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Privacy and Security

McAfee Labs, a company that deals with internet security from malware and hackers, has announced that a ring of criminals intend to steal money from customers with accounts at major American banks. The operation even has a codename, “Project Blitzkreig,” and is rumored to go into effect this coming spring. The fact that this plan is now out in the open makes it more likely that the cyber attack won’t occur as predicted, but it still engenders public fear and concern that our money is vulnerable when deposited into the bank.

According to CNN Money, the following banks are being targeted: Chase, Fidelity, E*Trade, Charles Schwab, PayPal, Citibank, Wachovia, Wells Fargo, Capital One, Navy Federal Credit Union, and more. There may be many reasons to dissuade a potential customer from doing business with large financial institutions, but the threat of a cyber attack shouldn’t be one. Customers who see the potential for this kind of a crime as a reason for not doing their financial business over the internet are over-reacting, but that’s little comfort in the face of fear.

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The banks are liable for any stolen funds as a result of cyber crime. Customers will not lose money. If this particular attack is carried out, despite the public awareness in advance, it would work by using customers’ own computers to access their own accounts to transfer small amounts of money. With millions of zombie computers operating, this adds up to a lot of stolen cash, but any one customer would, in theory, see only a small transaction. It’s riskier for the banks than for any one customer.

Banks are hit by cyber attacks every day, and are becoming more adept at preventing breaches of security. Only the big attacks hit the news. Banks are bombarded by security threats every day, and their systems are improving exponentially for detecting and dealing with these problems.

It’s fairly simple to ensure your account is not vulnerable to this particular attack. When logging into your bank account online, most banks allow you to “remember your computer.” You can then bypass a few security questions when the bank recognizes your computer’s IPv4 address, a unique identifier for each internet connection. Hackers can spoof your IPv4 address or even use malware to hijack your computer so you don’t even know it’s accessing your bank account. It’s best to disable the “remember your computer” feature. It’s a little bit of a pain, but it’s much more secure.

Be aware of social engineering. Email programs have become very adept at filtering out spam most of the time. You may still see emails that look very much like they are official, coming from your bank, asking you to visit the bank’s website and confirm some piece of information. In reality, the bank’s website is actually a hacker’s website, designed to look identical to the official site. Never enter your password or any other identifying information on a website that you’re accessing over an insecure connection.

Internet browsers now even identify the security certificate, so when you’re visiting a secure website that’s supposed to be operated by Chase, you can verify you’re safe. Click the security icon in your browser’s address bar for more information. Here is a screenshot of what that looks like with Chrome. (Click on the image to zoom in.)

You can make your passwords as long and as random as you like, but the complexity of a password is irrelevant if you hand it to a criminal willfully.

Stashing your money under your mattress is much less safe. When you don’t like dealing with banks because you already believe that these corporations are evil, stories like those that create fear are particularly resonant. News of major security threats seem confirm the skeptic’s opinion that money is only safe when it’s cold, hard cash, not bits in a bank’s computer. The threat of your house being robbed and criminals being able to find your hidden bills or walk away with your safe is much more likely than losing money due to cyber crime.

Many people seem to be taking this particular threat lightly, and that’s a good thing. “Let them come take my $1.50.” Perhaps a sign of the economic times, bank customers reacting to the news seem hopeful the criminals will forget their true intent or press the wrong button and deposit cash into these bank accounts.

If attacks like these ever get to the point of being engaged, the banks will know before you do. They could already solve the problem before the media confirms the plan for the attack has been executed. There is no way customers have their money at risk. Federal law requires that banks are liable in the event of a security breach, and there is no bank that wants to be liable for a potentially large amount, so the companies have a very strong incentive to be very proactive and protect their customers.

I may criticize banks often, but security is one area where the needs of the customers, shareholders, employees, and executives are completely aligned.

Does news of this planned cyber attack, Project Blitzkrieg, change the way you feel about banking online?


After a few years of testing this new security feature, Vanguard has begun rolling out voice pattern recognition technology for security. According to the representative I spoke to today, this feature will be available for Flagship customers first, and all customers will eventually follow. Voice recognition adds another layer of security to your financial accounts, and I’m impressed with it so far.

When you call a Vanguard representative to discuss your account, they ask a security question to verify your identity. They may ask your pet’s name, your high school mascot, or some other piece of information a stranger might not know. This isn’t very secure; a friend or family member could easily know the answers to many of the questions typically used for security verification. It is much more difficult to fool voice pattern recognition. Even a digital recording of your voice will not have the same acoustic properties that can be detected over the phone.

