Credit Card Security on the Internet - Coursework Example

Introduction In today’s time, plastic money or the so-called credit card is very common among people. In fact, even students carry at least one credit card every time they go out of the house. This is because credit cards are really convenient to use. Credit cards are the lightest form of wallet. It can be carried anywhere and any time of the day. Just by swiping the credit card out, signing the receipts or coding on the pin code, and voila, instant shopping spree. But what happens after the shopping? What about the security concerns when trying to use the credit cards, may it be online or thru the counter purchasing, is there any guarantee that everything will remain secured? This paper is aimed at analyzing the use of credit card as a whole along with the laws and regulations imposed relative to the use of such plastic money. Specifically, this paper is intended for: 1. Examining the credit cards in general – in the banking sector, the information technology sector and the insurance sector 2. Investigating the different concepts related to handling credit cards 3. Recognizing various issues and legal aspects of related to security of credit card use This paper will prove to be beneficial among credit card users and/or those who are planning to have one. These users will benefit from this paper because they will be given ample information about handling, management or the very use of their credit cards. This paper will highlight the ideal management or handling approaches of their credit cards to ensure security. This will also include laws and regulations pertaining to insurance and identity theft. With such information, they will be armed with enough knowledge on what to promote for or against the common practices of credit card usage. Bankers, insurance brokers, financial institutions, and even the information technology providers (web providers) will also greatly benefit from this study as they, too, will know if their management practices and/or approaches are appropriate, safe r secured and legal or not. They will be able to assess if they need to modify their strategies or if they need to seek some consultants and experts regarding safety and/or security of credit card use. Lastly, this paper will be of great help to other and future researchers who would be interested in tackling identity theft, online purchasing and other topics related to credit cards. The results of this study will serve as their basis for further research or can be used as references to prove their own hypothesis. Review of Related Literature Credit Cards Users When it comes to purchasing, accessing, and transferring online, credit cards are moving its way above. More and more people today are enjoying the benefits and rewards of using credit card online (Shop Safely on the Web, 2006). Why are there so many people getting hooked into using credit cards? And why are these credit card holders continuously use their cards despite the rising interest rates for their debts? People are hooked into using their credit cards because it implies freedom. Let’s face it, swiping the card will allow you to get the item you have been longing to have. Swiping the card will enable you to tour and visit some countries. Using the credit card will even send you to school, pay for your tuition, and buy your books and uniforms. And using the credit cards further, will allow you to pay your debts from other credit cards. Indeed, the use of credit cards is endless. The freedom it connotes is exhilarating. But the fact remains, usage of credit card is becoming really out of control, especially if the holders are the young adults and/or the students. These young adult credit card holders seem irresponsible enough in managing their own financial standing. The parents or principal credit card holders will give an extension of the credit card to their sons or daughters so that they will have ‘money’ to use whenever they will need it. The purpose is really in good intention, but the manner of doing it is not. The students or young adults who have gotten access with the credit card are given “freedom” to use the card whenever necessary, but the intensity of need is not clearly defined. These young adults should be properly informed or guided as to how they should use the card. These students needs to experience first how to manage finances, like balancing the actual debit and credit, and even managing the checkbooks so that they will know exactly when to stop spending. If this will not be done, these students or young adult credit card holders will just end up, like most impulsive credit card users, having numbers of credit cards with equally intense temptation to using the credit cards which will of course end up to thousands of debts, which they cannot afford to pay off. Credit cards are unnecessary as they carry unnecessary debts. Now that it is clear that if not trained properly, students, young adults or even the most ordinary civilians, who are credit card holders, will just end up with more unmanageable problems. So how can we deal with it? Simple, going back to the basics is the most effective way of preventing these people from facing any credit card –related problems. “Going basics” would mean not having any credit card, and just use the actual money to buy and/or pay for the things. This will ensure that no over spending will occur. However, if credit card is really necessary, then, having a checklist of when and what should be paid through