Something Phishy

As you probably know, Target suffered a major security breach which affected millions of personal credit card accounts. This hacking scheme was not your normal card reader / swipe scam where the bad guys would fix a thin pad on top of an ATM’s key pad, and capture both the credit card number as it swiped in and out through the pad’s card slot plus the PIN as it was punched in on the keypad. Those numbers allow you to create dummy cards from “blank” cards with magnetic strips on them that can be used in ATM’s or online to withdraw cash in exactly the same way a real card works.

The swipe pad only works on the card reader it is installed on. The Target breach affected every in-store card reader in the entire Target Point of Sale network. That means something (a piece of hardware or software – Malware) was installed behind the readers on the network. In this case I am willing to think it was malware. Most malware enters a network via a phishing scheme when a user receives an email with a malicious hyperlink or attachment. It is possible that someone could have purposely sabotaged the network by installing a piece of hardware or directly installing a malware program and but chances are it is a result of a phishing scam. It is one of the most common hacking attacks used by the bad guys. With the phishing scam, a user is tricked into clicking on a link or attachment thinking it is a legitimate request but instead gets infected with a malicious code. In this case, the code intercepted all in-store credit card transactions along with the pin codes.
Target is doing the best it can, the best any company can, by first removing the malware then notifying affected users and providing a course of action (calling the number on your card and monitoring your bank statements).
But, you can and should do more than just monitor.
If the breach is as wide spread and comprehensive as they think it could be, then the bad guys are sitting on nearly 40 million credit card transactions with card numbers and pin codes. They can use or sell this information anytime they wish.
In my mind, monitoring is not good enough. It does not stop fraud. It does not prevent potential damage to your credit rating. It only helps catch it after it happens.
If you think about your credit / debit card as any other online account you have – and you should – you will realize that it has both an account ID and a security password. If you ask any computer techie out there, they will say it is a good practice to change your password on a regular basis. With credit/debit cards there is an account number and a pass-code. Either the security code on the back of the credit card or in the case of a debit card the PIN code you enter every time you use it.
Hopefully if you use a Target Red Card, you signed up for using the debit option and not the credit card option.
Here is why.
Both options, because both credit cards and debit cards use the same banking and credit systems put in place by companies and regulated by the government. Both have the same level of “protection” to the consumer for fraud and illegal use. So the “insurance” is basically the same for either. It is essentially an industry standard. The trick is to catch the illegal use in a timely manner.
This is why Target is providing this consumer information and protection to it’s customers.
But, the main difference between the two is that credit cards encourage you to carry your balance for convenience and to buy more than you can afford. This is dangerous to not only your financial well being but to your credit score because in the end you end up paying more for the same items and you run the risk of not being able to get out of debt. Of course credit card companies and retail stores don’t mind that you end up giving them more money for the same items month after month after month. That is not fraud, just recurring profit.
With debit cards the charge is automatically taken out of your bank account. You don’t pay interest and don’t carry a monthly balance. This means that any charges are instantaneously transferred to both the good guys (retailers) and to the bad guys. But, remember the little bit about consumer protection? If spotted and reported quickly, you are covered. That is why it is good to regularly monitor all your financial accounts.
It is also why it is a good idea to regularly change your password on these accounts just like you are recommended to do with computer and online accounts. In this case, the password is your PIN code.
There are basically two ways to do this.
Go to the issuing bank or financial institution you got the card from and ask to change your pin code. You can physically go to your local bank and do this or you can cancel your card and ask – reapply – for a new one and use an entirely different card and PIN code.
With debit cards, this is easy.
With credit cards, this can be difficult. Most times with credit cards, to actually close and open a new line of credit, banks and stores ask you to pay off the remaining balance on the first account.
With debit cards, there is no balance to pay off. No bill to pay or wait for.
So, here is my recommendation to anybody regardless if they shopped at Target or not. Try to get into the habit of using only debit cards. Try to also get in the habit of changing your PIN code once a year. With the coming new year, this makes it a convenient reminder to start over, to renew you accounts with a new PIN code.
It makes for a great and easy new years resolution.

Beating those Bank Fees

If you are like me, you have either been hit with recent increases in banking fees, or received notice that you soon will be.

 

In my case, I am one of those lucky folks to have a Bank of America account.

 

Not only is Bank of America increasing the fees for debit cards and checking accounts, but they also have an “online fee” for using financial software such as Quicken or a financial site such as Mint.com.

 

Of course much of the reasoning for the increase in fees and such is a “credited” to the Credit Card and Dodd-Frank Act.  This act does cut the rates that banks can charge merchants for credit card transactions.  The theory is that merchants will pass the savings along to consumers and is part of the current administrations financial reform policies.  However, it also allows for the raising of rates for debit cards and other account services.

