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Living with credit, Protecting yourself

Worry about payment security, yes. Take precautions, no

Sienna Kossman

Americans may be joyously getting ready to feast on turkey and pie before shopping this weekend but there’s still a pretty significant worry weighing on their minds: payment security.

A survey of more than 1,000 U.S. adults conducted by BeFrugal.com revealed consumers are more worried about falling victim to identity theft, credit card fraud or a store data breach (42 percent) than sticking to a shopping budget (27 percent) or dealing with crowds (27 percent) this holiday shopping season.

Additionally, about a quarter of respondents (24 percent) said they feel more at risk for fraud this year than they did last year. Consumers felt pretty at-risk last year, too, according to a similar study conducted by CreditCards.com (See “Many cardholders will avoid stores hit by data breach.”)

This holiday season, BeFrugal.com’s numbers suggest approximately 36 million consumers may avoid certain retailers this holiday shopping season due to reports of stolen information.

After news of another data breach surfaced this week, I understand why people have strong security concerns . The latest data breach may impact consumers who dined or shopped at Starwood Hotels & Resort locations over the past year. According to Starwood’s security report, the payment systems of 54 hotels were infected with a malware that exposed payment card information to hackers.

Many consumers were already concerned. A whopping 75 percent of adults surveyed by BeFrugal.com said they’re worried about sharing credit card or personal information this holiday shopping season, especially when making purchases in stores. In fact, more Americans are concerned about using their credit cards online (63 percent) than in-store (53 percent), according to the survey.

This particular stat dumbfounded me because the introduction of chip card technology in the U.S. has made it harder for fraudsters to profit from credit card information they skim in-store. The protection does not extend to online payments.

If you are a consumer shopping online to avoid retail data breaches, proceed with caution. Card-not-present fraud  in the U.S. is increasing and now outpaces card-present fraud, according to Julie Conroy, financial fraud expert and research director for Aite Group.

“I think we have a perfect storm brewing, in which there is a vast amount of data at criminals’ disposal, thanks to all of the data breaches,” she told BankInfoSecurity.

Electronic payments provider ACI Worldwide found that card-not-present fraud increased 30 percent during the first half of 2015 compared to the same period last year. One of out of every 86 card-not-present transactions conducted between January 2015 and July 2015 was fraudulent.

Why the stark increase? ACI believes it’s partly because more consumers are shopping online these days, whether it’s with mobile devices or desktops.

Yep, the thing some consumers are doing to stay safe from retail data breaches may actually be increasing a different type of fraud risk.

Online shopping may only increase this weekend, too, as Cyber Monday nears. According to American Express, most shoppers (67 percent) will shop both online and in stores this weekend but holiday shopping as a whole continues to move online. About 2 in 5 U.S. consumers plan to do most or all of their holiday shopping online this year.

You may feel safer typing a card number on a retailer’s website rather than dipping or swiping a card in-store, but shopping online won’t protect you from fraud — especially if you aren’t taking substantial measures to secure your online activities. The BeFrugal.com survey found the majority of consumers aren’t doing as much as they can to protect their personal and financial account information.

For example:

•    75 percent do not frequently update and differentiate their passwords.
•    67 percent don’t always check URLs for a padlock symbol, which indicates it’s a secure page.
•    47 percent don’t shop online using a secure Internet connection.
•    Only 53 percent keep antivirus software up-to-date.

I’m cringing a little. Some of those security measures are really basic. If you need a good refresher on how to prevent fraud, read our tips on what to do if you suspect your information has been compromised in a data breach, or this blog on password security.

What I want you to take away from this post is there are fraud vulnerabilities virtually everywhere these days. Retail data breaches may have damaged your trust in retailers but shopping online isn’t a fraud-free solution. Fraudsters will continually find ways to compromise personal data and payment information, whether it’s through a retail store point-of-sale data breach or online fraud using stolen credentials.

If you’re taking part in Black Friday/Cyber Monday events this weekend, be mindful. You may be blissfully shopping and spending time with family but fraudsters don’t take holidays. They’ll always want a piece of your financial pie.

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