card is the next best approach. Having a checklist will guarantee that no unnecessary items will be bought. A checklist will also help monitor the amount that have been spent already and, of course, the amount of debt. Every student or young adult should be reminded from time to time to charge only what they can afford to pay, that is, on a monthly basis. They must also be reminded to pay all debits every month so that the interest rate will not add up. Generally, training on money and card management will help prevent anymore credit-card related problem. The unnecessary debts brought by the credit cards will be minimized if the users will be informed of its underlying causes and will be rained on how to prevent themselves from getting hooked by such problems. Convenience of Credit Card Use Credit card is a form of payment represented by a thin plastic which serves as an alternative option to actual cash. A credit card allows you to buy things you want online and offline. Credit cards allow purchasing items from the comforts of their own home, by merely typing the required description, quantity and other relevant details of the item intended to purchase (The Pros and Cons of Using a Credit Card, 2006). Consequently, technology allows credit card users to access their accounts through online banking anywhere and anytime. Online banking is accessible at home, in the office, internet cafes, or any location that has available internet access. It is always accessible for purchase, transfer, and payment of credit card accounts quickly and conveniently making things easier for all users (Online Credit Card Account Access, 2007). In the past, the concept of online banking appeared to be uncertain and unacceptable one. A lot of people worries about the authenticity of security plus the presence of computer glitches making them doubt its capacity. But with the continuing success worldwide, more and more people saw the potential of using online transactions as a tool to do business over the web. In the advent of sophisticated technology, online banking offer several advantages over traditional banking (Kenny, 2007). Online banking or sometimes known as internet banking is a term used in performing transactions over the Internet through a bank, credit union, merchants etc. This allows customers to do their banking inside and outside of bank hours at any location where Internet access is available (Online Banking, 2007). It refers to systems that enable online users to access accounts and general information on bank products and services such as credit card payment, online purchase, and manage funds online (Internet Banking, 1999). A growing number of people now realized how great a credit card is when it comes to purchasing items or procuring services online. At present, there is no need to carry cash all the time. The availability of credit card as one of plastic accounts that would serve the same purpose as money. The power of this thin plastic credit card are accepted by millions of establishments all over the world online or offline payments makes paying with credit cards much easier (Pros and Cons of Using a Credit Card, 2006). Thus, with an increasing number of consumers utilizing the global marketplace of the Web, convenience has become one of the primary factors for purchasing, transferring or paying online (Convenience Factors, 2002). Every people when they hear the word Internet they expect convenience, speed and efficiency. These same expectations apply to online banking or online transactions. Consumers view online banking as a fast and easier way to pay bills, access accounts and transfer finances. However, there are few drawbacks to online banking when used inappropriately (Pros and Cons of Online Banking, 2007). Nevertheless, the most obvious benefit of online banking is the convenience of being able to do banking 24 hours a day, seven days a week, saving time and effort by only a click away (The Pros and the Cons, 2004). It is like banking anywhere, at any available time. Credit card bills can be paid with a few fincger clicks, so it is easy to save the time of writing check payments, addressing and stamping envelopes and dropping them in the mail. Even the comfort of transferring money from one bank to another bank or merchant the convenience of transferring funds online make it easy for everybody (Kron 1996). In addition, credit car makes purchasing online easier. Even cash is not available at hand, with the use of credit card cash is no longer a problem because credit card can let you purchase items whenever and wherever you want (The Pros and Cons of Using a Credit Card, 2006). The accessibility to be able to log on and carry out online transactions at any location and hour of the day or night could be a welcome alternative than visiting the bank on lunch hours. For those in shift related work, this can be a real God send advantage. No queues and no bank holidays, which means customer has even more control over their finances. In addition, account information is displayed as a clear statement and no more riffling through mountains of old bank statements to find the information needed (Kenny, 2007). As such, the accessibility to bank, purchase or transfer funds online can be done from the office, home and even at the local coffee shop. There is no need to have any special computer program in order to log on or register to the account (Bank Information – Internet and Online Banking, 2005). Thus, things are much easier in doing online transactions. The