5 Dangers of Mobile Banking - and How to Avoid Them
Managing your money has never been so easy. With the rise of mobile banking, paying your bills and checking your balance can be as simple as posting a photo to your Instagram feed. But there's a price to pay for the convenience of depositing checks from anywhere in the world with a simple click of your mobile camera. That price is the increased risk that your private data and access to your accounts could fall into the wrong hands.
"As additional people flock to the mobile channel and transactions multiply, the bad guys are paying attention and deploying more attacks against it," banking fraud expert Julie Conroy warns. The best way to protect yourself, of course, is to know the risks. Read on for our guide to the dangers of mobile banking and foolproof tips on how to avoid them.
1. Wireless Networks Are Hacker-Friendly
Unlike websites, mobile apps don't properly encrypt information, which means it's not a good idea to access your bank account via mobile app when you're on a public or otherwise unsecured Wi-Fi network. As computer science expert Ron Vetter explains, "mobile banking apps are connected to wireless networks, and these networks are inherently insecure as they broadcast their messages into the open air."
If you plan to use a mobile app to conduct a sensitive transaction, you're better off using a secure wireless network or your phone's data network. This will help reduce the risk of your private information being intercepted by a hacker or some other third party.
2. Poor Reception Means Poor Security
Even if you're diligent in accessing your mobile banking app on your phone's data network rather than a wireless network, the security of your financial information could still be at risk if your 4G or 3G data drops into a lower service range. Poor reception invites the chance that the data contained in your banking transaction could misfire and be intercepted by an unauthorized third party.
3. There's More at Stake If You Lose Your Phone
Studies show that nearly 40 percent of smartphone owners don't password-protect their devices. If any of those folks were to lose their phone, anyone could pick it up, log into their banking app, and access their money. Even if you do password protect your phone, you could still be putting yourself at risk by auto-saving your password. For optimal security, select "no" when any of your apps ask to remember your username and password. You can further help protect yourself from fraudsters who gain access to your phone by installing a remote-wiping application that allows you to erase your phone's data even when the device isn't physically in your possession.
4. You May Have to Wait to Access Newly Deposited Funds
Although you can deposit funds into your account instantly via a mobile banking app, there may be a longer lag than normal until you can access those funds. "In many cases, [banks] will protect themselves against fraud by increasing the delay in the availability of funds, as compared to if you'd just deposit that check in an ATM or branch," Conroy says.
5. Fraudulent Apps May Deceive You
Mobile apps can cost you -- even the free ones. Fraudulent apps posing as your official banking institution are lurking throughout the app store, and if you unknowingly start using one, the app creators can access -- and abuse -- your private information. Download your app directly from your bank's website to avoid this scam. And if you use Android, set your security settings to abort installations from sources other than Google Play.