1/14/2011 12:57 PM ET|
5 ways your bank spies on you
If you think your bank doesn't care about you, you might be surprised to know just how far it will go to find out -- or try to guess -- more about you.
Chances are, you don't feel close to your bank.
Banks tend to be big and imposing, which can make you feel like a faceless, anonymous number -- just one among the multitudes who deposit and withdraw money there.
But you're not going unnoticed. In fact, your bank is keeping an ever-closer eye on you these days. Tighter credit standards, new ways to combat fraud and an ever-growing pile of monitoring services offered by credit bureaus and other analytics companies means that banks know, or guess, more about you than ever before.
Here are just some of the ways they're tracking you.
1. Transaction scores
Every time you swipe your credit or debit card, the transaction is scored to gauge the risk of fraud, said John Ulzheimer, the president of consumer education at SmartCredit.com and the author of "You're Nothing But a Number." Where you're shopping, how much you're spending and how that compares with your usual patterns are noted and analyzed. Atypical or high-risk spending patterns can result in a call from the bank's fraud department, a hold on the transaction or even the temporary shutdown of your card.
What seems like innocent behavior to you can be highly suspicious to the bank's software. If, for example, you top off your car's gas tank and then head over to Target to stock up, you might trigger a red flag. That's because credit card thieves often try using a card at a gas pump to see if it's active. If it is, they may barrel over to a retailer to use the purloined account to buy electronics and other easily fenced items.
Of course, thieves change their tactics all the time, and bankers constantly tweak their software, so it's hard to predict what could set off a fraud alert. To keep disruptions to a minimum, give your bank plenty of ways to contact you. Make sure it has your current cell number and consider signing up for e-mail or text alerts that can let you know when a problem occurs. Call your bank when you plan to be out of the country and consider giving it a heads-up when you're off to buy electronics of high value, such as a new television or computer system.
2. Behavior scores
Credit scores gauge how a person handles a variety of credit accounts. Behavior scores, by contrast, look at how a person handles an individual financial account. Behavior scores got a bad name a couple of years ago when American Express told an Atlanta businessman his credit line was being cut in part because of where he shopped.
"Other customers who have used their card at establishments where you recently shopped have a poor repayment history with American Express," AmEx's letter to Kevin Johnson said, which led to headlines like "AmEx hates Wal-Mart shoppers." American Express quickly dropped behavior scores from the tools it uses to determine credit lines.
But behavior scores still are widely used as risk-evaluation and marketing tools. On credit accounts, behavior scores look at where and how you spend your money, as well as how you pay your account. (Do you pay in full? Minimum payment only? Sometimes carry a balance, sometimes not? Often late, but never by more than a few days?)
Card issuers can use the scores to, for example, guess whether a missed payment is an anomaly that can be ignored or the start of a default that might trigger them to start calling you daily about when you're going to pay. A sudden switch in spending -- such as starting to take cash advances or spending a lot of time in casinos -- may also send up red flags. Additionally, lenders use behavioral scoring to help target marketing efforts such as who gets low-rate balance transfer offers.
Bankers can use similar scores to monitor how you handle your bank accounts. What the scores tell them may help determine how long you have to wait before you can access deposits (known as "deposit holds"), whether a customer-service representative can waive a fee you don't like and what other products the bank may try to sell you.
Fair Isaac, the creator of the leading FICO credit score, works with banks to create custom behavior scores that monitor bank balances, withdrawal activity and the source of deposits, said Debb Gordon, a senior principal consultant for the company.
VIDEO ON MSN MONEY
-I fired all banks a few years ago. I now do credit unions and refillable debit cards, live in an RV in a park, carry no loans and do all business in cash that is not on my debit card, which gets quite a workout to actually 'earn' the reasonable fees.
How did I get put in this position? Layoffs, missed tax deadlines, unable to pay the tax on unemployment wages, and the killer -I buried a 25 year old stepson that had zero health benefits thanks to the insurance industry and their draconian mentalities. -all at the behest of our capitol hill folks.
I'm not mad...far beyond that...I'm going to VOTE AS MERCILESSLY as the establishment has been with me.
This IS WAR!
My dad always used to say " Never be a borrower or lender be " and "if you have to buy anything on credit it's the same as wearing a rope around you neck". He said "if you want to buy a big ticket item, it's called layaway " if you cant do that then walk away. He knew back then what this country's banking system would turn out to be like. I've also noticed that jobs will do a credit check before they consider hiring you. What has this world come to? GREED! My land lord decided to charge me $100.00 extra a month because my son is living with me temporarily. I'm struggling to make ends meet. It's bad enough I am stretching every dollar I earn, This makes me want to scream!!!