convenience, accessibility, and speed are not only the positive points given by online use of credit card but to top all that credit card can even increase purchasing power. The need of paying bills or wanting to buy something important there is no need to pay it in cash or go out and buy on the store and wait for a long line of payment. The use of credit card in lieu of cash can make you buy things online and offline. Shopping spree is easier with just thin and small card on your pocket. The power of clicking finger can make you purchase any thing you need or want for you and your family’s consumption (The Pros and Cons of Using a Credit Card, 2006). The convenience of using credit cards online or banking online makes process and executes transactions faster than traditional banks. These tools help you manage your assets more effectively (Singh, 2006). The Issues on Security Credit cards are not all advantages, it has also some downside. When it comes to using credit cards online or online banking there are also unfavorable considerations which you must bear before deciding on using a credit card for your needs (The Pros and Cons of Using a Credit Card, 2006). In times of new in using online transaction, it might take time to register on bank’s online program. Or, it may be easier to physically fill out a form at the local branch than undergoing the online registration process. Sometimes when you and your spouse wish to view and manage your assets together online, one of you may have to sign a durable power of attorney before the bank allow to divulge information for both parties (Pros and Cons of Online Banking, 2007).  Moreover, some banking websites can be difficult to navigate. There is need to invest some time and/or read the tutorials in order to become comfortable in using the website account.  Even the largest banks periodically upgrade their online programs, adding new features in unfamiliar places. In some cases, you may have to re-enter account information all over again dealing another form of tiring and time-consuming registration process (Pros and Cons of Online Banking, 2007). For most people the biggest obstacle to online banking is learning to trust it and to be sure whether it is secure. The main concern of online banking is security, protection of customer's privacy and protection against fraud (Singh, 2006). Trusting an online banking system is a considerable thing for two main reasons due to identity theft and operator error. If you use a non-secure wireless Internet connection, it might not be a good idea to use online banking. It’s too easy for a savvy ID thief to view your personal information making it easier to manage your financials and create false representations (Pros and Cons of Online Banking, 2007). Indeed, the fear is very real, more and more banks are reporting fraudulent access to bank accounts using Internet/Online banking. Consequently, the safety factor is a very real one (Bank Information – Internet and Online Banking, 2005). Security is by far the biggest concern surrounding online transactions, with consumers worrying that hackers will get into their account and spend their money (The Pros and the cons, 2004). Credit cards are prone to security issues, especially when it comes to online transactions. The details found in credit cards aren’t really embedded in secure channels. Anyone who manages to intercept the data found on your credit card can easily use your line of credit for their own purposes. As a result, making you suffer for the mistakes that you never done (The Pros and Cons of Using a Credit Card, 2006). Internet banking or online banking, offers advantages such as speed, convenience, save time, money and effort, but it's important to protect yourself from the potential pitfalls (What you should know about internet banking, 2007). Since the Internet is a public network, it's important to safeguard your banking information, credit card numbers, Social Security number and other personal information (What you should know about internet banking, 2007). Criminals don't always need to have shotguns and masks to threat and rob money; it only takes a social security number, or a pre-approved credit card application from trash to make things according to their wicked way (ID Theft, 2004). Some consumers have had credit card numbers and Social Security numbers stolen and used fraudulently or identity theft. By taking reasonable steps to protect your personal information, this can mitigate the chance that it may be stolen (What you should know about internet banking, 2007) by identity thieves. Identity theft is a term used for serious crimes associated with someone uses your name, address, Social Security number, bank or credit card account number or other identifying information without your knowledge to commit fraud. This fraud may only take setting up accounts in your name and make online transactions without you knowing (Get the Upper Hand on Credit Crime, 2004). Identity theft is one of the fastest growing crimes in America. This makes it very alarming since these thieves can use or get personal information about you. Most of the time identity thieves use your number and your good credit to apply for more credit in your name. Followed by using the credit cards and do not pay the bills. Yet you don’t have any idea that someone is using your number until you are turned down for credit, or you begin to get calls from unknown creditors demanding payment for items you never bought (Identity Theft and your Social Security