 

If you look around, you can still find banking institutions that have little or no fees at all.  One reason is pure and simple competition; other banks want your business.  But another, more important reason is that the Credit Card and Dodd-Frank Act primarily applies to large banking institutions with capital assets of more than $10 Billion.

 

This is where smaller regional banks and credit unions come into play.  And this is where I found a great local bank that is well run (no bail-out money), good history of controlled growth and excellent customer service and has no fees for any of their primary accounts.

 

So now I have started my own little form of protest, consider it my version of Occupy Wall Street, by opening an account with a local Bank, and starting the transition away from the Wall Street friendly Bank of America to the more people oriented and fee free institution of The Fauquier Bank (pronounced just like it is spelled “fawkeer”).  😉

 

The Economy is great !

You can find deals everywhere from Walmart (WMT), to Verizon (VZ) and AT&T (T), to fast food chains (Mcdonalds (MCD) and Burger King (BKC) $1 value items), to online brokerage firms (Both Schwab (SCHW) and Fidelity undercut the fee schedule of $7.99-$12.99 for most E*Trade (ETFC) transactions and a flat $9.99 for all Ameritrade (AMTD) trades), to; yes, even credit card companies.

This is a perfect example of deflation which is affecting nearly all parts of the economy.

All of the “excesses” of the previous economy, which was behind both the boom and the bust, have now created a climate of deflation.

Of course this is not good for businesses, as they now have to not only struggle with less consumer spending but now they have to deal with less revenue streams, and reduction in profit margins.

Yes, there is always two sides to a coin, and always a sword with two edges. The result of this economy unfortunately also translates into added pressure on people with lower salaries, unemployment, and defaults in credit and loans.

There is no utopia. There will always be a certain amount of insecurity, risk and “bad side” to everything in life. But there will always be the “good side” as well.

This reminds me of a quote I heard, “There is no security, only opportunity”.

Today’s economy, though far from perfect, has created opportunity.

Here is how I have taken advantage of some of this opportunity.

Credit Cards:

One of my resolutions this year is to reduce, hopefully eliminate, non housing debt.
One step I have towards doing this is to open a credit card account with a 0% interest and fee promotion. This last for up to 12 months depending on ones credit history and score.

The good side – no interest on balances for 12 months. This means my monthly payments go entirely to paying down the principle balance.

Of course as I pay down that amount, I apply (no matter how small an amount) the savings next month to my payment.

Coupons and Promotions:

This first month alone, we have been able to take advantage of department and grocery store promotions and coupons to save on everyday purchases. This enables me to apply these savings to paying down my debt even more.

So, how have all you readers, bloggers and Internet surfers out there found ways to save and take advantage of opportunity?

Bad Karma – Revisited

So last year I did this post about things just “going wrong”.

Well, just when I resolve to get my debt taken care of, improved my bottom line, and get my finances in better order….

This month the following has happened….

What turned into get one or two new tires for my car turned into needing to get all four replaced, to an alignment repair and needing new brakes…

Then last Friday our refrigerator decide 63 degrees was just the right temperature to store food. NOT! So, forgoing repairs that would have approached a new refrigerator, we opted to get a new one. After hours of shopping online we narrowed our choices down to two models and then proceeded to shop locally for them at local stores. Well, needless to say, we found what we were looking for but we have to WAIT for delivery which is currently scheduled for next THURSDAY!. Arrrgh.

So now we are living on frozen food for a week not too mention that we will have to replace everything that went bad in the old one. DOUBLE Arrrgh!

So just when I was planning to reduce debt, I have added to it.

Perhaps I should have gone to a fortune teller before making my new years resolutions.

Speaking of which, I was looking online for a type of widget that would actually track my progress of reducing credit card debt and report it in percentage format much like my covestor widgets on the right sideline do.

Needless to say, I could not find one I liked. But I did find this…

Palm Reading Widget

Something tells me that if all palm readers looked like this, business would be pretty good.

So, starting next weekend, until I find a credit card widget I like, I will post my progress, for better or worse, on the right via a manual chart. And you will just have to take my word for it.

Oh yeah, and the stock market went really south this past week too.

But the month is not over yet. So, who knows what will happen between now and then.

Keeping Score

Perhaps some of you saw this article about a nurse who took on the IRS and won.

She took on the IRS regarding her claims that her MBA costs were deductible. She won!

I like the fact that she was able to take on the IRS by herself and win!

She did it by checking the facts, reading the fine print and being anal retentive and sticking to her guns and goals!

