Online Banking, Bill Paying and Shopping:

10 Ways to Protect Your Money

Internet commerce is fast and convenient, but as with the

old-fashioned ways of doing business, it pays to take precautions

Online banking, bill paying and shopping are conveniences that most people want to enjoy. And most of the time, high-tech transactions are completed quickly and without a glitch. However, just as with other transactions, in a small percentage of cases something goes wrong. That's why you need to take precautions against theft and errors. In particular, even as banks and merchants tighten up security, Internet thieves devise new, sophisticated ways to trick consumers into sending money or into revealing information that can be used to commit fraud. "Today's Internet threats wear many different disguises, from fake Web sites to fraudulent text messages on cell phones," warned Michael Benardo, Chief of the FDIC's Cyber Fraud and Financial Crimes Section. "That's why online consumers need to be aware that they may be targeted and they should always be on guard." David Nelson, an FDIC fraud specialist, added: "Online fraud is an ongoing game of cat and mouse. Crooks continuously hunt for security holes, banks and merchants plug those holes, and then the criminals find new ones to slink through. But consumers play an important role in keeping crooks at bay by being aware of the potential risks, taking precautions and remaining vigilant."

FDIC Consumer News, which

periodically issues guidance to

consumers regarding online

precautions they can take, offers our

latest collection of top tips. Note: Not

all financial institutions offer each

product or service described here.

1. If you bank online, frequently

check your deposit accounts and

lines of credit to spot and report

errors or fraudulent transactions,

just as you should with traditional

banking. "Your ability to monitor your accounts online has gotten easier, faster and more convenient now that banking by cell phone is starting to mature alongside banking online," said Michael Jackson, Associate Director of the FDIC's Technology Supervision Branch. "This is important, because the sooner you can detect a problem with a transaction, the easier it should be to fix." Nelson suggested checking your accounts online about once or twice a week, but he also noted that "more and more banks are making it easier for their customers to keep an eye on their accounts electronically. For example, many banks offer e-mail or text message alerts when your balance falls below a certain level or when there is a transaction over a certain amount." Federal laws generally limit your liability for unauthorized electronic funds transfers, especially if you report the problem to your financial institution within specified time periods, which will vary depending on the circumstances. A good rule of thumb is to check your statements promptly and report unauthorized transactions to your bank as soon as possible.

2. Never give your Social Security

number, credit or debit card

numbers, personal identification

numbers (PINs) or any other

confidential information in response

to an unsolicited e-mail, text

message or phone call, no matter

who the source supposedly is.

Chances are an "urgent" e-mail or phone call appearing to be from a government agency (such as the IRS or the FDIC), a bank, merchant or other well-known organization may be a scam attempting to trick consumers into divulging personal and account information. It's called "phishing," a high-tech variation of the concept of "fishing" for personal information. Also watch out for phishing scams that involve bogus text messages sent to cell phones claiming that a bank account has been "blocked" and the recipient must call a certain number to fix the problem. If you make that call, you likely will be asked to enter your account number and PIN. The criminals can use this information to make counterfeit debit cards and drain your account. "Real bankers and government officials don't contact people asking for this kind of information," said Benardo. "Your bank will already have your account numbers and only you should know your log-in credentials, and a government agency won't have a need for this information."

3. Don't open attachments or click

on links in unsolicited e-mails

from anyone you don't know or

you otherwise aren't sure about.

Sometimes these attachments or links can infect your computer with "spyware" that can change your security settings and record your keystrokes. "Spyware can secretly steal your passwords, bank or credit card numbers, and your answers to security questions like your mother's maiden name or your high school," Benardo advised. "Online thieves can use this information to log into your account, make changes and transfer money, leaving your bank account empty." In one recent example, criminals sent out fake IRS e-mails warning recipients that they were being investigated for unreported income and asking them to click on an attachment for more information. The file launched a program that allowed hackers to install spyware and other unwanted programs on personal computers (PCs) to access bank accounts.

4. Watch out for sudden pop-up

windows asking for personal

information or warning of a virus.

This is called "scareware" because it frightens people into providing information, downloading malicious software or paying for removal. If you get an e-mail or pop-up window saying your computer has a virus and it offers a program to clean your PC - and the warning window won't go away - your first step is to use the computer's "task manager" function and click "end task" or "force quit" to shut down the pop-up window. Scareware can be a nuisance to clean off your computer, so call your anti-virus software company if you need help.

