to prevent ID Theft. For more detailed info on what a “Credit Freeze” does and how it can be placed in your state, please check this link here from The Consumers’ Union.

*   *   *

Our next Financial Education Workshops will be taking place in our main office this month.

Sept. 19^th 6:30pm – Teen Reality Based Budgets – Help your teenager or young adult learn how to create and manage a personal expense budget. This is a “life after college” simulation. Please contact me to RSVP for the workshop. Gmeyer@meriwest.com or 408-365-6328.

Sept. 26^th 6:30pm – Credit Myths and Repair – Learn the top ten myths of credit management, how to access your credit report for free, and how to address information on your reports that is inaccurate, invalid, or out of date. Thousands of South Bay residents have benefitted from this workshop over the past five years. Please contact me to RSVP for the workshop. Gmeyer@meriwest.com or 408-365-6328.

Child Identity Theft

We do a lot to protect our identities. We buy software for our computers to protect us from hackers. We change our passwords on our accounts regularly (or at least we should!). We write “Ask for Identification” on the back of our debit and credit cards. We do all this in an effort to protect our credit and our assets from criminals. We worked hard to build these things and will work equally hard to keep hold of them and guard them from those who would take them from us. How much time do you spend protecting your kids’ identities?

That’s right, I asked about your kids’ identities. Your kids have Social Security numbers and identities just like you do. Sure, they don’t have all the financial baggage that your personal data comes with, but they are just as vulnerable. I hear you thinking, “But they’re just kids! Why do we need to worry about their identities?”

The Bad Guys out there don’t discriminate when it comes to age. The social security number of a fourteen year old is just as good as one from a forty year old; often better as there is no past history. When a minor’s social security number is used to access a credit report, the reports are usually squeaky clean. There is not even a date of birth attached to the record. It is a beautiful clean canvas that a criminal will use to create their false identity.

Every year I meet several high school students who have had calls from collection agencies or have discovered through other means that their personal information was compromised. These students are all under the age of 18 and have credit problems caused by someone else. Sometimes they learn of it when they go to order their first cell phone and discover that a relative who had a previous account cancelled for nonpayment had used the youngster’s personal info to access a new phone and a new cell account. Some do not learn of the identity theft until they have graduated high school and are denied student loans due to a person’s misuse of their personal data. Often, relatives are involved. Each case is its own tragedy.

These students who have had their information compromised have a lot of work to do before they can access credit for themselves. They have to get started on their own credit repair process. In some cases it involves turning in relatives or family friends to the authorities for investigation of identity theft.  

But what about your children’s personal data? How safe is it?

What have you done to protect them? Who has access to your child’s social security number? Have you ever talked to your kids about sharing information? You need to protect your children’s personal data just as you would your own. Medical, school and banking documents that have your child’s social security numbers on them need to be locked up and eventually shredded properly. Ensure that going forward the only people with access to your son or daughter’s personal info is you and your spouse. When the kids are old enough, have that talk with them about what information about them is secret and should never be shared with strangers.

Far too many parents don’t talk about money and credit with their kids and their kids suffer because of it. Don’t be that parent! Prepare your kids for life after school.

Credit Inquiries: How do they effect your credit?

How does this application affect my score?

Inquiries are not a big part of our credit scores. They only comprise 10% of the overall credit calculation of our FICO score. But they do play an important role in how financial institutions grant credit. There are different kinds of inquiries; some affect our credit score and some inquiries don’t.

• Promotional Inquiries A promotional inquiry is an inquiry made by a lender on an entire neighborhood or larger region. ABC Credit Union may want to advertise their new low rate credit card so they will contact a credit bureau and ask for all the people in a certain Zip Code with a credit score of 600 or better. Then, the bureau does a mass inquiry to create a mailing list. These sorts of inquiries do not affect your credit. They appear on your report for two years, but do not affect your score at all. 

• Employment Inquiries Checking your credit history for employment purposes will not affect your credit scores. According to Experian Credit Bureau, when your credit report is requested for employment purposes it generates an inquiry. However, that inquiry is shown only to you on your personal credit report. It is not shared with lenders or other businesses and is not included in credit score calculations.

• Credit Inquiries for Borrowing (HARD Inquiries) These inquiries will effect your credit score as they are known as a “Hard Hit” inquiry; meaning they were initiated by you when you signed an application applying for a rental property, a credit card or some other type of financial lending product. Whenever we apply for credit; whether it is a personal loan, car loan, home loan, line of credit, credit card, or a business loan, you will have a “hard hit” credit inquiry on your report. The inquiry will appear on your credit report for two years but will affect your credit score for only one year.

Have you ever been to a store where they offer you a 10-15% discount on your purchase for completing a credit application? I bet you have. Recently, I was in Kohl’s Department Store and Target and was asked by clerks in both stores if I was interested in completing their credit app for a discount on my purchase. All around me there were people filling out their applications for the store card to get their discount. I have heard people say they do it all the time to get the discount. As mistakes are known in the internet world, that is a FAIL.

Multiple inquires create multiple hits on your credit report and score. It is not a good idea to complete a credit application for a purchase discount. It takes points from your score and may cause you to have your credit application for something you really need, like a home or a car, be declined as your credit score was low due to multiple inquiries.

Remember, a hard hit inquiry can take 10 or more points off your credit score. It all depends on the strength of your credit report and score.

Interested in learning more about credit? Attend our Credit Myths and Facts Workshop next Wednesday at our Monta Loma Financial Center in Mountain View.


 

Wednesday, April 25 at 6:00 p.m.
Credit Myths, Facts and Credit Repair