There are laws that help protect your bank account's security. Your job is to keep track of the transactions in your account and take reasonable precautions.
Whether you use cash and paper checks or do most of your banking electronically, you want to be confident that the money in your bank accounts is safe from people who would like to get their hands on it. Luckily, there are laws and practices in place — and steps you can take — to keep your account secure.
The first rule is to know where your checkbook and bank or debit card are at all times.
TRADITIONAL BANKING
If you keep track of the checks you write, the cash you withdraw at an ATM, and any electronic transfers you authorize, including those with your debit card, you've taken an important step in banking safely. If you check your account online, be alert to any transactions you don't recognize and notify the bank immediately.
If you don't check your account online, be sure you open your bank statement when it arrives each month and review it carefully. Generally you have 60 days to report problems with electronic transfers but only 14 days to report other types of problems. It's always smart to call first and then follow up with a letter, keeping a copy for your files.
If you've provided the required notice, any money taken from your account will be restored. But it may take time.
ONLINE BANKING
Some people worry that online transactions aren't as safe as the ones you make in the traditional way with cash or paper checks. But banks take many precautions to protect you and themselves from fraud or theft. And you have the same legal protections with online accounts as you do with conventional accounts.
Bank records are insulated by a firewall, a computer that controls the flow of information between the bank's internal computer system and the outside world. A firewall is designed to ensure that your personal data, and all the information the bank keeps, can't be stolen or manipulated by outsiders.
Banks also provide data encryption. When you communicate with the bank's site, your passwords, personal data, and other secure information are scrambled, or encrypted, by the site. No one who doesn't have the key to unscramble the data can tap into your account.
You use a personal identification number, or PIN, to identify yourself whenever you enter the bank's site. It may be the same PIN that you use for your ATM or debit card, but it's probably a good idea to choose a different one. That way, even if one PIN is compromised, the other isn't.
In addition to those safeguards, many online banks automatically log you off if you're idle for more than a few minutes, so no one can get into your account if you walk away from your desk. And some banks send you e-mail alerts if someone has tried to get into your account with an incorrect password.
DEBIT CARD PROTECTIONS
There are also safeguards in place to protect you if your bank or debit card is stolen or your account is compromised.
The danger is that if someone uses your debit card without your permission, they can use up your entire balance, plus the full amount of your overdraft line of credit. Fortunately, you can get back almost everything that's taken from your account — if you act promptly.
That's because all electronic fund transfers, or EFTs, are governed by the Federal Reserve Board's Regulation E (Reg E), which spells out in specific detail what your rights are and how they must be protected.
If you report a lost or stolen card within two days of discovering that it's gone, the most you can end up losing is $50, no matter how much is missing from your account. In fact, at some banks you may not lose any money at all, even if someone uses your card. Reg E doesn't require that the report be within two days of the actual loss, since it's possible you may not discover it's gone right away.
If you don't realize your card is gone until you get a bank statement reporting withdrawals or purchases you didn't make, you still have 60 days from the postmark on the statement to report the loss or misuse. As long as you're within that time limit, you still won't lose more than $50.
But if you miss the 60-day deadline, you could lose all the money that's taken from your account after the 60-day period ends — provided there's anything left — plus up to $500 of what was taken during the initial 60-day period.
THE HASSLES
The bigger issue with a stolen card, of course, is the hassle. If someone has used your card before you realize it's gone, your account could be bled dry. If you don't have overdraft protection for the bills your pay, you could encounter bounced checks, angry creditors, late fees, and a host of other problems.
Your bank initially has ten days to investigate your report and refund any money that it agrees was withdrawn without your permission — potentially minus $50. If it wishes, the bank can extend its investigation for up to 45 days. But if you've filed a written report, it must put the disputed amount back into your account within ten business days so you won't be left high and dry.
The bank has more flexibility with accounts open less than 30 days. It can take 20 days to finish an initial inquiry and refund your money, and up to 90 days for an extended investigation. The suspicion may be that you're trying to defraud.
Debit card problems can be resolved quickly. But if the bank questions your report or believes the evidence doesn't support your claims, getting a loss resolved can be time-consuming and potentially expensive.
SAFETY PINS
Sooner or later you're likely to lose a debit card or have it stolen.
As long as your PIN isn't written on the card or some other obvious place, it can be pretty tough for a thief to get far at an ATM or with a card reader. Some ATM machines even swallow a card if someone types in three incorrect PINs in a row.
Protecting a debit card that can be activated with a signature is harder, since retailers don't always check closely. But be sure to sign the back anyway. That way there's always a chance someone will discover the forgery and refuse the sale. Unfortunately, that won't help you if the thief uses the card to make online purchases, where you are at risk if someone has your card.
Of course, the sooner you notify the bank and the card is cancelled, the safer your account will be.
© 2011 Lightbulb Press, Inc. All Rights Reserved.