Education loans and expenses are one of the two types of debt that I can accept as being OK to keep.
The other is housing.

Both can be tax deductible.
Both are also considered, in my mind, investments and can lead to more opportunity and potential earnings.

When it comes to debt it is important that you keep a few things in mind.

First, A Budget!

You can’t do anything if you don’t have one.

Second, Just as with a budget, set goals for either staying out of credit card debt or goals to get out of debt. And stick to them!

Third, Keep Score. Track your credit report and score.

A credit score is a basis for determining or rating or your risk for assuming debt based on your credit history.

The score is based on certain factors, including payment history, the amounts you owe and the types of credit you’ve obtained.

Personal information like income, occupation, age and marital status are not considered.

Everyone is entitled to one free credit report per year. This report shows everything the credit bureaus use to come up with your score.

NOTE: The only official site to go through all three major credit bureaus is
AnnualCreditreport.com

A credit report will also give you another means of protecting yourself against fraud and suspicious use of your credit and finances.

Check out my post about the Identity Theft Game

If you do an Internet search for free credit report or score, you will get way too many scams listed in your search results.

Having lots of available credit is good. Good for emergencies, purchasing power, obtaining loans and lower rates on said loans, and good for your credit score.

This is where some people first get confused about debt and credit cards.

Debt is bad.

Credit cards are good.

They can:
– Earn you rewards which can be used for other purchases, plane tickets and even vacations.
– Allow you to pay bills on time, even automatically. (this is important)
– Protect against identity theft, and fraudulent activity. (important too)
– Help resolve disputes with vendors and merchants.
– Purchase protection.
– Interest free loans. (if you pay bills in full and on time each month)
– And last but certainly not least – Improve your credit score!

Of course, it is also recommended that you pay off any credit card debt each month, or at least as soon as possible.

Here’s why.

Let’s say I give you a penny today, and promise to double the amount every day for a full month. How much money would I be giving you on the 30th day?
The answer: over $5 million. Check it out:

It all adds up

Lets call this my compounded interest game!

Each day, the “interest” I paid you the previous day earns more interest. At the beginning, the amounts are nominal, but by the end we’re talking big bucks.
Of course, no one’s going to double your money every day. Not even credit cards. But this concept explains how people who save relatively small amounts over the years can build rather substantial nest eggs. After a few decades, their actual contributions represent only a small part of their burgeoning wealth — it’s mostly their returns that are earning returns.

It also illustrates how debts can quickly balloon out of control. If you’re paying interest, rather than incurring it, and you’re not diligent about paying off the finance charges in full every month, the unpaid amount will incur additional interest charges, increasing the total amount that you owe.

This is why so many families who incur credit card debt eventually find themselves in trouble as the amounts they owe explode past their ability to pay.

One of my new years resolutions is to pay off none housing debt. I have been “debt free” before and it is my goal to pay off my credit card balance.

There are a couple ways to go about this.
A) If you have the money and regular automatic savings to recover it quickly if you deplete it. Use the savings.
B) If you have the automatic savings and feel comfortable diverting that to pay off the debt, use the automatic savings each month.
C) After establishing your budget, find where you can make savings and put those savings towards paying off the debt. Chances are, this will have a two fold effect. First cut back on the expenses that are most likely adding to your balances each month and secondly apply these savings towards paying down your debt.
D) Move your credit card debt to an interest free card. This is more tricky now than it used to be.
– There are no more transfer free card programs out there. Everyone is charging 3% – 5% or more as a transfer fee.
– I would only recommend this if you can budget to pay it off during the 0% introductory period.
– Like everything else, do your research. There are a lot of different cards and programs out there with even more “fine print”.

E) Tip: As you pay off the debt, take the savings from you minimum amount (even if it is just pennies) and add it to your next payment. Remember the chart above!

F) And if all else fails and you are unable to come up with a reasonable plan or goal to be debt free, then ask for help. It’s OK. And in the long run you will benefit from it and be better off. A good place to start is here at the National Foundation for Credit Card Counseling.

Of course these are only suggestions. I believe that everyone needs to tailor their budgets, goals, and plans to their own individual life styles.

I would be happy for anybody to make other suggestions if they have them. After all, as with the nurse who took on the IRS, information and education is a valuable weapon.

As Always

Be good. Do well. Have fun.

Lets play a game…

Oh, and by the way, it is not identity theft! It is stealing of information and fraud! I will always be who I am…

But on to the game…

People never cease to amaze me. The other day I was standing around in a Taco Bell waiting for my food, along with about a dozen other people, and was amazed at how much I had learned within 10 minutes; yes 10 minutes for a taco!

