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It’s understandable to be worried about the safety of your money — and your personal information. From time to time, large companies and businesses lose customer data in major hacks. Credit card fraud is a growing problem — it caused an estimated US$31.26 billion in losses in 2018 alone. In 2010, it cost around US$7.60 billion worldwide, which indicates a massive increase in just eight years. If you’re concerned about your credit card information, you’re not alone. Here’s what you should know about credit card security — and how to keep your information safe.
To get a credit card, you must first submit personal and financial information to a card provider. Your name, phone number, email address and residential address are a given. However you’ll also have to divulge sensitive details about your employment information, total annual income and your Social Insurance Number.
We hand over this information without a second thought – but is it safe once we part with it?
First, the good news: As of yet, there hasn’t been a significant data breach in a major credit card company.
Large financial institutions tend to adopt security measures that are generally more sophisticated and harder for outside threats to compromise. Banks and credit card companies know it’s important for them to safeguard customers’ information and money. To that end, they’re constantly updating their security systems to guard against hacks. However, it’s not impossible for a big financial player to be breached.
Even if your credit card company closely guards your data, there’s the chance that a merchant could lose your credit card information. Your own computer hardware could be hacked, and thieves could steal your credit card information at ATMs.
So it’s not just your bank’s job to keep your information safe — it’s a good idea for you to be vigilant as well.
Credit card fraud doesn’t happen often, but it can be incredibly inconvenient when it strikes. Though financial institutions rarely lose customer data, it’s not out of the question for it to happen.
To protect yourself, implement these safeguards:
Credit cards are incredibly convenient. The tradeoff for using them, however, is losing your financial anonymity.
This doesn’t mean everyone will know what you spend money on. However, your card providers will: They’re regularly slicing and dicing your card use. They can see where you’ve used your card, and they’re constantly evaluating your creditworthiness based on your spending habits.
For example, if you’ve used your card at a casino or at bail-bond shops, your provider may consider you more likely to be in financial trouble. It could mark you as a riskier borrower who might default on payments. To protect itself, your provider might take preemptive measures, like lowering your credit limit.
Fortunately, your card company isn’t allowed to share your personal information with nonaffiliated third parties. But that doesn’t mean third parties don’t have ways of monitoring your spending. Google, for instance, has ways to monitor credit and debit card transactions through its third-party partnerships.
The implication is clear: If you use credit cards, always assume someone’s monitoring your spending.
Thieves steal credit card information in numerous ways, and one of the most common is by using credit card skimmers.
Skimmers are small, nearly undetectable devices that criminals fit onto credit card machines to read and record your credit card data. For example, a skimmer can be placed over the card slot on an ATM to steal information from a card’s magnetic stripe.
Credit card skimmers have proliferated in recent years, largely because skimmers have gotten more sophisticated. In the past, the bulkiness of a skimmer would give it away. Now they’re small and sleek, and it’s hard to tell when they’re installed.
First, a thief installs a skimmer onto a credit card machine — like a store credit/debit card terminal or an ATM. Typically, fraudsters will plant skimmers where they’re less likely to be caught doing so — outdoor ATMs and gas pumps are prime targets. They may also install hidden cameras or fake keypads to steal customers’ PINs.
After some time, the thieves will return to collect the skimmer. They’ll sell the information they’ve stolen, or even use it themselves.
Whenever you use an ATM, consider the possibility that a skimmer is installed. ATMs inside of a bank are less likely to have been tampered with. But if you’re using an ATM in an outdoor or isolated area, the machine could be compromised.
If you must use an ATM that’s not monitored by cameras or bank personnel, make it a point to check your credit card transaction history for suspicious activity.
It’s difficult to detect all skimmers you could come across, and they’re only getting more sophisticated. However, you can minimize the risk of losing your credit card data to these devices.
We’ve talked considerably about how credit card information can be stolen. Still, a credit card has built-in defences against fraud – and the financial industry is always developing better tools to combat fraudsters.
One of the reasons that card companies monitor your spending is to catch fraud.
Fraud costs banks money. To avoid losses, financial institutions develop technologies that automatically detect inconsistencies in customer spending. Uncovering these anomalies is how card companies catch fraud.
There’s more good news: You most likely won’t be liable if your credit card is used fraudulently. Many banks and card providers offer “zero liability” protection for fraud. That means if your card is lost or stolen, you won’t have to pay anything.
Overall, a credit card is an excellent way to pay because it offers great consumer protections against fraud.
A chip card is relatively secure because it encrypts account information differently each time it’s used. In contrast, data is static on a magstripe card, which means it’s easier for criminals to extract. Skimmers are highly effective at collecting data from magstripes, but they’re less adept at foiling chip cards.
Chip cards have been widely adopted around the world, with many countries, including Canada, using chip-and-PIN cards. These cards require you to enter a personal identification number. Chip-and-PIN cards are considered to be more secure, since there’s no signature to forge.
E-commerce is growing fast, but consumers still have security concerns about making purchases online. The truth of the matter is that a credit card is one of the safest ways to make purchases online. As long as you’re using a trusted website and the online retailer encrypts your data, it’s safe to enter credit card information on the web.
Here are a few precautions you can take to use your credit card safely online:
When it comes to fraud, is cash a better option than a credit card? While there are some pros to using cash, credit cards have the edge for safeguarding your money.
Both cards and cash can be stolen, but you’re unlikely to recover cash once it’s gone. On the other hand, you can quickly replace a stolen card. It’s also unlikely that you’ll lose money from a stolen credit card, because you typically won’t have to pay for fraudulent transactions.
For safeguarding your information, cash is the hands-down winner. To get a credit card, you have to submit personal information like your Social Insurance Number and contact details. If your card data is stolen, your information could be sold. Meanwhile, cash transactions can’t be traced back to you.
Overall, credit cards are better at safeguarding your money. Just remember that you’ll give up some privacy to use them.
Consumer privacy is governed by both federal and provincial/territorial laws. These laws, which include the Personal Information Protection and Electronic Documents Act, protect consumers against fraud and privacy abuses. This act provides legislation, ensures compliance, deals with complaints and enforcement, and investigates any businesses breaching privacy laws.
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