Voice Pattern WaveformThe biggest benefit of this level of security is that it eliminates the need for Medallion signature guarantees for most financial transactions for which they were previously required. Signature guarantees can be a hassle; for a financial institution that conducts is business mostly online and over the phone, you might need to visit a local bank or credit union with identification in order to secure a signature guarantee, and then it will take some time to send the signature guarantee to Vanguard.

To enable voice recognition today, call a Vanguard representative today. You’ll be asked to repeat a passphrase several times: “At Vanguard, my voice is my password.” The security system will analyze your voice, which will act as a secure key. After confirming that you’re ready to begin using voice recognition as a security check, the new technology will be activated for you with your next call to Vanguard.

After entering your Social Security number via your phone’s keypad as usual, will be prompted to speak the passphrase. It sounds like this technology could be easily fooled through recording, or to be ineffective depending on the quality of your phone line, but it’s much more secure and accurate than the existing system.

If your security check through voice recognition fails when you call, you will be asked to answer a security question. This fallback can solve any issues if you’re in a noisy room, for example, but that reduces the level of security.

Would you use voice pattern recognition to verify your identity for financial transactions?

Photo: altemark


The fourth largest bank in the United States by assets, Wells Fargo, admitted last week that many of its customers received statements with other customers’ banking information included. In this security breach, those affected might have received a statement with a stranger’s account number, transaction detail, and in some cases, Social Security number. Other affected customers might have had their information compromised, with their details included on other customers’ statements, without their knowledge.

Wells Fargo through its spokesman Josh Dunn blamed the error on a “malfunctioning printer.”

Wells FargoThe biggest threat is that with an account name and number, and a bank’s routing number which is public information, anyone can easily print a check. When presented, if the signature isn’t checked, could result in a withdrawal from the compromised customer’s account. For those whose Social Security numbers have been shared, the potential fraud could be worse.

My first reaction is to encourage customers to turn off paper statements opting instead for online statements only, but that won’t prevent every potential bank error. Online statements are much more secure than mailed statements.

If you’ve been affected, I would suggest changing your account number at Wells Fargo. This may be a significant process, particularly if you have direct deposit enabled or automated debits scheduled with outside vendors. It will be worth the effort, however, to ensure the compromised account number is no longer linked to you. If you Social Security number has been shared with a stranger, you should contact one of the credit reporting bureaus to freeze your credit. Your Social Security number can be used to open accounts in your name, using your credit history, so by working with the credit agencies you can opt to be notified if anyone tries to open a new line of credit.

Considering Wells Fargo’s error, the bank should offer to pay for credit monitoring services for affected customers.

Is this extra motivation for moving your money out of a big bank? There are many reasons to switch to a credit union, but this may not be a reason on its own. Mistakes like this one can happen at any institution, regardless of the company’s size.

I’ve used Wells Fargo for my primary banking services, ever since Wells Fargo acquired Wachovia, since Wachovia acquired First Union, since First Union acquired CoreStates, since Philadelphia National Bank merged with New Jersey National Bank forming CoreStates Financial Corporation.

If you’re a Wells Fargo customer, do you plan to close your account after this incident?

Photo: MoneyBlogNewz
BusinessWeek (AP)


The latest big business security breach affected Citigroup and about 1% of the company’s credit card customers. Hackers were able to access the customer database, finding customers’ names, credit card numbers, and email addresses free for the taking. The hackers were not able to gain access to other personal information, like Social Security numbers, card verification numbers, or birth dates. The company has started contacting affected customers.

It’s unlikely that customers whose numbers and names are significantly more susceptible to identity theft as a result of this breach, because Citi kept the more sensitive information secure. It may still be a god idea to change your password if you have online access to a Citi credit card. In cases like these, there is little that customers can do to avoid being included in a data breach short of opting out of the finance industry overall. If you never sign up for a credit card, you prevent hackers from stealing your information. Once you’re in “the system,” you have to rely on banks to protect your information appropriately.

As a result of this breach and the continual development of technology, financial institutions may soon find new regulations that require even stricter security for online access. Some financial institutions now offer options for their customers to authenticate via a SecurID — technology that uses wireless networks to provide a unique code over the air that must be verified before you can access your account. In my role at my former job, I accessed banking institutions on behalf of the company, and every bank required a different wireless device. This could be where the consumer market is heading — and if it is, it’s going to make even more sense to simplify your finances.

Additional information: According to the Wall Street Journal, Citigroup waited up to three weeks after the incident before notifying customers. The delay was due to an investigation into the issue.

Update: Of the 360,000 accounts breached, only 3,400 accounts were subject to fraudulent charges by the hackers. Customers are not responsible for fraudulent charges, though the total loss on Citi’s side due to the fraud is $2.7 million.

Yahoo Finance / AP, CNN Money


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