I did not say one word, not one question, did not apply one bit of social engineering. If I had, who knows what I would have learned.

I’ll purposefully leave out some of the specific information but supply enough so that you get the general idea.

You see there was this one lady (Bethany) with her 4 year old child (Andrew – Drew for short) who was born on November 12, at such and such Hospital and lived in a certain neighborhood , had two other siblings (Crystal and Thomas), who went to such and such school.

Then there was this other lady who was a researcher for a particular real estate investor who was looking to acquire property out in Chantilly. She liked horseback riding and had a brother (Ron). She was discussing this with a man (Dennis) who was in construction and his company was struggling to find financing for a new project also in Chantilly. Oh, and he was wearing a NASCAR jacket and cap. I also knew his kids names (all five of them) and where he currently lived and had lived 3 years ago. He used to live in the same neighborhood as another person’s parents.

I bet with a little social engineering I could have found out more about favorite teams, sports, colors, favorite pet names, and probably gotten a kid to recite his or her phone number just for fun.

Oh not to mention I could have picked up on license plate information and if I was really tricky, maybe a receipt or two.

This all reminded me of a game I participated in once at a conference. It was a simple game where people are given seemingly innocent cards that had dates, months, colors, teams, city, favorite numbers, etc etc. There was even one which asked for any 2 numbers from your phone number and or social security number. The game was simple, go around and find as many people as you could who matched information on your cards and write down their names. Winners would get a prize! And yes,this was done at a computer security conference with IT professionals. Many grinned and laughed but played along anyway. Some, less trusting souls wanted their cards back afterwards. Which as kind of stupid since many had signed up with their full names, company information, hotel information and even credit card information anyway. . .

OK, so without telling me specifically, how many of you out there have PIN numbers, passwords, answers to security questions, (you know, all the layers out there that are supposed to give us added protection to identity theft and fraud) that are in some way related to one of the categories of information listed above?

Last year, 8.4 million people in the United States had their identities information stolen at a total cost of $49.3 billion. That’s $5,720 per victim.

So, with that in mind here are some safety tips as reported by Javelin Strategy & Research. And no, I am in no way affiliated with them. I just found this information on their site and am posting it free of charge. Consider it my prize to you for reading my post 😉

1.Be Vigilant—Monitor your accounts regularly online at bank and credit card websites, ATMs or by phone and set up alerts that can be sent both online and to a mobile device. Americans who monitor their accounts frequently are most likely to uncover suspicious or unauthorized activity. The survey found that those victims who took more than six months to detect the fraud saw four times higher average costs. Meanwhile, too many cases of fraud are detected via slower methods, such as when consumers review credit histories, paper statements or are contacted by a debt collector.

2.Keep Personal Data Private—Do not provide sensitive financial information over the Internet or phone, including Social Security Numbers, passwords, personal identification numbers (PINs) or account numbers, unless you initiated the interaction to a verified and trusted location, such as the number or web address on the back of a credit card, debit card or statement.

3.Online is Safer Than Offline When Consumers Use Available Security Controls—Consumers should install and regularly update anti-virus and anti-spyware software, and keep operating systems and browsers updated. Once online access is secure, consumers should move financial transactions online to eliminate many of the most common avenues fraudsters use to obtain personal information and gain more control compared to traditional channels. Moving online includes turning off paper invoices, statements and checks, including paychecks, and replacing them with electronic versions. Avoid mailing checks to pay bills or deposit funds in your banking account. Instead, pay bills online and use remote deposit check imaging services.

4.Be Aware of Those Around You—Be mindful of your environment and others who may be in proximity of overhearing sensitive financial or personal information or watching you text. This includes purchases over the phone or use of your Social Security Number for identification.

5.Ensure Credit and Debit Cards are Protected—Obtain credit and debit cards from financial institutions that provide zero liability if a card is ever lost, stolen or used without authorization. Nearly all financial institutions automatically protect you against any unauthorized transactions made at merchants, over the phone, on the Internet or at the ATM.

6.Learn About Identity Protection Services—There are additional services for those consumers who want extra protection and peace of mind. These include credit monitoring, fraud alerts, credit freezes and database scanning, some of which can be obtained for a fee and others at no cost. At a minimum, consumers should review their credit report no less than once per year, either for free at AnnualCreditReport.com or through many financial institutions’ websites.

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For Additional Educational Tips, Consumers Should Visit:
• Intersections Inc.
http://www.identityguard.com/aboutidentitytheft/landing.aspx
• Wells Fargo
http://www.wellsfargo.com/privacy_security/fraud_prevention/
• Better Business Bureau
http://www.us.bbb.org