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Almost every adult has a bank account for savings and emergency funds. Bank transfers also play a crucial role in modern payment technologies. However, with the rise of financial fraud, you might doubt the security of bank transfers. Is it safe to share your banking information? Like you, we find direct deposits convenient, but we don’t want to divulge too much information by accident. You shouldn’t mindlessly disclose bank account numbers, after all. Our team scoured the web for official financial security resources, ID theft prevention guides, and real-life stories from fraud victims to gain insights into bank fraud. By the end of this piece, you’ll know what crooks do with stolen bank accounts. Please read without skipping. We’ll share a scary yet crucial fact about the privacy of your bank account and routing numbers. Staying in the dark will only compromise your security. So, what can someone do with your bank account number? Let’s find out! In this article
Statistics show that nearly 125.2 million American households have bank accounts. Commercial banks assign each account a unique set of digits, or bank account numbers, which they use for identification and verification purposes. Virtually every bank transaction will require it. Whether you need to make a direct deposit or order a new check, you’ll need to provide the account numbers involved. Similarly, third parties will need your account number for certain transactions. For instance, if someone needs to make a direct deposit to your name, they’ll need your account number. But don’t worry—account numbers are generally safe to share. Third parties that have your account number, and nothing else, can’t do anything apart from making direct deposits. With that said, you should still divulge this info prudently. Note that crooks can perform several fraudulent activities if they pair your account number with your government-issued IDs, full legal name, credit reports, and other banking information. Overall, you wouldn’t want someone with ill intentions to know your bank account number. So, when is it safe to share your bank account number? There are no hard-and-fast rules, but you should avoid disclosing it to third parties that:
Overall, limit sending your account number to trusted institutions, companies, businesses, and individuals that need to send money to your bank account. If you have doubts, opt for other payment options. There’s no reason to push direct deposits if you’re uncomfortable, especially since dozens of payment processing solutions are available. What can someone do with your bank account number and personal information?Again, crooks can’t do much with just your bank account number. However, they can already commit several fraudulent transactions and activities if they have other pieces of information, such as your:
Unfortunately, many of these details are publicly available. A skilled identity thief can piece them together to: Commit ACH fraudACH payments are pretty versatile. They support various payment options enabling you to pay bills, subscribe to monthly services, make direct deposits, execute bank-to-bank transfers, and pay merchants. Although convenient, this versatility also poses a security risk. Criminals can set up automated payments to various products and services with your bank account and routing numbers. Most victims only detect them once their bank statements arrive. Unfortunately, criminals only need a few days, or even hours, to exhaust the funds in stolen bank accounts. It might already be too late when you realize you have unauthorized subscriptions. Launder illegal moneyPlease keep track of all the money that enters your bank account. If a considerable sum of money suddenly appears, contact the commercial bank involved and dispute the transaction. Remember that crooks might use your account to launder money. They’ll transfer increments of illegally obtained cash into stolen accounts, then withdraw them via ACH fraud tactics at a later date. Make sure the bank knows you have nothing to do with the transaction. Otherwise, they might call you an accessory to money laundering and file a police report about your account. Pay for online purchasesMost online shops require several pieces of banking information before processing payments. Some even ask for government-issued IDs. However, several online platforms nowadays process payments with just your bank account and routing numbers. Crooks can abuse these shops and run your bank account dry. Unfortunately, commercial banks rarely side with victims in these instances, especially if the crook targeted debit instead of credit cards. The Electronic Funds Transfer Act (EFTA) protects you from some liability. However, note that you’ll have to report your compromised bank account before crooks use them to commit financial fraud. Create fake checksCrooks can issue fake checks under your name if they have your bank account number, routing number, full legal name, mother’s maiden, and employment details. Some commercial banks might ask for SSNs. However, some crooks might fall through the cracks depending on your commercial bank and checking account. Once the crook creates the fake checks, they’ll have access to your funds. They can issue checks, deposit money to their accounts, and make unauthorized payments until your account runs out of money. What are the common types of banking fraud?Identity thieves always prey on the naive. They catch ill-prepared victims by surprise with their meticulously crafted social engineering tactics and complex hacking systems. You can’t wholly avoid crooks. However, familiarizing yourself with the typical schemes minimizes your likelihood of falling victim to them.
Overall, avoid divulging information to shady individuals or entities. Opt for other payment methods if you doubt the person on the other end of the line or the company they represent. To avoid social engineering tactics, you should know when to share and withhold your banking information. For instance, the following transactions might require your account and routing numbers:
Don’t blindly disclose your banking information. Even in the situations we mentioned above, you should still follow your best judgment and avoid transacting with shady individuals or institutions. How do you avoid bank fraud?Many believe that banking fraud attacks are isolated cases. Unfortunately, financial fraud, identity theft, and cyberattacks happen more often than you might think. The Federal Trade Commission (FTC) says it received over 2.2 million fraud reports in 2020, which indicates an 11% increase from 2019. With fraudulent attacks at an all-time high, you’d do well to protect yourself by:
Warning … Even if you follow the tips mentioned above, you still can't wholly stop identity thieves from acquiring your banking information. Whether you like it or not, your account and routing numbers are already available to various parties. Don't get us wrong—we don't want you to feel helpless. On the contrary, we want you to understand your situation so that you'll go above and beyond to secure your data further. Ignorance only gives you a false sense of security, after all. With that said, we believe you can minimize your susceptibility to financial fraud if you routinely monitor your finances. Watch out for irregularities with your bank statements, credit reports, and 3-bureau credit scores. The three main credit bureaus provide free annual credit reports. If you want to request more, you'll either have to pay $10 to $15 per copy or sign up for a credit monitoring tool. What do you do if someone is using your account number?We always say that prevention is better than cure. Go the extra mile to secure your personal data and ensure that crooks can’t abuse them. However, if your banking information has already been compromised, focus on damage mitigation. Stop crooks right in their tracks by:
Please take action at the first sign of financial fraud. Whether you noticed a small, unusual transaction or lost a significant amount of money, you’d do well to file reports ASAP. Keeping your banking information safeShould you stop sharing your bank account and routing numbers altogether? Of course, not! As we mentioned above, fellow account holders need these pieces of information to send money. Otherwise, your bank transactions won’t push through. However, you shouldn’t carelessly disclose them as well. As you already know, criminals will abuse every piece of information they can extract, from public data like your home address to more confidential PII like SSNs. You’d do well to monitor your data. Although you can’t stop information from spreading, limiting the institutions and individuals accessing your files minimizes your susceptibility to breaches. View anything that asks for banking information with skepticism. Verify the identity of the person talking to you, double-check why they need your data, and ensure they’ll protect your files from cyberattacks. Aidan has been writing about personal finance for over 6 years. Prior to this, he worked as a Corporate Finance Analyst where he specialized in Due Diligence, Company Valuations and more. He is a CFA charterholder. |