Is Your Money Safe? Banks are Biggest Cybercrime Targets

Organized crime is making a big business out of stealing bank account and credit card records, says an authoritative study released this morning. The Verizon Business Data Breach Investigations Report found that 94 percent of all records compromised by cybercrime in 2009 were from financial services companies.

Perhaps that's not a surprise. "Stealing digital money from information systems rather than vaults is basically just a less primitive form of bank robbery," the report said. "It represents the nearest approximation to actual cash for the criminal."

The full report is fascinating to read and worth downloading. It looked at more than 900 corporate data breaches involving more than 900 million compromised records, and reveals that high levels of cybercrime are carried out by insiders such as dishonest bank employees. And it verifies what you probably already suspect: That some breaches never even get reported.

All of that spells troubles for consumers, because there's little you can do to prevent your financial data from being stolen from your bank's servers. You can, however, limit how badly such a theft could hurt you. Here are some tips.

Check your bank's security policies and its policies for covering losses due to fraud. At a minimum, a bank should have a policy of double-checking you if you ever try to access your account from a different computer than the one you ordinarily use. That could just mean you're using the computer at your parents' house, or it could mean that a criminal has your password. Look up your bank on the data breach list at the Privacy Rights Clearinghouse to see if it's had serious problems in the past.

Change your passwords often. And use different passwords for every bank and brokerage account.

Read all of your statements like a hawk. As soon as anything shows up on your bank statement or credit card bill that seems wrong, contact your financial institution and keep a record of your complaint.
Keep your business accounts and your personal accounts separate and protected by different passwords. Commercial accounts don't always receive the protection that personal accounts do. If you have a business account with a big line of credit and a criminal cleans it out, your bank might not make you whole, as Forbes details in a recent troubling story.

Take all of the usual steps to protect your credit report, but realize that freezes and alerts just stop thieves from opening new accounts in your name; they don't stop anyone from using the accounts you already have to clean you out.

Don't use a debit card. I admit, that's just me talking -- some people love them. But if someone steals your credit card number, you can usually maintain your financial life while you get it straightened out. If someone steals your debit card number, however, they can empty your checking account before you know it's gone. And then your checks will bounce and your bills won't get paid. Banks say they'll make good on debit card losses, but the stress of dealing with bounced payments and a compromised checking account while you wait is more than I'd want to sign up for. Carry a minimal amount of cash and use a credit card for everyday expenses. Pay it off every month, of course, but that's a post for another day.

Photo by hegemonx on Flickr.
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