Identity Theft and Fraud
A common practice among service companies (like insurance companies, utilities, and others) across the country is to insist that you reveal personal information, bank account access numbers, and/or credit card information … and sign authorizations for them to collect directly from your private or business accounts. As an incentive for you to give away control … many times they will offer a discount. Some companies do it the opposite way, “Oh, you don’t want us to have direct access … well without access our price goes up!”
Let’s analyze the risks you face when you give out access information and/or authorization for direct/automatic bill payments.
1.Thieves are well aware of which companies collect payment/source data directly from their customers. Such companies are a prime target for them. It doesn’t matter whether the it’s an inside informant leaking information or hackers breaking into the computer systems … you are still a victim and it will still cost you dearly if some unauthorized thief steals money from your bank account or credit card.
2.The companies that demand you pay through automatic withdrawals or credit card access claim they maintain the minimum standards required by law for consumer protection. Sounds good … right? Minimum standards actually mean that they do what they need to … to avoid any legal issues that might be involved if someone comes after them for negligence. Negligence means they didn’t meet those minimum standards … in which case they might be liable for your losses. Have you ever heard a company claim they meet MAXIMUM standards … no, you haven’t … because they don’t.
3.The more times you give out such personal information the more you expose yourself to being hit by thieves or by identity theft. If you allow such access twice … it doesn’t mean you are twice as likely to get hit … the risk is much higher than that. Larger companies have hundreds of people with access to personal consumer account information … so each exposure increases your risk hundreds of times.
4.Insurance companies and banks … in particular … are well aware that their supposedly secure account information files are susceptible to hackers (and/or information leaks from within) … the fact is they have actuarial tables that estimate all forms of loss potentials. They also know that in order for them to be legally held as negligent … you would have to prove they didn’t meet minimum protection standards. Since they essentially wrote the standards there is little chance you would be able to prove such a thing. Further, you would also need to prove that your loss was directly traceable to an attack (or leak) from their databases. Proving that would probably be next to impossible too!
5.If you have authorized direct withdrawals from bank account or credit cards … you can’t just call the bank or Credit Card Company and tell them to stop paying such-and-such account. They will tell you it is electronic and you will need to go directly to the company that is charging your account and get them to stop taking your money. Personally, I have had trouble with this in the past. In one particular instance in order to put a stop to it … I had to close my checking account and open a new one. What’s worse is if the company you gave access to … closes its doors … now you have no one to help you stop the charges and those charges could continue for months … and any potential for recovery could be subject to the whims of a bankruptcy court.
6.Here is one you’ll like. Insurance companies protect themselves by maintaining minimum standards for database protection (that they wrote to protect themselves from liability). Then they turn around and sell you insurance to protect yourself from identity theft. Ya just gotta love it!
7.Companies that insist you pay with automatic withdrawals claim it saves them money. To save them money you give up control … is that really the tradeoff you want to make? You can’t get them to stop charging you … unless they agree to stop charging you. Now ask yourself this question. Have you ever had a disagreement with a company you are doing business with … personally or in the business arena? Enough said!
8.Am I indicating that you can’t trust anyone? Absolutely not! It’s simple really. There are thieves out there and it is impossible to know where or who they might go after next. Be honest, if you put a burglar alarm on your home … it’s not because you don’t trust your neighbors? And it’s not likely that a company you do business with would steal from you either. You have a burglar alarm because you don’t know who or when someone might attempt to break in your house and you’re smart enough that you don’t keep a key under the front matt. You don’t want someone stealing your identity or accessing your bank/credit card accounts either … but giving automated access to these companies that insist you pay that way … is tantamount to putting a key under your matt for hackers and thieves.
9.When you get right down to it … this whole direct pay nonsense is actually a bully tactic that companies use. It offers little advantage to you, puts you at a much higher risk for loss and/or identity theft, takes control of your money out of your, and guarantees them an automated revenue stream.
Sure … automated payments are the trendy thing to do … but is it really the smart thing to do?