We’ve talked before about scams that target your banking information and how the best way to combat these scams is to avoid sharing your information in the first place, but can you be scammed or hacked after providing your bank account information for a legitimate reason, like for employee direct deposit? We dig into some instances where you might find yourself having to share bank account information, things to consider beforehand and how to decide whether or not to share.
When would someone ask for your bank account information?
There are a number of instances where someone would ask for your bank account information. These include enrolling in direct deposit through your employer, sharing the information digitally (via email, text message or to sign up for an online payment service like PayPal or Venmo), writing a check or filing your taxes to get your refund deposited into your account, among others.
What you should know before you share
As we noted above, you may be asked to share your banking information more often than you think, which is why it’s important for you to know some things before you share.
It’s technically never completely safe to share bank account information
In some cases, all fraudsters need are your account and routing numbers to perpetrate banking identity theft. This means, in the wrong hands, something as basic as a blank check can compromise your financial security. That said, the risk of this happening isn’t the same in every situation and in some cases, there may not be any risk at all. Still, it’s something to be aware of.
Know that you’re trusting them to store the information securely
Although we like to think all people or services store our valuable information securely, this isn’t always the case, as proven with the number of major data breaches in the past couple years involving government agencies, health insurance companies, payroll companies and more. While you may think you’re safe if a company, landlord or otherwise stores hard documents of your information, which is somewhat true, it’s still at risk. For example, if your landlord or HR representative keeps a blank copy of your check in a filing cabinet that doesn’t lock, your information can be exposed to anyone or everyone who has access to that cabinet. Even though there’s isn’t much you can do to make sure an employer, landlord, friend or company is storing your information securely — besides ask about their storing and destroying process — there are some precautions you can take when you opt to share this information.
Ask questions before you share. If it involves a company or person storing your banking or personal information, you have the right to ask questions before sharing any information. Although these aren’t always the most comfortable conversations to have, asking why they need the information, how it will be stored and similar questions can provide some clarity as to whether or not you’ll want to trust that person or company with the information.
Make sure all URLs start with HTTPS. This is something we’ve talked about often, especially with the recent Gmail scam, because it’s important. If you’re asked to input your bank account information into a website, you’ll want to make sure the site is protected with HTTPS encryption. The easiest way to do this is look for HTTPS at the beginning of the URL — your browser will likely also include a padlock or green coloring. Something equally as important is to confirm you’re using a secure Internet connection — public Wi-Fi, even on a plane, isn’t a smart option.
Be aware of how you share the information. Email is often one of the easiest ways to contact someone, but it’s not always a secure way to communicate, as we saw with the recent Yahoo! breach, especially if you’re sharing valuable information, like your bank account number or your social security number. Similarly, text message is also not untouchable. As such, your best bet is to either deliver the information in person or via the phone — just be sure to have the conversation in a private place.
Remember that you’re not always obligated to share banking information
Be aware that simply knowing someone really well or using a big-name service is not a reason to share your banking information. While opting out of sharing your banking information may cause some extra hassle, as you’ll likely receive a paper check or not be able to use the service at all, it may be worthwhile to know that your accounts are safe if that person ever misplaces the information or the service is breached. If you really want to sign up for a service or simply want the convenience of direct deposits or automatic payments, it might be worth opening another checking account that you can share so you can minimize the risk of fraud on your primary account(s).
Should you share your banking information?
Ultimately, it’s your responsibility to protect your account and up to you to decide if you want to share your banking information. While it’s not reasonable to avoid sharing your bank account or financial information altogether, doing your due diligence to make sure you’re comfortable with sharing and frequently monitoring your bank accounts for suspicious activity can help you mitigate or catch potential fraud. Also remember that it’s essentially up to you to be aware of who you’ve authorized to have access to your account and for what purpose.
For more banking tips, read our personal finance blog, where we talk about everything from maintaining good credit scores to protecting your financial information.