Number, 2006). Credit card numbers, driver’s license numbers, social security numbers, date of birth, and other personal identification can net criminals thousands of dollars in a very short period of time. Most often, identity thieves will obtain your personal identification numbers and obtain credit in your name by having credit cards, goods or services delivered to their address or mail drop. Since the bills for charges incurred are sent to the thief's address, not yours, you will be unaware that debt is mounting up in your name until the collections department tracks you down. By then your credit report will already be riddled with late payment histories and show many accounts in collections. As you can imagine the credit reporting bureaus will be reluctant to change negative credit without proof that you didn't create the bad credit. With this, it may take a lot of time and effort to clear your name and bring back your credits (McGoey, 2007). How to Handle Credit Card Security Issues Identity theft and credit card fraud is not uncommon; such is the nature of an online world (Credit Cards and Identity Theft – Online Fraud, 2007).  Credit Card Companies is encouraging consumers to take some simple, commonsense steps to avoid falling victim to online credit fraud or identity theft (Get the Upper Hand on Credit Crime, 2004): When communicating with credit card issuers electronically, consumers should always use their issuer's secure online Web site (Get the Upper Hand on Credit Crime, 2004). Be sure to have the latest anti-virus, spy ware and security updates as a safety measure (Get the Upper Hand on Credit Crime, 2004). Create passwords that are easy to remember, but difficult for "outsiders" to guess. Mix letters and numbers, avoid using birthdays and Social Security numbers making it hard to predict or guess (Get the Upper Hand on Credit Crime, 2004). Use a different password for financial- services Websites and transactions than for other accounts. Change passwords regularly. Just as with any information used to access any other financial account, you should keep these codes secret. Your bank will tell you what to look for such as an icon of a locked padlock to ensure you're accessing your account over a secure line (What is Online Banking, 2003). Deal only with companies that post their privacy policies on their Web site. Reputable companies should prominently display their policies before asking for credit card or other personal information (Get the Upper Hand on Credit Crime, 2004). In addition, be sure to beware of a scam called phishing where crooks send out e-mails that might look exactly like e-mails from your bank (What is Online Banking, 2003). Phishing is a strategy used to fool people into revealing passwords and other sensitive information by posing as a legitimate source. A common example is email sent by a party claiming to be a bank stating that the addressee must take action immediately to prevent problems with their account. The email usually has a link an online form that is branded to like the organization web site. The form will usually ask for sensitive details such as passwords, tax numbers etc (Credit Cards and Identity Theft – Online Fraud, 2007). "Phishing" is a growing Internet scam in which criminals use fraudulent e-mails and websites to retrieve personal financial information such as account numbers, passwords, or social security numbers. This confidential information is then used to steal money from your account or to run up charges on your credit cards (Einhorn, 2005). E-mail is usually not secure. It's not a good idea to send personal information such as your Social Security number, personal identification number (PIN) or account numbers via e-mail, unless you know it is encrypted (What you should know about internet banking, 2007). Thus, it is important to be vigilant with these identity thieves to prevent these unlawful actions to take place. Credit cards are one of those things that could make your life easier, or could make your life disastrous. The positive and negative effects or the advantages and disadvantages of having a credit card help understand various features and factors involved in credit cards. When all is said and done, choose wisely, and realize the credit cards are weapons that can be used for a bountiful existence or a tragic fate. It all depends on how you wield the same fruit and make it better (The Pros and Cons of Using a Credit Card, 2006). Make sure your computer’s security system is safe and sound to establish privacy while using online transactions. Some people may miss the face-to-face contact of their local branch, and most will choose a combination of online banking. As online banking becomes more established, its likely most of us will end up conducting at least a proportion of our transactions online (Kenny, 2007). Thus, the use of credit card online makes things easier for all of us. As long as we remain vigilant it would mitigate chances of fraud and identity thieves. It is important that credit card holder to have precautionary measures when using credit card online or making online transactions to make things favorable and eliminate identity thieves. Online banking isn't out to change habits of handling money. It simply uses today's technology to give you the option of circumventing the time-consuming, paper-based aspects of traditional banking in order to manage finances more quickly and efficiently (What is Online Banking, 2003). 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