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Data Breach? Don’t Ditch Your Card Just Yet

Credit Card Data BreachMajor cyber attacks reported by the media, like the recent breach of the user database at eBay, tend to play on our fears and instill distrust, even when the thieves don’t actually obtain any sensitive information. The way these stories are framed may have you thinking it’s only a matter of time before you’re victimized and that a hasty retreat away from credit is the only way to prevent it from happening.

What is often missing in news reports is what kind of information may have been compromised. Was sensitive data like encrypted passwords, SSNs or credit card numbers taken, or was the theft limited to contact information?

Every breach is serious and should be acted upon by both banks and consumers, with your response depending on the degree of risk to your personal accounts. While millions of credit card numbers may have been compromised, the thieves may not use them all, especially when the publicity is so intense and vigilance is heightened. Changing passwords may be all that’s needed, depending on the severity of the breach.

Assess risk. Secure technology. Be Proactive.

Attacks by hackers can spread through a compromised system faster than many people realize. Don’t think that it’s a problem for merchants and financial institutions and won’t happen to you. For example, millions of people are using outdated software, such as Windows XP, which no longer receives security updates.

Any form of technology that has been used to store or check your personal accounts may be vulnerable. Protection begins by installing anti-malware software and firewalls. But it doesn’t stop there; you must then keep vigilant about keeping these security programs up-to-date. This means never shutting off automatic updates and only temporarily disabling them when absolutely necessary. Always allow the update program to do its job as soon as new updates are released.

Most security is the responsibility of consumers.

The majority of stolen information is a result of unsafe practices and unsecured technology directly related to faulty consumers practices. The chance of an account being compromised resulting in identity theft from a large scale breach from a corporation like Target is less than 5% of all cases. In fact, three-fourths of all victims never know the source of the crime, but those that do attribute the theft to computer related, lost or stolen personal effects and corrupt employees or businesses, according to an Identity Theft Assistance Center survey.

The number of things you can do to help secure your personal information can be found on this blog and thousands of other websites, but two important actions that should be put into place immediately are to:

  • Stick with a credit card and only use debit when absolutely necessary. A thief can empty your checking account in a matter of minutes if they get access to your debit card number and PIN. Credit cards also offer a depth of protection that is simply not provided for debit card purchases.
  • Limit the amount of information you share to only that which is required to complete your transactions. Be stingy in disseminating your personal information, including your birthday, cell phone number and address.

Ongoing Effort to Secure Data

Don’t expect the news stories about data breaches to subside, because no matter how much effort is put into beefing up security, new ways will eventually be found around it. The insidious nature of data thieves means that they’ll continually invent new methods for stealing information as soon as new security measures are put in place.

The more attention that’s paid to securing consumer data, the rarer data breaches will become. Vigilant oversight by all parties involved – consumers, banks, card processors and issuers – is vital. Updated security measures and better policies, technology that keeps up with threats as they become known, improvements in how data is stored and retrieved and consumer education programs, in addition to legislative mandates to ensure that stronger measures are put in place, will help to thwart further attacks, but they won’t prevent data breaches completely.

Don’t buy into the hype that credit is better than cash!

Paying with cash is generally a good idea, but to whitewash all credit and debit cards as too risky is impractical and irrational. In fact, it’s riskier to walk around with a wallet stuffed with large bills than to use either a credit or debit card. Paying with a credit card offers a layer of protection that simply is not offered for cash purchases.

If you want to use a debit card, there is one  important thing you must do to prevent losing your life savings to a thief – set up a separate checking account strictly for this purpose. If your card is compromised, the only funds at risk will be whatever is in this account. Your other accounts for your mortgage, car payment, etc. will be secure.

If you suspect that you may be a victim, it’s important that you respond quickly to protect the integrity of your finances. Immediately contact the bank or credit card issuer in question to deactivate your account. You can also request a 90-day fraud alert in the names of all authorized users. This will authorize the credit reporting agencies to block any attempts to open new accounts and prevent additional breaches.

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