Letter: Unintended Exposure Through Bank Debit Cards

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All,

When giving an analysis of bank debit cards and the advantages and disadvantages of their use, we come across quite a bit of useful information. There is indeed a shift from the use of checks and cash towards debit cards. According to the Federal Reserve Payment Study (2013) “Over the years, payments have become increasingly card-based. Card use may have replaced check use for certain payments” (P.6). The use of cards is of great end use convenience to account holders as swiping a debit card is faster than writing checks. Debit cards are almost universally accepted in today’s market, and most vendors do not overtly charge usage fees. However, many businesses have in fact increased prices slightly to offset the costs of maintaining an electronic payment network. The most common overt increase of payments is at service stations where the price per gallon of fuel is slightly increased with debit/credit payment. Also some business have instituted minimum purchase prices in order to utilize debit or credit cards. The use of a debit card also decreases bulk the end user must carry as a check book is significantly larger and heavier when compared to a debit card.

Another great aspect of debit cards is almost real-time payment posting/authorization. This allows for very accurate and timely electronic account balancing and a more robust option to balance accounts accurately. The record of transactions is also easily searchable depending upon your financial institution’s electronic platform. The downside to this is the system is wholly electronic based with backup procedures that are largely institutionally chosen and not standardized.

One major drawback however to debit/credit cards is financial and personal data security. Debit cards operate on an electronic system that is much more susceptible to fraud, and according to the Federal Reserve Payments Study (2013) “In 2012 cards had substantially higher total unauthorized transactions by number and value than ACH and checks. Card fraud rates by number and value were also substantially higher” (P.6). So the convenience doesn’t come without increased risk to fraud and identity theft as the magnetic strip contains personally identifying information.

Within the last couple of years we have also seen an increase in exploitation of date storage facilities and payment processing websites. All of these convenient systems create a huge amount of exposure, often times creating huge liability for both parties to financial fraud and leaked personal information. If you are unfortunate enough to be targeted for this type of financial fraud, the path to recovering your money and credit can be quite time consuming and difficult. According to PrivacyRights.org (2015) “Debit cards typically put consumers at much greater risk than credit cards, because they offer less legal protection in the event of a loss. And because debit cards access funds directly from your bank account, your money will remain missing while you and your bank sort out any theft, which could mean bounced checks, late fees, and numerous other problems” (P.1).

Scarier still is the knowledge that not all nefarious parties involved in such schemes are seeking financial fraud alone. On the rise are government sponsored hacks that target monstrous amounts of data to create databases of sensitive information. According to CNN (2015) referencing a recent breach “the goal behind the attack is to build a database of federal employees using stolen personal information to fool and impersonate government workers, to set up future insider attacks. By revealing who has security clearances and at what level, the Chinese may now be able to identify, expose, and blackmail U.S. government officials around the world, the experts added.

Ladies and gentlemen we are currently at war with China; this may be a soft or non-kinetic war, but it’s war nonetheless. The war we fight currently against China and potentially Russia is being fought on the front lines of the Internet and other Internet-type systems of data storage and sharing. The financial/personal identifying information data breaches are just another aspect of the exploitation of our lust for easy to use convenient systems. So I submit to you that perhaps the ease of using that credit/debit card or your favorite website might not be worth it after all. Don’t be complacent.

The information I obtained for this posting I believe is both accurate and relevant. The sources were reputable and within the referenced documents was additional source material and reliable research.

S.M.

References:

Liu, M., Berkenpas, J., & Chen, M. (2013, December 19). The 2013 Federal Reserve Payments Study. Retrieved October 17, 2015, from https://www.frbservices.org/files/communications/pdf/research/2013_payments_study_summary.pdf

Liu, M., Berkenpas, J., & Chen, M. (2013, December 19). The 2013 Federal Reserve Payments Study. Retrieved October 17, 2015, from https://www.frbservices.org/files/communications/pdf/research/2013_payments_study_summary.pdf

Liptak, K., Schleifer, T., & Sciutto, J. (2015, June 6). Experts: China might be building database of federal worker info – CNNPolitics.com. Retrieved October 17, 2015, from http://edition.cnn.com/2015/06/04/politics/federal-agency-hacked-personnel-management/

Unknown, U. (2015, August 1). Fact Sheet 32: Paper or Plastic: What Have You Got to Lose? Retrieved October 17, 2015, from https://www.privacyrights.org/fs/fs32-paperplastic.htm

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