The Informed Investor

Protecting your identity and finances is a constant challenge.  Here are some suggestions that may help to protect you.

Is it safer to pay with a debit card or credit card?

Credit cards offer fraud protection benefits that debit cards don’t. Nearly all of today’s top credit cards offer zero fraud liability on unauthorized charges, which means you won’t owe a penny on any charge determined to be fraudulent. The key difference: With a credit card, the card issuer (such as VISA, MasterCard) must fight to get its money back. With a debit card, you must fight to get your money back -it is already out of your bank account.

Debit cards  limit your fraud liability and require you to report your lost or stolen card within two business days to limit your liability to $50. If you report after two business days but before 60, your liability goes up to $500. After 60 days there is no protection.

In general, credit cards offer better fraud protection. If someone skims your credit card information, for example, you have time to dispute the charge before you’re liable for the payment and the pending charge may never even post to your account. If you use a debit card, though, the funds can be removed from your bank account directly and quickly, making the process of disputing and getting your money back much more time-consuming.

Debit cards are not a good way to pay when you shop online. Credit cards are safer to use when you buy things online: You might have a problem with something you buy online. It is much easier to get your money back if you use a credit card.

According to the EFTA, your potential liability for fraudulent debit card transactions is virtually unlimited. You have up to 60 days to report a lost or stolen card under the EFTA. After that, you simply lose whatever money was taken, even funds siphoned from linked accounts. The exact liability limits under the EFTA are:

• Lost or stolen card reported before unauthorized transactions: zero liability.
• Lost or stolen card reported within two days: $50 liability limit.
• Lost or stolen card reported within 60 days: $500 liability limit.
• After 60 days: no protection.

Places you should not use your debit card

 1) Online. We all shop online because it is super convenient and quick, but it is also an opportunity for hackers to steal your information and go on a shopping spree. While most debit cards are protected against theft after the first $50, imagine the headache of trying to get that money put back into your account and potentially not having money until the account is restored (which can take up to 30 days). It is much better to use a credit card when making online purchases.

2) Restaurants. Consider this: your server often takes your card away to process your payment. While 90% of the time there is no problem, there is that 10% where the card is copied for fraudulent use.

3) Gas stations.  Gas stations are common targets for crooks that install devices on pumps to capture debit and credit card information as consumers swipe their cards — a process called skimming. They even install miniature cameras to view your PIN as you enter it. Then they can create counterfeit debit cards to drain your account.

4) Independent or isolated ATMs

5) Grocery stores.  Getting cash back is one of the appeals of using a debit card in a grocery store….it saves a trip to the ATM but grocery stores get hit by skimmers too.

6) Traveling. This is a big one because you use a card for almost everything here — checking bags, paying for parking, hotels, getting food, etc. At airports, everything is rushed, and you are being pushed to get it done in a hurry to catch a flight or get out of the airport. Identity thieves are counting on this, so it’s best to use a credit card while in transit so your bank account is not at risk. When you check into a hotel it’s not certain what final amount you will owe when you check out will be, due to restaurant charges or other fees charged to your room. So hotels will place a hold on a certain dollar amount above the room rate.

If you pay with a debit card, you won’t have access to those funds temporarily, which could cause problems if you don’t have sufficient money in your account or didn’t plan on spending more than the room rate.

Freeze Your Credit in 3 Easy Steps

Freezing your accounts at the three major credit bureaus is the best way to prevent thieves from opening new credit accounts in your name.

The old reason to freeze your credit was if you’d suffered identity theft or some other compromise of your personal information. But as data breaches occur continually, a pre-emptive credit freeze has become a prudent and popular way to protect your credit, even if a thief hasn’t yet made fraudulent use of your information.

What Does a Credit Freeze Do?

When you put a credit freeze (sometimes called a security freeze) in place, new creditors can’t review your credit reports to judge whether you’re eligible for a credit card or loan — and in turn, lenders are unlikely to grant credit to fraudsters posing as you. When you need to shop for credit for yourself, you can temporarily lift the freeze for a few days or few weeks, whatever is needed.

How Much Does a Credit Freeze Cost?

Placing and lifting a freeze is free at each of the major credit agencies, thanks to federal law.

How Do I Freeze My Credit?

To set up a credit freeze, take these three steps.

1. Gather your information. In the past, all three of the credit agencies had consumers use a PIN to confirm their identities when they wanted to temporarily lift or permanently remove a freeze. But Equifax and Experian no longer require a PIN. Instead, you can set up a password-protected online account or provide identity-verification information by phone or mail. With TransUnion, you must provide a six-digit PIN to unfreeze your credit report by phone or mail. But if you go online, you can manage your freeze with a password-protected account instead.

 Think carefully about the number you’d like to use for your TransUnion PIN — don’t pick something obvious, such as your birth date — and of passwords that you can use for any online accounts that you set up. Keep a pen and paper handy to jot down your PIN and passwords.

2. Contact each credit agency. The web pages or phone numbers below are the quickest avenues to imposing a freeze. To submit your request by mail, use these addresses.Freeze your credit with Equifax
   Equifax Information Services LLC,
   P.O. Box 105788,
   Atlanta, GA 30348
   (Fill out and submit this formto request a freeze by mail.)
   888-298-0045

Freeze your credit with Experian
Experian Security Freeze,
P.O. Box 9554
Allen, TX 75013
888-397-3742

Freeze your credit with TransUnion
TransUnion
P.O. Box 160
Woodlyn, PA 19094

888-909-8872

3. Save your PINs and passwords. Write down the PINs and online account passwords, and keep them in a safe place at home. When you’re ready to shop for a loan or lift the freeze for any other reason, you can call the phone numbers or visit the websites listed above, log in and set the dates you want your freeze lifted and reinstated.

Should I enter my Social Security number on every form that requests it?

If the entity asking for your Social Security number isn’t a financial institution, government agency or employer, you should ask why they need it, what they are going to do with it, how long they’re going to store it and whether they share it with any third parties. If they’re using your Social Security number for identity verification only, you should ask whether there’s another way to establish your identity. Perhaps a picture ID or driver’s license can be used. 

 Is it risky to give a company your cell phone number?

These days, cell phone numbers are being used as a piece of verification data to prevent fraud in digital transactions. In addition, as online vendors collect cell phone numbers, they use them for marketing purposes, which means you may receive a lot of spam. They may also sell them to third parties that collect and barter them on the dark web. You can end up getting a lot of calls and texts from scammers who are trying to trick you into giving up personal information or downloading malware. Scammers may also try to use your cell phone number to access your online accounts.

 How can we use ChatGPT and other forms of generative AI safely?

Never give one of these programs your personal information, such as your Social Security number, date of birth, mother’s maiden name or even your work history. If you provide this kind of information to ChatGPT and ask it to write you a résumé, for example, you never know where the information will go or whether it’s going to be used for a nefarious purpose. And with artificial intelligence, there’s even more proliferation of information that could be hacked or stolen.

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