Photo: Flickr / cogdogblog
The mobile wallet revolution has already begun, but a new study suggests it might be wise to think twice about putting your credit card information on your smart phone.The Chicago Tribune reported this week that, according to a nationwide survey, the number of Americans victimized by identity theft rose 13% over the last year, mainly due to an increased use of smart phones.
According to the research group, our love affair with high-tech phones is making us careless – and thieves are learning to exploit that fact.
In 2010, there were 10.4 million reported cases of identity theft. Drawing conclusions from a massive survey that concluded last Wednesday, Javelin Research and Strategy, an independent research firm, found a much larger number for 2011.
There were about 12 million cases of identity theft in America this past year. While Javelin cites a few large data breaches as a contributing factor – such as the ones that hurt Sony Online and Citibank – our increasing reliance on smart phones was partly responsible for the higher levels of fraud.
According to Javelin’s research, 32% of all smart phone users don’t have the most current version of their operating system, 62% don’t use a password to protect their home screens and 32% save login information on their phones.
When you consider the amount of personal information Americans upload to social networks like Twitter, LinkedIn and Facebook, this is some seriously dangerous behaviour. All of these platforms can be accessed through a smart phone, and they provide more than enough data for a thief to sign up for numerous credit cards in a victim’s name. According to Fiserv fraud analyst Mike Urban, such carelessness is an invitation for theft. “You don’t leave your money lying on a table,” he says. “You don’t want to leave your important information out there.”
Though banks and merchants have been beefing up security on the customer databases that thieves usually raid for credit card numbers, Javelin has revealed that stronger firewalls have encouraged hackers to start preying on consumers directly instead. Thieves are simply “doing more and more crime in order to get the same return,” says Urban. Instead of hoping for major corporate database leaks, thieves are now resorting to picking off credit card numbers one by one.
That’s bad news for unwitting consumers, and it’s easy to see how having your credit card information in your phone would make things much worse. Even with passwords protecting everything, a stolen phone can be jailbroken, its core operating files accessed by a computer. All of the information it contains can then be exposed and distributed.
If you’re still sold on the idea of keeping your money in your phone instead of in a wallet, then you should take whatever steps you can to ensure that your data remains secure. Password-protect everything, preferably with unique passwords for each service. Don’t share data over public Wi-Fi networks, and make sure all the apps you download come from legitimate vendors. Remember – even though consumers are liable for no more than $50 in fraudulent credit card charges, the damage a thief can do to your identity can haunt you for months, years or decades.