5. Use a mix of security tools and

procedures. "Staying safe online is like protecting your home with lighting, locks, alarms and fire extinguishers," explained Nelson. "You can't rely on just one layer of defense to protect you from all online threats." At the top of the list of security tools to use - and keep updated - are anti-virus software to detect and block spyware and other malicious attacks, and a "firewall" to stop hackers from accessing your computer. Even if your computer seems fine, Nelson said, schedule an automatic anti-virus scan to run at least once a week but preferably every day. Call or e-mail your anti-virus vendor right away if you get a warning message and you don't know what to do next. Also consider these extra precautions as you use the Internet:

• Don't log into your bank account while using public computers, such as at a library, or free wireless connections at coffee shops and similar places. Criminals often try to intercept Internet traffic, including passwords, from these locations.

• Pay attention to the toolbars at the top of your screen. Current versions of the most popular Internet browsers and search engines often will indicate if you are visiting a suspicious Web site.

• Choose "strong" user IDs and passwords that will be easy for you to remember but hard for hackers to guess. The strongest ones have a combination of letters, numbers and other characters, and are at least 10 characters long. For your online banking, choose IDs and passwords that are not the same as those you use for e-mails or social networking sites, just in case they get into the wrong hands. Also change your online banking password about every 90 days. And if you remove a computer virus from your PC, immediately change your password.
• Have each person in your household bank and shop online and send e-mail through his or her own "standard user account." Not conducting these online activities through the computer's "administrator account" - the one that makes changes affecting all users - reduces the likelihood that a hacker can install unwanted programs on your PC. Limit the use of the administrator account to special tasks needed for your computer, such as adding or removing software and installing updates to your operating system.

• Consider using a separate computer solely for online banking or shopping. A growing number of people are purchasing basic PCs and using them only for banking online and not Web browsing, e-mailing, social networking, playing games or other activities that increase the chances of downloading malicious software. You can also consider using an old PC for this limited purpose, but you should uninstall any software you no longer need and follow up with a scan of the entire PC to check for malicious software.

• Only use security products from reputable companies. Nelson said one way to check out these products is by reading reviews from computer and consumer publications. "Look for a product that has high ratings for detecting problems and for providing tech support if your computer becomes infected," he said. Kathryn Weatherby, a fraud specialist at the FDIC, also cautioned that banks normally don't ask their customers to download software updates. "If you get an unsolicited request to update your banking software," she said, "independently verify it by calling your bank using a phone number from your bank statement, not the phone number that appears in the request, which could connect you to a scam operation instead of your bank."

6. Beware of check scams.

With unemployment high, con artists are preying on people who need cash. One common check scam involves attractive offers - usually originating in e-mails or online job postings - involving part-time work from home. As the new "employee," you will be sent a check to deposit (which will be counterfeit) and told to forward cash from your own account (to the crooks). Another scam involves "mystery shopper" programs where the new hire is given fake money orders or checks and asked to wire funds to the criminals. And unlike electronic transfers that are covered by consumer protection laws, fraudulent check scams often leave consumers suffering the loss.

7. When shopping online, deal with

reputable merchants and be wary

of unbelievably low prices. "There is no guaranteed way to ensure that an online merchant you're unfamiliar with is reputable, but there are ways to avoid doing business with an unreliable one," cautioned Jeff Kopchik, an FDIC Senior Policy Analyst specializing in technology matters. First, he said, ask your friends and family if they've had good experiences with a merchant you're considering using. "If people you know have used and can recommend an online merchant, that's a strong indicator," he added. Second, you may already know and like some online merchants from their retail outlets, mail order catalogues or other services. They are likely to be a safer bet than an unfamiliar merchant that doesn't list a physical address or a phone number on its Web site. If you are uncertain about an online merchant, check with the Better Business Bureau Online (www.bbbonline.com). You can also search online for complaints about the business. Similarly, if you have a problem with an online merchant, file a report with the Better Business Bureau. The Bureau will notify the merchant about your concern and ask you if the issue was resolved. A legitimate merchant will attempt to fix the problem, while a crooked company may have many unresolved issues.

8. Using a credit card generally

offers more purchase protection

than a debit card or other electronic

forms of online payment. "Unlike paying with a debit card and the money being immediately transferred out of your account, with a credit card you generally have weeks to pay your bill," Kopchik said. "So if the merchant does not deliver as promised, you have time to dispute the transaction and even enlist the help of your credit card company." He also noted that federal law gives you certain rights, in areas such as dispute resolution, when buying with a credit card. However, watch your budget when using your credit card to shop online. Kopchik said studies have shown that people spend more when they use a credit card instead of cash, a gift card or a debit card.

9. Be on guard against scams hiding

behind online coupon offers. Web sites for legitimate coupons will only ask consumers to provide an e-mail address in order to use their service to search for online specials and discounts. Beware of any coupon site that asks for personal, financial or payment information, which can be misused by criminals.

10. Be careful if you download

banking software onto a cell phone.

