“Sorry, but your card has been compromised…” Millions and millions of Americans have heard or seen those words in the past year or so. And those words conjure up all sorts of fears: empty bank accounts, new car loans, unrecognizable credit card accounts, maybe even a new mortgage in their name. And, eventually, the possibility of an undeserved bankruptcy. In fact, combining identity theft with all other sorts of fraud, total losses reported by American consumers reached over $1.6 billion in 2013, according to the Federal Trade Commission. The question becomes this: with card fraud, data breaches and general identity theft as prevalent as they are, what can be done about it? One of my mentoring clients told me a story that I’d like to share with you. Risky Business Kristin was on a business trip recently, which included attending a trade show where purchases were being made from vendor after vendor. During the course of several days, she watched her debit card being swiped on little squares at the top of smart phone after smart phone. No control over whose phone it was. “Would you like me to email you a receipt?” they’d ask. While away from home she was accessing the internet through her hotel’s wi-fi. Knowing she’s “tempting the internet devil’ when she’s on unsecured lines, there are certain tasks she won’t even consider. Accessing her bank accounts is one of them. But she does get daily text messages with her bank balances, so she can keep tabs no matter where she is. By Day Three, she said she could no longer reconcile the balance in the text message. She desperately wanted to go into her accounts online, but instead drove to a branch of the bank and asked them to pull up her accounts. Receipts and notes in hand, she checked through and found that an automatic payment had simply been deducted early. All was well. (In fact, the visit to the bank made Kristin realize that particular deduction was coming earlier and earlier each month. And she discovered the company thought months all had 28 days, so was billing in 4-week cycles. Surprise, surprise! That meant one extra payment per year! Needless to say, she called the service provider as soon as she got home, got a refund for extra charges and cancelled that service.) Back to Kristin’s bank accounts. Relieved at being able to reconcile her numbers once she saw her accounts at the bank, she finished up her trip. And, once home, she went back to her normal surveillance routine, one we had developed where she monitors her balances daily. Limiting Exposure Kristin has two debit cards that she uses, one for business and one for personal spending. Those accounts are in a bank by themselves, where there is no link to other funds. She moves in what she’s budgeted for the month, and draws down. That one gesture allows her to sleep at night, making internet purchases and online payments with the knowledge that — even in the worst case — the losses would be limited. And, as for identity theft, she’s a great believer in identity theft protection services and credit monitoring. A couple of days after getting home, Kristin said she was checking an online account and noticed something strange. A tiny debit, under $2, had been made and credited back within the same day. The next day she saw odd debits in larger and larger amounts. She called the Card Fraud Department of her bank immediately and had the card shut down. (They reversed the charges while they investigate the fraud.) How Some Card Fraud Works They explained how some of the card fraud takes place. Sometime during her trip, someone had likely gleaned enough of her information to try to withdraw from her account. They tested it with a small debit. So as to continue undiscovered, they credited it back so she couldn’t detect it without looking at the actual account. Once they knew they had gotten in and completed a transaction, they sold her information to anyone who would pay for it — hence the sudden deluge of debits. What’s the moral of this story? Actually, there are two. Moral #1: Even if you are someone who has systems set up to monitor for fraud and who thinks she’s pretty protected, everyone is susceptible to card fraud and identity theft. Moral #2: Unless you are someone who knows her numbers, checks her balances and reconciles her accounts regularly, the amount of damage done can be extensive. Fortunately, because of Kristin’s comfort level with her numbers and her respect for her money, she caught the card fraud early.
Sarah was finally making money.