The more financial transactions you conduct online, the safer your personal information will be.
That may seem to go against all the hype and horror stories of online fraud and identity theft, but a recent report by Javelin Strategy & Research found that using the Internet for financial transactions can help protect consumers from the two most prevalent kinds of ID theft: opening new accounts with your information and using your existing accounts without authorization.
That's because you are far more likely to have a bill or statement containing compromising information stolen from your mailbox than to have a hacker crack your accounts electronically.
"Paper is generally the enemy when it comes to identity theft," says James Van Dyke, founder and CEO of Javelin Strategy & Research. "The Internet is the solution."
The Javelin report estimates online banking and bill paying can help prevent more than one million cases of identity theft and save consumers and businesses $4.8 billion annually. Javelin, which advises financial services companies on technology, based its report on a survey of 2,877 consumers as well as analysis of Federal Trade Commission findings and U.S. Postal Service reports.
Get over your fears
Although personal information can be obtained more easily in the physical world than through secure Web sites, Van Dyke says fear of conducting financial transactions online persists among consumers. "They think if they stay off the Internet, they won't be a victim of (identity theft)," he says.
Van Dyke admits that it is easier for ID thieves to use stolen information for online transactions than traditional transactions (in a store, for example). But that doesn't mean it's easy to steal personal information that's transmitted online through secure sites.
In fact, more private personal information is being sent to mailboxes than ever before. The average household receives 20 paper statements and bills per month, Van Dyke says.
People who rely solely on paper statements tend to monitor their accounts just once a month. Those who bank and pay bills online view their balances and statements nearly four times per month. Watching your accounts in real time can help you spot and stop fraud in its tracks.
How to make the switch
While many companies allow you to monitor your account and pay bills online, they will continue sending you paper statements. The key to protecting yourself against ID theft is eliminating that paper. So make sure you ask the company to stop mailing statements.
If you aren't already paying bills online, here's what to consider when making the move to paperless transactions:
Start with your bank. Many banks now offer e-banking and bill payment services for free. If your bank charges a fee for the services, shop around. Many banks and credit unions let you pay various accounts such as your phone bill, utility bill, credit card, etc., using your checking account. You can pay all your bills at one sitting and monitor all your payments on one screen.
Check with the companies you currently do business with to see if they offer online bill payment. You may have to go to several sites to pay your bills, but it's better to stick with trusted firms than to opt for a third-party electronic bill-payment service.
Make sure the site offers a "no-holds-barred" guarantee that completely covers your losses if your account is compromised.
Make sure you're comfortable with the site's online payment system. Most offer demonstrations, and Van Dyke recommends taking the time to view them.
Make sure you have access to 24/7customer service with a real person who can answer questions and help you with problems.
Sign up for e-mail alerts that notify when bills are due. (Some sites even notify you of unusual account activity.)
View online statements and bills weekly.
Don't respond to e-mails that ask you to log in or update data. Only log in to secure sites directly by typing and double-checking the Web address.
GETTING STARTED
