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Protecting Your Money In Today’s Digital Age
Long ago, if you wanted to protect your money, you simply needed a safe place to keep it. This is actually one of the reasons banks developed in the first place, to provide a safe place for people to keep their money. Banks still serve that purpose today – but protecting your money has become more complex. The Digital Age has brought with it a host of conveniences and amusements, but along with that comes a responsibility to protect ourselves in new and sometimes complex ways. In today’s episode I want to hit on four different assets you’ll want to make sure to protect in today’s digital age, and I’ll give you some ideas on how to do so.
This first tidbit is going to be aimed at small businesses, and that is to protect your payments. When you write a check to someone in today’s age, in some ways it is like sending currency. It’s like sending cash in the mail. Why do I say that? That’s because the available technology to edit a check and change a payee has never been easier. This tactic is called “washing checks” and I want to explain how it works by sharing an example. Let’s give an example using characters from The Office. Let’s say that I own Abe’s Deli. One day the temperature outside goes from 70 degrees down to 20 degrees in a single day (now I know that would never happen in West TN, right?). So I have to switch back over to heat to keep my customer’s warm and I realize that the heat is not working. So, I call Bob Vance at Vance Refrigeration and ask them to come fix my unit. Well, they are always prompt and always know their stuff, so they get me all fixed up and leave an invoice of $2,000, because I needed a new condenser. Okay, I’m not even sure if condensers help with heat, nor do I know if $2,000 will cover one – but let’s just go with it. At Abe’s Deli I’m not super tech savvy, so I have a checkbook in my office. I write the check and put it in the mail. A month goes by and I get a call from Bob Vance telling me they haven’t gotten my check. So I call my bank (because remember I’m not tech savvy enough to check my mobile app) and ask them if check number 150 has cleared. They tell me it has. I call Bob Vance and tell him the check has cleared the bank. He tells me he never got it. We have ourselves a dilemma. I call the bank again and they check the check image and find that the payee was changed to a different name. The check had been “washed”.
Here is what actually happened. The check was stolen from the mailbox outside Vance Refrigeration. Since I’m using names from The Office sitcom, let’s say that Todd Packer took the check and washed Vance Refrigeration off the payee line. But Packet is smart enough not to write in his own name in the payee line, because that would be clear to the police who took the money. So he runs an ad on a muscle building website promising $500 for easy work. Michael Scott responds to the ad (surprise surprise), and Packer tells him through email all Michael Scott needs to do is deposit a check for him. Packer will then put Michael Scott’s name in the payee line and send him the check to deposit. He’ll then ask Michael to wire him to wire $1500 and to keep the remaining $500 for his trouble. So here’s who ends up losing in this scenario. I lose as the owner of Abe’s Deli because I’m out $2,000 that never made its way to Vance Refrigeration. Michael Scott is out $1500, because he owes this to me, but he wired it out to Todd Packer, who he didn’t even know (because Todd never revealed his true identity), and there is still a $2000 outstanding invoice to Vance Refrigeration. So, believe it or not, it isn’t super safe anymore to send out big checks in the mail. Whatever type of business you have, writing large checks is risky and they can be stollen from your mailbox or even in transit.
If you are a small business, here’s three things you can do:
1. Have someone in your business looking at your account daily to make sure no checks clear your account with a strange payee on them. Your bank should be able to give you access to those images. The sooner you act, the better the chance you might be able to get your money back.
2. Consider paying your bills online through the company’s website. Many vendors will offer this option and it allows your bills to be paid electronically through ACH (automated clearing house), which is safer than sending a check in the mail. Some vendors will not even accept checks anymore because they do not want to deposit checks that are not good.
3. Consider using Business Cash Management. This service should be offered by your local bank and will allow you to pay as many bills as possible electronically in a way that is a little easier than going to each merchant’s website.
These methods of payment are not without risks in and of themselves. You’ll have to decide what method is best for you, but I wanted to be sure you knew of this scam that is showing up more and more.
Another asset thing we have to protect in the digital age is your passwords. I’ll bet you have at least 25 passwords you have to keep up with, some of you may even have 50 or 100 passwords. You might be one who writes them down on a piece of paper. If that ever gets stolen, you are up a creek. Maybe you save them on your computer. If you ever click on a malicious website link, once again, you’re up a creek. A relatively new way to protect your passwords is the use of a password manager. I happen to have an iPhone, and I use this feature extensively. You can store your passwords in what Apple calls Keychain. This is a vault of websites and passwords that can only be accessed through your face, fingerprint ID, or a passcode. The world is moving more and more toward biometrics like this to access our most important information. Someone can get your passwords, but it’s really hard for them to get your face. Once you have Keychain enabled, you can actually ask Apple to create random passwords for all the websites that you need that would be almost impossible for someone to guess. These generated passwords are typically long with a variety of characters and cases that make them almost impossible to crack. But you don’t have to remember those passwords because they are stored in the Apple cloud. All you have to do is unlock Keychain with your face. You can learn more about this feature on Apple’s website. I’m sure Android has their own version of this as well, but I’m not as familiar with it. You can also subscribe to password managers like Last Pass and Bitwarden. These do the same thing but can be used on your PC and/or any other device.
Apple and Android don’t just protect your passwords, they can protect your debit and credit card numbers. When you load your cards into Apple Pay, a unique card number is generated that can only be used when it receives a token from your iPhone. This means that if you go to Chick-Fil-A regularly, like you know I do, and if their payment servers were compromised, they won’t have access to your card numbers. The unique numbers generated don’t match the numbers on your card and they won’t work without the key on your device. Pretty cool, huh? So I use my phone and my Apple watch to pay for things everywhere Apple Pay is accepted – which is probably 70% of the places I shop. It’s great to use Apple Pay online as well, because it already has your address and contact info loaded to make checkout faster and more secure. This is one instance in which the digital age can actually help protect our card numbers – if we’ll use them, that is.
Protecting your identity is the last thing I’ll mention. The reality is that most of our identities are out there on the dark web for someone to purchase. In my opinion, the best thing we can do is to monitor our credit to make sure no one tries to pull credit in our name and monitor the use of our identity. There are some services that you can subscribe to do this. The digital age has its consequences, and a lack of privacy, unless you work hard to secure it, is one of them.
We happen to have a resource to monitor your identity. Our Foundation Benefits with High Interest account offers an identity monitoring service along with the other benefits in the account. Terms and conditions apply, so visit foundationbank.org/accounts or contact your local branch to learn if this account might be a good fit for you. If you’ve found this podcast to be a good use of your time, we hope you’ll subscribe to it in your favorite podcast app and share it on social media. Until our next episode, God bless you.
-President Chad P. Wilson, CFP
Today’s episode of “Money Matters” was written and recorded by President Chad P. Wilson of McKenzie Banking Company / Foundation Bank on February 27, 2024. This episode does not constitute financial advice. Please consult a financial professional to discuss your specific needs. Any rates mentioned are subject to change and are accurate as of the recording date. MBC/Foundation Bank is an Equal Housing Lender, Member FDIC.
