2006 September 20 | Wheatworks Blog: Financial Matters

Archive for 20th September 2006

Check 21 Warning: Guard Your Online Banking User Name and Password!

9/20/2006, 5:38 pm

Your bank will never ask you for your user name and password in an email. Why? Your bank already has them! Only a thief will send you an email asking for your online banking information.

Most people are savvy enough to delete an email containing a direct request for their online banking information.

But watch out for phoney bank web site links in emails that look like they come from your bank! Sending an official looking email with links to phoney look-alike banking web sites is called ‘phishing’.

With Check 21 becoming law next month, on October 28, it may become much easier for criminals to drain your bank account. The bad guys will go phishing. All they need to do is send you an email (that looks official, as if it were sent from your bank) and persuade you to click a hyperlink in the message and logon to their perfect visual copy of your online banking web site.

Once a crook has your user name and password, he has it made. The thief will create an image of one of your cleared checks made out for an amount that seems right for your account (with your username and password he’s already explored your online banking account). He will put your forged signature on it (your scanned checks with your signatures are online), and, Wham!

He deposits the phoney check and there goes your money.

And unlike the way a credit card company protects you from online fraud, don’t expect to get your money back from the bank before they’ve taken their time to investigate. (I posted earlier about the Terms of Service of one local bank requiring that customers “To the fullest extent permitted by applicable law, you agree to be responsible for all unauthorized or erroneous transactions initiated through BANKNAME Online.”

In other words, guard your online banking user name and password. They literally represent the entire amount of money in your account (as well as the money available on overdraft). If you have overdraft protection tied to your checking account a criminal may write checks that drain your account and then run to the limit of your overdraft protection. If this happens, your money is gone and you owe the amount due on the credit card you used for overdraft protection.

Here’s a hint that may help protect you. Avoid overdraft protection if you don’t really need it. If you use it and have it tied to a credit card, use a card with a very small credit limit. Avoid using a card with a $5,000 or $20,000 limit for overdraft protection!

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