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A Thing

The World Wide Web of Fraud

By Chris Hester

From phishing scams, database hacks, computer viruses and unscrupulous merchants, your business is at great risk from Internet-based fraud; however, your personal information is at risk, too. Following are some tips on ways to protect it:

Phishing Scams

The number of phishing scams has multiplied rapidly in recent months. The scam, in a nutshell, involves being lured into providing personal information by official-looking fake e-mails and Web sites.

What happens next? Criminals use this information to steal your identity and empty your checking account, charge up your credit cards or open new accounts in your name. Following are three ways to avoid this scam:

  1. Remember that legitimate companies do not ask for sensitive information via e-mail (Social Security number passwords, bank account information, etc). It's best not to respond to these e-mails at all. The links contained within the message will direct you to fake Web sites or force you to download a program that captures every keystroke you type, even typed into legitimate sites.

  2. Before entering personal or financial information into any site, check to make sure that the site is secure. The address in which you are entering payment information should begin with "https," and you should see an icon for a padlock at the bottom of your browser.

  3. Be skeptical. Phishing e-mails often look like they are from well-known companies such as PayPal, eBay and Citibank. The scammers use scare tactics to try to get you to verify or secure your account. If you have doubts about whether the e-mail is legitimate, open a new window in your browser and enter the company's URL, or call the company directly.

Internet Merchants Storing Credit Card Data

No one likes to dig their credit card out of a wallet or purse every time they make a purchase on the same Web site, but that's exactly what you should do. Because hackers have become more sophisticated in their attacks, it's no longer a good idea to let merchants store your credit card data, regardless of the inconvenience. Following are a few recent examples of why:

  • A wholesale club announced in the spring of 2004 that its database had been hacked, and an estimated 40,000 credit cards were compromised.

  • Earlier this year, scammers made news by using simple Google searches to turn up credit card numbers.

  • In August of this year, a 21-year-old Pennsylvania man was arrested for stealing more than 2,000 credit card numbers from computers that he had hacked.

Computer Security

After initially setting up our PC, most of us fail to keep up with securing it. Without showing ongoing diligence, the system becomes extremely vulnerable to security breaches that might involve the stealing of personal and financial information. At the very least, use the following protective measures:

  • Virus protection software: This software monitors both incoming and outgoing files. It will not only send an alert upon receipt of a known virus, but it will also remove it. Update the software frequently (most products offer an auto update feature) to protect against the latest viruses.

  • Firewall: This is hardware or software that protects the computer from others' gaining access to it via the Internet.

  • Security patches: Download the latest security patches to help protect against hackers. According to recent Internet research, an "unpatched" PC connected to the Internet will only last about 20 minutes before malicious programs compromise it.

Financial Records

Now that e-commerce has been around for more than a decade, most retailers' procedures are fairly similar. Merchants will normally e-mail a receipt for an online transaction.

If dealing with an unscrupulous individual, or if you simply entered the wrong e-mail address, you may never receive a receipt. Your best protection is to print a copy of the confirmation page or save it to your computer as long as it does not contain your credit card number.

Statements and Credit Reports

Checking monthly bank and credit card statements assists in early notification of fraud. Also, regularly monitor accounts online.

Last, but certainly not least, review your credit report at least once each year. This will alert you to suspicious activity, such as accounts that someone else has opened in your name. The three major credit-reporting agencies (Equifax, Experian and TransUnion) must now provide you with one free report each year.

West Coast states can start taking advantage of this rule in December of this year, with the rest of the country following suit by next summer.

Additionally, if you've been denied credit within the last 60 days based on derogatory information on your credit report, you're already entitled to a free copy of the report now.

Chris Hester is Production/Underwriting Manager for Electronic Exchange Systems (EXS), a national provider of merchant processing solutions. Founded in 1991, EXS offers ISO partner programs, innovative pricing, a complete product line, monthly phone/Web-based training, quarterly seminars and, most of all, credibility. For more information, please visit EXS' Web site at or e-mail Hester at . EXS is a registered ISO/MSP for HSBC Bank USA, National Association.

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