Many cell phones called "smart phones" allow consumers to add computer-like features ranging from video games to "mobile" banking. But cell phone users need to be aware of an emerging threat from criminals selling malicious software for mobile banking, some even falsely displaying bank logos. "These applications may contain spyware, and downloading them could be giving a hacker access to your bank account or payment card information," reported Nelson. His advice? "Only download mobile banking applications from a safe site, such as your wireless provider, phone manufacturer or your bank." When in doubt, he added, "contact your bank before downloading any banking applications to your cell phone."

      News Release

PRESS OFFICE                  

SBA Warns Small Businesses of Fraudulent Attempts

Offering to Help Them Secure SBA Loans

WASHINGTON - The U.S. Small Business Administration (SBA) is warning small businesses to use caution if they are contacted by firms offering to help them apply for funds available through SBA programs.

SBA and SBA's Office of the Inspector General (SBA OIG) have received several complaints from small businesses about abusive marketing practices, scams, and exorbitant fees charged by firms offering to help them obtain a loan, grant, or other federal funds, from SBA.  

Some of these complaints include:

• Firms charging small businesses high fees to provide assistance applying to SBA funding programs. Some firms allegedly guaranteed that the small business would obtain SBA funding if they paid the fee. SBA does not endorse or give preference to specific private companies or their clients.

• Firms charging small businesses for services never requested after the small business gave bank account and routing information to a caller claiming to be a firm offering assistance. SBA recommends that small businesses never provide social security numbers, bank account information, or credit card numbers to anyone; and, never over the telephone.

• Firms alleging that a small business would be issued a "forfeiture letter" that would make the small business ineligible for any SBA funding for three years if the small business refused to use the firm's services.

When electing to use a third party to apply for SBA funding programs, small businesses should also bear in mind:

• Small businesses can get free assistance in person or by calling one of SBA's 68 District Offices and from information on SBA's Web site (www.sba.gov). They can also get assistance from Small Business Development Centers, Women's Business Centers, Veterans Business Outreach Centers and SCORE Chapters, either free or for a reasonable fee. Location and contact information for the centers can be found on SBA's Web site.

(more)

SBA 10-09 -- Page 2

• Small businesses should ask for references and confer with trusted colleagues and institutions, such as the Better Business Bureau, when selecting service providers.

• Small businesses should clearly establish and document: 1) What they are being charged; 2) When they will be charged; 3) What they must do; and 4) What services they will receive.

SBA's Office of the Inspector General will investigate and respond to all complaints.  SBA encourages anyone with knowledge of a misrepresentation regarding SBA Business Loan Programs, or any other SBA program, to contact SBA OIG by calling the OIG Hotline toll-free at (800) 767-0385, or submitting an online report at the SBA OIG Web page (www.sba.gov/ig), and click the link for "Report Fraud Waste or Abuse." 

Anyone who has a question regarding an SBA loan or any SBA program, may contact their local SBA District Office, the SBA Answer Desk at 1-800-U-ASK-SBA (1-800-827-5722) or e-mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

# # #

Move Your Money and Save

By smitchell

Created 02/22/2010 - 09:33

This article was originally published on Huffington Post [1] as part of a partnership with their Move Your Money [2] campaign. 

Bigger banks were suppose to lower costs for consumers. That was the promise made repeatedly in 1994 and again in 1999, when Congress dismantled laws that had long restricted the size and scope of banks, ushering in a wave of mergers that left the industry dominated by a few financial giants.

Testifying in support of the so-called Financial Services Modernization Act in 1999, Michael Patterson of J.P. Morgan used the word "consumer" no less than twenty-one times in his remarks. He told Congress that freeing up big banks to get even bigger would provide consumers with "greater convenience, more innovation, and lower costs."

Many regulators and lawmakers echoed his assertions. Robert Rubin, then Secretary of the Treasury and later a director at Citigroup, said that the "reforms" would "lead to better service and lower costs." Congress passed the bill by wide margins and President Bill Clinton enthusiastically signed it into law, promising that the changes would "save consumers billions of dollars a year through enhanced competition."

Just seven years later, the fees consumers were paying on their checking and savings accounts had skyrocketed, rising from $21 billion in 1999 to $36 billion in 2006. (And these amounts do not include credit card and ATM fees, which also shot up.)

That bigger banks would mean higher prices was plainly evident in 1999 to anyone who bothered to consult the data. For the previous five years, the Federal Reserve had issued yearly reports to Congress that showed that bigger banks charged significantly higher fees on checking and savings accounts.

The Fed's 1999 report, published five months before the Financial Services Modernization Act passed, found that overdraft fees were 41 percent higher at big banks compared to small. Big banks charged more for almost every fee imaginable, including 43 percent more for bounced checks, 57 percent more for stop-payment orders, and 18 percent more for ATM withdrawals.

