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The dangers of mobile banking

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  • Is mobile banking safe?

    Is mobile banking safe?

    It's the newest thing for your smartphone -- still, security concerns keep a lot of people from mobile banking. While banks are doing their part, some experts says a smartphone is only as safe as the consumer
    It's the newest thing for your smartphone -- still, security concerns keep a lot of people from mobile banking.

Advertising for mobile banking has become as popular as traditional banking commercials. Customers like makeup artist Alisha Cooper are increasingly going mobile these days, and for good reasons.

"I travel as a licensed makeup artist and so I do work in North Carolina, sometimes in Arizona, Atlanta, different places, so for me not carrying a machine, I have to have my cell phone," says Cooper.

Mobile banking means transactions are faster, you can access it without the use of a computer, and it's an easier way pay bills.

But with all good things lie potential dangers.

Now that smartphones double as wallets and bank accounts allowing users to manage their finances, transfer money, make payments, deposit checks and swipe their phones as credit cards, they are very lucrative scores for thieves.

And with 30 percent of phone subscribers owning iPhones, BlackBerrys and Droids, there are a lot of people at risk. While storing a password and keeping your phone locked is a good start, it's not going to protect you from professional fraudsters.

Polly Bell is CEO of the MEA Federal Credit Union in Columbus, Georgia. She says mobile banking can be as safe as online banking from your home computer. But for those who do become a victim of identity theft, Bell says there is a hefty price to pay.

"It can have a tremendous effect on your loss of reputation, the opportunity to get a job, affects on your life when you're a victim of identity theft," says Bell.

Security attacks on smartphones climbed to an all-time high in 2010 according to AdaptiveMobile, an international mobile security firm. Specifically, attacks on Google's Android smartphones quadrupled, and smartphones running Java-based applications jumped 45 percent.

But you can protect your information.

"That device is registered and it's registered with certain passwords and codes that are known only to you. So if you do lose your phone, or the device is in the wrong hands, it's a very sophisticated ID theft that those kinds of transactions can be pirated," says Bell.

According to New York Research Firm Frost & Sullivan, 12 million people used mobile banking services in 2009. They say that number is expected to climb to 45 million by the year 2014.

According to a 2011 Customer Trends Survey, these are reasons why most people turn to mobile banking. Nearly 77 percent use it for 24-7 banking access. about 65 percent say it saves time. But a smaller percentage of people prefer mobile banking because transactions are faster, they can access it without the use of a computer, and it's an easier way to pay bills. That alone has induced millions of people to overcome fears of identity theft.

"Mobile banking has become so popular over the last year or so that it caused our industry, financial service industries, to do more surveys than you can keep up with," says Polly Bell.

She says we can expect the number of mobile banking customers to increase dramatically in the years to come.

"Consumers are going to do whatever is convenient for them, whatever benefits them and apparently this connects with the population being able to do things with their mobile phones," Bell says.

Financial experts say if you use mobile banking or make online payments frequently, you should invest in anti-virus protection and check with your bank about any security or identity theft protection features that you can enable.

Most smartphones also offer remote wipe-out services, like MobileMe for the iPhone,that automatically erase the information on your phone if you claim it as lost or stolen. If you bank with your phone by accessing its website rather than opening an app like Alisha Cooper does, be extra careful when typing in the address.

Some identity thefts create domains with the same address as major banks with two letters switched in hopes a consumer will accidentally land on the site and enter their username and password.

And make sure you immediately log out of any bank apps or sites where your financial information is stored as soon as you're finished.

"You have to have my PIN, you have to have certain passwords to get in but also it is not in my phone. When I go onto my application it takes me to first data's website and all of that is posted on that website and once we're finished with that transaction it's actually deleted," says Alisha Cooper.

Consumers are going to do whatever makes their lives easier and this is going to make their lives easier, but there are some inherit risks in that. Mitigate the risk with identity theft protection or some kind of insurance or value-added package you can get from your financial institution.

According to Bell, such packages are already included in some bank fees you already pay. So it wouldn't hurt to check with your bank to find out if you have that protection.

But for customers like Alisha Cooper, the good outweighs the bad when it comes to banking with her mobile device.

"It is very convenient and I don't think we would go back to the primitive way of doing things," says Cooper.

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