Passwords, PINs, Bank Accounts And Fraud!
The loss of 25m Child Benefit records may increase fraud levels. However, moving your current account could improve your security.
As you have probably heard, a recent slip-up by HM Revenue & Customs (HMRC) has caused a `data disaster'. HMRC somehow managed to lose two CDs containing the entire Child Benefit database. These records contained confidential financial records on over 25 million individuals, including names, addresses, dates of birth, National Insurance numbers, current account details, and so on.
(By the way, this blunder shouldn't affect your Child Benefit claim in any way. However, if you're worried, then call the special helpline on 0845 302 1444.)
In total, the discs listed information on over 9.5 million adults and 15.5 million children -- in short, everyone with a current claim for Child Benefit. These discs have been missing since 18 October, and may possibly fall into the hands of cyber-criminals. If this is the case, then these fraudsters would attempt to use this data to commit identity fraud. They would aim to obtain credit in other people's names, and even use personal data to hack into online bank accounts.
In the worst-case scenario, criminal misuse of this data could lead to a surge in identity fraud and in attacks on online-banking systems. However, if you are the innocent victim of fraud of this kind, then your bank will bear the cost. Still, banks being banks, it could take months for problems to be resolved, leaving you short of cash and patience!
So, perhaps we should use this howler as a timely reminder of the importance of protecting our personal data and, in particular, our online-banking details. My grandfather was a wartime code-breaker at Bletchley Park and I studied cryptography (the disguising of information) at university, so I find information security fascinating. Hence, here are my tips on beating the bank-account bandits:
1. You don't have to, but now may be a good time to change your PIN
A Personal Identification Number (PIN) is a four-digit code used to access your bank account via cash machines and, sometimes, online. Ideally, your PIN should be an entirely random number which has nothing to connect itself to you. However, millions of people find it terribly hard to remember number sequences, so they change their PIN to something memorable.
Although no PINs were included in the lost HMRC data, thousands of worried people have already changed their PINs. This isn't necessary unless your PIN is easy to guess, for example, you've used your own birth year or that of a child. Actually, despite having 10,000 possible combinations, PINs are far easier to deduce than you'd think. For example, I'm willing to bet that a large number of Glasgow Rangers fans have 1690 as their PIN, which is the date of the Battle of the Boyne!
So, if your PIN is too easy to guess, then change it to something harder to figure out. That way, you'll reduce the risk of being an easy target for fraudsters.
2. Beef up your Internet security and passwords
When it comes to information security, humans are always the weakest link -- for example, the bozo who lost these discs in the first place!
The same advice goes for passwords as for PINs: make sure that you can remember them, but don't make them too easy to guess. The longer a password, the more difficult is it to crack. Thus, make yours of a decent length, say ten to sixteen characters, consisting of letters and numbers. Furthermore, don't use the same password (and PINs) for all your online finances, as you could fall victim to a `clean sweep' of your accounts.
For more advice on enhancing your computer and Internet security, visit government website Get Safe Online.
3. Why not profit from this blunder?
Given that the details of over seven million current account details could be doing the rounds, now might be the perfect time to switch current account. By doing this, you can leave your old bank details behind and find yourself a Best Buy replacement at the same time.
If your current account is usually in credit and you only rarely slip into the red, then you need a bank account which pays the highest rates of credit interest. However, as I warned in Watch Out For The 0.1% Trick, most old-style current accounts pay yearly interest of a feeble 0.1% on positive balances. Thus, by switching to a new-generation Best Buy account, you could increase your annual interest by a factor of sixty or more.
In addition, if you spend most of the month overdrawn, you could still save a fortune by switching to a better bank account. For instance, why borrow at 20% to 30% APR when you could enjoy an interest-free overdraft for a whole year? For more information on choosing a better current account, read Switch And Save and visit the Fool's current account centre.
Interestingly, some banks are taking steps to move their own customers to better bank accounts. For example, the Halifax is writing to thousands of its customers to recommend that they transfer to its superior High Interest Current Account (HICA). From January next year, Halifax customers who pay at least £1,000 a month into an ordinary Halifax current account will earn just 0.1% AER on credit balances. Therefore, these customers would be better off if they move to Halifax's HICA or another Best Buy alternative, such as the popular Alliance & Leicester Premier Direct account.
4. Finally, please don't have nightmares!
It's highly likely that the two missing discs were lost through bureaucratic incompetence and not malicious intent. Nevertheless, as always, do keep an eye on your current account for any suspicious transactions. Also, to be extra-safe, don't give out any personal details in response to requests by telephone or email, and watch out for signs of identity theft. Stay sharp and you won't lose out!
More: How To Protect Yourself From Identity Theft> Check your credit report for free