What I tell my family about protecting their identity.

 Recently a family member asked me how to respond to a solicitation for "identity protection."  The ad appealed to fear and some of the benefits were ambiguous. 

Every time we open an account or do business, we expose ourselves to fraud.  About three percent of us will be the victims of transaction (e.g., payment card) fraud but almost one percent of us will be victims of fraud so serious as to cause serious financial loss or crippling  damage to our reputations.  Therefore, I offer the following advice in the order of its importance.  

• Use strong (e.g., multi-factor) authentication wherever it is offered.  (Prefer Passkeys for a good balance of security and convenience.)
• Avoid doing business with those who do not offer it.
• Prefer purpose-built applications for financial activity.  Avoid the use of browsers.
• Prefer mobile computers to personal computers for financial activity.
• Review all account balances and activity on a timely basis (for large and active accounts, "review" equates to online and "timely" may equate to daily.)
• Sign up for "paperless" options.  (For good security these should be the default option but for reasons of "backwards compatibility," one must usually opt in.)
• Allow notifications.  (Again, this should be the default.)*
• Freeze your identity on all three credit bureaus.  (Locking and unlocking is now easy and free but all three bureaus will take every opportunity to try and sell you "identity protection" for a relatively high annual fee.  All three have had major compromises of personal data and are not reliable.)
• Use complimentary credit monitoring from AAA, American Express, or, as offered, by your bank or credit union.
• Most card issuers now permit you to "lock" your cards, using a mobile app.  Balance this with the convenience of using the card but be sure to lock the card if it is misplaced, lost, or stolen.  
• When buying online, prefer to pay with such checkout proxies as PayPal, Apple Pay, or Click to Pay.  Avoid using debit or credit cards.  However, prefer credit cards to debit cards.  
• When paying at the point of sale, prefer "contactless."  This resists the leakage of the Primary Account Number on the magnetic stripe.  Most banks now offer such cards and both Apple and Google Pay offer.
• Do not use the option permitting the merchant to retain debit or credit card information.  Checkout as a guest; avoid signing up for accounts.  
• When using debit or credit cards for the convenience of frequent purchases from a merchant (e.g., Amazon) consider the use of a one-time or one merchant token number from Privacy.com.  
• Consider insurance against financial loss and/or expenses related to identity theft.  Such insurance is not a substitute for any of the measures above, may be redundant of protections that you already enjoy (from homeowners insurance, fiduciaries, e.g., https://www.fidelity.com/security/customer-protection-guarantee ), may be expensive, and is best purchased from insurance sources (e.g. as an optional endorsement  to one's homeowners insurance).  https://tinyurl.com/FTCreportidenttiyfraud

* While I have been writing this I have received notices of three legitimate transactions.  This assures me that I will get timely notification of fraudulent ones.  

On "Patching" III

One cannot patch to a secure system.

The rate of published "fixes" suggests that there is a reservoir of known and unknown vulnerabilities in these popular products (e.g., operating systems, browsers, readers, content managers). No matter how religiously one patches, the products are never whole.

They present an attack surface much larger than the applications for which they are used and cannot be relied upon to resist those attacks.  However, in part because they are standard across enterprises and applications, they are a favored target.  

They should not be exposed to the public networks. Hiding them behind firewalls and end-to-end application layer encryption moves from "good" practice to "essential."

Patching may be mandatory but it is expensive, a cost of using the product.  

On Resisting Payment Fraud

A recent report suggested that credit card numbers captured by malware installed on point of sale devices at hospitality sites, including twenty at  Starwood Property Group hotels, are being used in fraudulent transactions.  The Verizon Data Breach Incident Report (DBIR) confirms that point of sale devices at hospitality sites frequently leak credit card numbers.

But there is no shortage of compromised credit card numbers; their street price is approaching a dime a dozen. It is too late to address fraud by  keeping credit card numbers secret. We need a new strategy, similar to those being promoted by American Express and described by Ken Chenault at President Obama's Conference at Stanford University.

Chenault told the conference that by confirming every card transaction to the customer's mobile, they are able to detect fraudulent transactions within sixty seconds. This is just one example of how we can use the mobile to resist fraud.

American Express also confirms transactions by e-mall. In order not to overwhelm the mailbox, the customer can set thresholds. One switch is the "card not present" switch. If as expected mobile transactions and EMV cards drive fraud to CNP then the ability to detect fraud early, for example, before goods are shipped, will be key to,resisting fraud.

We need a strategy that relies not on secrecy but on feedback. The default should be that the subject of a record be notified of any change or query to that record, that the owner of every account be notified of every transaction. The digital,networks not only make this possible but cheap enough to be efficient.

Needless to say, the lobby of the credit reporting industry that is empowered by law to charge the consumer for telling him about the content of and activity to,his record will resist this strategy. Legislation will be required to change this but it is essential to to resisting application fraud.

On the other hand, American Express and its competitors are embracing it. Even bankers are embracing it. My little three branch community bank uses SMS to notify me intra-day of all large (as defined by me) transactions to my account.

Eventually competition and efficiency will force most enterprises to adopt these tactics. You can make it strategic rather than merely tactical