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Ask Slashdot: How Safe, Really, Is Paying For Things Online?
An anonymous reader writes:
Due to the rash of intrusions into electronic payment systems lately, I've decided to go back to paying cash for everyday purchases, groceries, fuel, and anything else I pay for in person (which also has the positive effect of making balacing my checkbook every month that much easier). The question I have is: For the monthly bills it's just not practical to pay in person (utilities, for instance), how safe are those?
Five minutes of research is telling me that mailing paper checks isn't any more secure than online electronic payments and in fact may be even less secure, but short of literally showing up at the electric company, phone company, ISP, and so on, and paying them cash in person, I can't see any other way to pay them. So how safe is it right now, honestly?
I'm always interested in how Slashdot readers secure their own personal finances -- but how high is the danger that a remote malefactor will hijack and then drain your bank account? Leave your best answers in the comments. How safe, really, is paying for things online?
Five minutes of research is telling me that mailing paper checks isn't any more secure than online electronic payments and in fact may be even less secure, but short of literally showing up at the electric company, phone company, ISP, and so on, and paying them cash in person, I can't see any other way to pay them. So how safe is it right now, honestly?
I'm always interested in how Slashdot readers secure their own personal finances -- but how high is the danger that a remote malefactor will hijack and then drain your bank account? Leave your best answers in the comments. How safe, really, is paying for things online?
Well, how safe is it to be walking around with a pocket full of cash? What if you get robbed? What if you drop your wallet? What if you go to the bank machine and it dispenses too few bills, but thinks it dispensed them all? What if you go to a teller to withdraw cash and watch them count it, but the bank gets robbed?
At least with credit card payments, there's a known and tested dispute process in place.
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everything has a risk. Personally, I use online billpay from my bank to send the utilities a check. My bank doesn't just cut a check using my account information, they transfer the money out, cut a check on their own account number, and then send it. Some smaller banks and credit unions will just print a check using your account information, so, send yourself a bill pay for a buck and see if it's your information on the bottom.
Most major utilities use bank lockboxes or if they are large enough... their own. Mail fraud in those instances is very, very low because typically the mail goes out in large automated trays to those addresses vs the one or two letters that you and I are used to getting.
But you ask... sometimes it's an ACH payment using the Billpay... well.. you're right, sometimes it is. However, life is all about risk. Personally, I find it riskier to carry cash on me and drive to 10 different places to pay bills than it is to just go online, have the bank cut a couple checks, and ride it out. I also do not use the bank debit card for anything other than ATM transactions and a few places that will accept debit, but not credit. Sure, let some kiddie get my credit card number and go to town... it takes a phone call and a "um, not me" and I've got a new card on the way with no liability.
First many banks pay to open accounts so open an account at a bank that is paying those rewards, Every month simply transfer enough to pay your bills to your new PAY OUT ACCOUNTS. For example you can have an account just to pay your electric bill. Leave the required residual in the account so it is not closed. This way if the account is hijacked all you can lose is the electric bill payment. i also use PayPal a lot. So imagine that you set up ten accounts at banks offering sign on bonuses. Mine pay anywhere from $50 to $500 to open an account. Assuming your are all $50. reward accounts you will still quickly and easily earn $500 for a few minutes work. Meanwhile your funds earn interest in your regular account and you never, ever, pay bills from that account so you earn more interest. On most accounts with rewards you are free to change at the $90 day mark. So you can do this many times a year. Also you can earn referral fees for steering others to open accounts so work with a friend and refer each other frequently. Currently some people can actually earn a living simply opening and closing bank accounts.
Your CC# has always been vulnerable at the endpoints, whether or not it gets trawled up with a million others in a hacking scheme is a much smaller risk.
There is risk in everything. Understand the type and extent of those risks. For example, you could get hit by a car while trying to pay a bill in person and die or end up in the with hospital with thousands of $$ in bills. Paying by check or online looks pretty safe by comparison.
Furthermore, paying with a credit card limits your risk to $50 for fraudulent charges - just check your statement every month. If you're really paranoid, get a Bank of America MasterCard. They have a feature called ShopSafe whereby you can create multiple virtual credit cards (linked to your real CC) for use online. You simple specify the amount and duration and new CC and CVV/CVC numbers are generated. As a bonus, only the first vendor to use a virtual card can use that card. You can bump the limit and/or expiration date and "delete" the virtual card at any time.
It must have been something you assimilated. . . .
You only need to use electronic payments, such as a credit card, not necessarily online. Many thefts used compromised readers during a regular in person transaction, though newer cards make this less likely. Ultimately your retailer will typically store your payment information in a database, along with other personally identifying information. This is even more likely with over the phone purchases. Many companies store it in plain text while few properly hash/encrypt it.
The above isn't actually all that true; PCI requirements demand encryption at rest (encryption, not hashing, there's no point in hashing a credit card number). But let's assume that it's true.
Meh. I don't care.
By federal law, my liability for any fraud is limited to $50. In practice, no credit card issuer I've ever met in the US (and I used to do security consulting for credit card issuers, so I've met a lot of them) charges cardholders a penny. If you claim that a transaction is fraudulent, and they can't prove it wasn't, you won't pay a penny. If they're pretty sure you're the fraudster, they'll just cancel your card, and refuse to do business with you any more.
Credit card payment is the safest form of payment, online or in meatspace. Cash is the least safe form of payment.
Note that I'm talking about safety, not privacy. That's a separate issue, and on the privacy axis cash is king and credit cards are awful (though personal checks are significantly worse, assuming you can find someone still willing to accept one).
Note also that debit card transactions (when processed through the debit networks, not as credit cards) do not provide the same protections that credit cards do. Many banks do handle fraud similarly, but you need to get your bank's policy to know. With credit cards, the $50 liability limit is guaranteed by law.
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Heck even the police will take it from you if you have enough of it
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