But rather than allow the evidence in favor of smaller banks to guide policy, Congress decided to get rid of the evidence. At the urging of then Fed chairman Alan Greenspan, Congress ordered the Federal Reserve to stop publishing its annual report on bank fees. "The Fed fought to get rid of it," said Ed Mierzwinski, consumer program director at the US Public Interest Research Group. "They said transparency was not a good use of their resources."

[3]For most of the last decade, information on the average cost difference between big banks and small local financial institutions has not been publicly available. But, as it turns out, the firm that the Fed once employed to gather this data, Moebs Services, has continued to survey fees at more than 2,000 financial institutions. Moebs agreed to share its 2009 data with the New Rules Project. As our charts [3] show, the biggest banks still impose much higher costs on their customers than small financial institutions do.

Not only are fees lower, but several studies have found that smaller banks and credit unions pay higher interest on savings accounts. In a study published by the Federal Reserve Bank of Cleveland, researchers Kwangwoo Park and George Pennacchi examined data from 1998 to 2004 and found that rates on one-year CDs were an average of 14 percent higher at small banks (under $1 billion in assets) than at large ones (assets of $10 billion or more) and rates on interest-bearing savings accounts were 49 percent higher.

Why are small banks and credit unions a better deal? One reason is that they really want your deposits. Unlike big banks, which have access to wholesale funding, community banks rely much more on customer deposits to finance their lending and investments.

A second reason is that many small banks are more efficient than their big competitors. That may seem surprising at first. In many industries, more volume lowers costs, but in banking there's an upper limit - a point at which a bank's bloated bureaucracy makes the cost of doing everything more expensive, not less. Exactly where that threshold lies is a matter of debate, but some analysts suggest that the sweet-spot for efficiency starts as low as $500 million in assets and ends once a bank hits $4 or $5 billion. To put that in perspective, Bank of America and J.P. Morgan Chase are about 300 times that size.

But perhaps a more instructive question to ask is not why are small banks a better deal, but how do big banks get away with charging so much more? After all, people have a choice about where to bank and free markets are suppose to drive down prices.

Christopher Peterson, an expert on consumer finance at the University of Utah School of Law, says there are two main theories. Those who believe the market is working contend that "bigger banks have more comprehensive branch locations, so people will pay a premium for convenience."

Another explanation is that banks are adept at obscuring their prices and make it hard to comparison shop. "I think our impulse in this country is to overestimate the ability of people to shop down fees that are not transparent," said Peterson.

Indeed, the Government Accounting Office recently sent secret shoppers into 185 bank branches. They were unable to obtain detailed information on account terms at one-third of those branches and unable to obtain a comprehensive schedule of fees at one-fifth, despite the fact that such disclosures are required by federal law - a law that apparently is not enforced. More than half of the banks did not provide this information on their web sites, either.  (Here's the GAO's report [4].)

Mierzwinski says big banks have the advantage of having recognizable names and branches everywhere. Many people simply go to the nearest big bank branch and don't shop around. "They particularly don't compare the bank's penalty fees, which are so hard to find," he said. "Everyone advertises free checking, but 'free' only defines monthly maintenance fees."

If you bank at a big bank, all of this should prompt you to give some serious thought to ditching it. Even if you are good at avoiding penalty fees, why do business with a bank that charges exorbitant prices and attempts at every turn to hit its depositors with sneaky fees? Shop around instead for a institution that treats its customers fairly. Consumer advocacy groups say the best place to start is with local credit unions and community banks. The smallest have the lowest costs on average. But keep in mind that averages are just that; institutions vary and each should be evaluated individually according to how well it meets your needs and how responsive it is to your community.

Take Charge of Your Money

Get Your Federal Benefits Electronically

Source: U.S. Department of the Treasury, Financial Management Service

Still receiving your federal benefit payments by paper check? You should know that paper checks can be vulnerable to delays, loss or theft. In 2008, more than 485,000 Social Security and Supplemental Security Income (SSI) checks were reported lost or stolen and had to be reissued. Don't let yours be next - get your payments electronically. It's safer, easier and gives you more control over your money.

To sign up for direct deposit, call the U.S. Department of the Treasury's Go Direct^® campaign helpline at (800) 333-1795, go to www.GoDirect.org, or visit your bank or credit union. Prefer a prepaid debit card? With the Treasury-recommended Direct Express^® Debit MasterCard^® card you can make purchases, get cash and pay bills. No bank account is required. To sign up for the card, or for information on its fees and features, call (877) 212-9991 or visit www.USDirectExpress.com. It's your money - take charge of it today!