Online payment products are imperfect, but consumers can protect themselves

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How to prevent card fraud
This could be one way to prevent credit card fraud, not exactly practical though. (Image via kupunawiki.com)

The marriage of credit cards and online payments has led to a rise in fraud, identity theft and money laundering.

The potential for phishing attacks, credit card cloning and skimming, and database breaches all make card users more prone to becoming victims of fraud today than at any point in history. For most, it is not a question of “if” it will happen, but “when”.

Whether paying utility bills, shopping online, or transferring funds between accounts, the growth of online payments has brought about a huge change in the way people make transactions. While there are a number of ways personal account information can be compromised causing people to lose their hard earned money, there are an equal amount of ways the system and its major players are trying to protect consumers. Yet while it seems that the digital payment space is well fortified, through state-of-the-art anti-fraud technology and ever-improving data security measures, the reality could not be farther from the truth.

Despite the fact that the outlook for digital payment security is so bleak, consumers continue to hunger for these types of products after being exposed to successful marketing campaigns by the financial services industry. One would think that these companies would first fix the system and then sell users higher quality and more secure products. In fact, these companies employ a strategy of user trial and error to mitigate these problems over time, in an industry that will never be completely secure.

Their thinking is akin to an underground pipe meant to transport water.

If you pump only a few liters to test for any leaks, you will neither detect all leaks nor will you be able to gauge the true strength of the pipe at full capacity. Similarly, the payments environment requires real test subjects to do live transactions on the actual platform. As leaks are identified, and become more sophisticated, they are patchedup, thus allowing the flow to continue. It’s an imperfect system, but one consumers continue to demand.

After all, despite the large privacy and security concerns facing users, it is hard to imagine ditching the entire online payment system altogether, and going back to carrying around large sums of cash to shop. In an increasingly complex and intertwined global economy, we cannot do away with digital payments altogether, so how can consumers protect themselves?

Below are a few best practices for consumers to defend themselves from becoming victims of fraud:

  1. Do not give out your card pin to anyone, not even a gas pump attendant. You may trust the other person, but you never know who else may hear or receive your identifying information through these parties.

  2. Never share your card details over the phone, an SMS, or via email. It’s not only “who” you share your card information with that matters, it’s “How” you share it. These platforms are insecure and can lead to a breach of your privacy.

  3. Change your card every four to six months. Ask your bank for a replacement card frequently, particularly if you are a regular online shopper.

  4. With your hand, try to nudge the ATM card slot to check for any unauthorized skimming device that can copy your card information without your knowledge.

  5. Use prepaid travel cards when traveling abroad. Not only will this save on unwanted charges, but it will also protect your information from unknown points of sale. Travel cards are a lifesaver in the event that you forget your card somewhere or it is lost or stolen during transit.

  6. Do not take pictures of your credit or debit cards with your mobile phone or scanner. These images can be compromised when shared or downloaded to another device.

  7. Schedule auto-bill payments online. This way you do not need to enter your card information or swipe your card more frequently than necessary.

  8. Safely store your plastic cards by investing in a good card holder or in an e-credit card service. Protecting your physical payment methods is just as important as digital security.

  9. Use a credit card instead of a debit card whenever you can. Credit cards have built-in fraud protection shields. Debit card fraud can also be more harmful because money is taken directly from your personal account.

  10. Ensure that each of your credit and debit cards have an SMS alert enabled to notify you for each transaction so that you are always aware of any transactions made from your cards by you or someone else.

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