Banks need to stop making up there own rules and stop nailing us little people!!!! I work hard, it annoys me when banks think they can charge an outrageous fee for overdrafts!
And now we can add on that former employees with a grudge will give personal information to place like Wikileaks as the fired Swiss banker has done.
Personally, I am past being concerned about what banks do or do not think of me. I feel that I will use them, when it does not cost me a cent. They can pay me interest-if I feel the interest is high enough to use them. It is amazing what people can do without having to rely on credit cards or credit scores. Debit cards can be used as credit, in the same way and with the same protection. Paying myself the interest that I would pay the bank is a much smarter way to think than the other mindset. If I want a big item, I'd better rethink how I can put money aside for that purchase or event. If I want, I can put things on price hold, or advance purchase (aka layaway) provided there is no fee or the sale price outweighs the holding fee. Or I can buy from certain vendors with no interest 3 or 4 payments and free shipping, but basically, I just wait and buy things on sale. Life is so much simpler when I do not have to worry about what a bank thinks. It is time for us to think for ourselves, about ourselves. It is one reason that I won't allow the banking industry into my 'life insurance', hospital insurance, or any other sort. of risk factors. I go from the NYOB philosophy. ( It is none of a bank's business should I need to go to a hospital, etc).. Although free, the insurance is not something that I will buy into, because it allows the banks into my medical history. The prying eyes of certain industries could prevent a loan, I favor the NYOB philosophy of doing business. It is none of your business (your meaning the bank, insurance, or marketing venturers, Wikileaks and other data predators) what, where, how or why I shop for this or that. It may not even be for me personally. It is just stupid to be concerned with someone else who is the invader-just do not give them the satisfaction and to go offline and pay cash for every transaction, or buy some no name cards and use them. Privacy is a difficult commodity nowadays.
@Bankerbabble......First of all, you misspelled (ironically) "rocket science" and "character"....FYI you lose some credibility in your argument on that alone...
Banks are private companies, EVEN THE FEDERAL RESERVE!!! (go ahead research it) These private companies have one main job, that is to handle all things financial for their clients/customers. Why is it that these companies need a bailout? Because they made poor decisions in character about who to loan out to and got themselves into a hole....yet we are supposed to allow them to have the final word in rating our worth? If a catering company was known for poisoning customers with their food, should we let them cater our wedding? No. So why let another private company be the judge of your character when they have obviously failed at doing so in a major way
Food for thought, since banks are privately owned, and the Fed is privately owned and not regulated by the government, the bailout money for those banks came from our government, who got that money from the Fed. When the Fed prints money for our government, they add interest to every dollar the government borrows for circulation, putting our nation further into debt. The only one coming out on top is the Fed. It's no wonder why Big Banks don't mind getting bailouts, since they are owned/regulated by the Fed, the ones making the money in all this....wake up America, before it's too late!!
You are all fooling yourselves. By way of any number of laws recently put into place, the federal government has essentially turned all banks into spies for law enforcement and the IRS. Everything you do – even with cash because you have to get the cash somewhere – is recorded and monitored for suspicious activity. 1984 is alive and well!
I bank with a credit union, and I can personally attest to the same tactics being used at many of these so-called 'customer owned' banks. The bank is only as decent as the people operating it.... Beside the convenience of using a debit card for purchases (minus overdraft 'protection'), and loans for individuals and business, the rest of the services are a scam to drain your wallet, period.
It is naive to think that the bank is trying to protect YOU from fraud, to the contrary, they are trying to protect the BANK, as well as it's invested interest in your account.
I guess if the article was titled something other than "5 Ways Your Bank Spies on You," no one would read it.
This article fails to mention the fact that regulators, like the FDIC, EXPECT and ENCOURAGE us to monitor our customer database in order to prevent a loss to the bank due to fraud, loan charge-offs, etc. In fact, some regulations MANDATE that we do this monitoring in a certain way.
This article was going along OK, until the last two sentences, "That may be good news if you carefully manage your accounts, but woe betide you if you mess up. Remember, Big Banker is watching." We may be watching, but thank your lawmakers and the FDIC for that, not us.
" That may be good news if you carefully manage your accounts, but woe betide you if you mess up. Remember, Big Banker is watching."
I found this closing sentence quite entertaining, and possibly unintentionally insightful. 'Big Banker' has mismanaged their credit, stocks, assets, integrity, accountability, reputations and
responsibility so thoroughly; that to assign overt judgement or any type of omniputence to 'Big Banker' is laughable.
Watch yourselves, be alert, that's the key. In doing so, your providing less fodder for and in turn watching 'Big Banker'.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
TIPS FROM OUR SPONSOR
RECENT ARTICLES ON CREDIT SCORES
Tired of your wallet taking a beating at the grocery store? Here are some creative ways to save big on food costs.