A great answer to preventing fraudulent use of credit cards is here. Many of us have been victimized in some form with credit fraud, especially if you shopped at Target or one of the other companies involved in the December 2013 credit card fraud. Even if you don’t lose money, it is very inconvenient to obtain new credit cards. Plus, the identity theft will have access to your personal information. They can use this to open new accounts in your name and easily damage your credit score. It can take years before your credit is fixed after falling victim to fraud. However, if you have a smart cell phone, new technology has arrived with a unique solution. What if you could simply turn off your credit cards with a touch of your mobile phone?
Solution to Credit Card Fraud
A new company, OnDot, based in San Jose, Ca, has developed software that lets you “turn off” any of your credit and debit cards from your mobile phone. Once their application is downloaded to your cell phone, you can prevent all of your cards that are tied to a credit card company from being used. This does not cancel the cards, but will keep anyone, including you, from charging on the cards. When you need to use the cards, you can simply touch a tab on the application and your cards are open for business within seconds. Or, to be safe, you can open the cards you intend to use before you leave for home.
Another great option is that you can also put a limit on your cards of your own choice. This limit does not have to match the actual limit on the card by your bank. This way, an owner has some additional great choices. He or she can lend the card out to a relative or child, knowing they can only spend so much money. They can also use these control amounts to budget for the month or to keep to a certain goal when shopping for an item. The application is has a password so only the owner of the mobile phone can use it.
Options Available To the User
Other available choices include:
• Limiting charging at certain types of merchants such as retail, gas or lodgings
• Limit the dollar amount of any transaction when the card is unlocked
• Block some types of transactions such as transfers between accounts, cash withdrawal or online purchases
• Limit the geographic area where your card will work
Clearly, many of these options provide great choices for the customer to prevent fraud and make it easier to manage their own spending needs. With OnDot, a client can prevent charges at any merchant. They can limit their charges with a merchant, resulting in less impulse buying, for example, at Amazon. Even better, they can limit fraudulent charges at least to a local area. This prevents the thief who wants to charge the cards from a foreign country from being able to succeed. Even better, if a client has limited his other bank transactions as well, the thief may not be able to access the rest of his bank accounts at that bank. The potential here to prevent fraud is huge.
Effectiveness Of the New Solution
"Our system applies to every card," said one of OnDot's co-founders, Vaduvur Bharghavan. OnDot tried their system out with Lone Star Bank. "We were able to decrease our fraud losses from $450,000 in 2012 to $180,000 in 2013, a reduction of over 60%," said the bank's CEO, David Penoli. "This has been a big breakthrough, and justifies the solution on its own.” Clearly, businesses are already seeing the potential of this product and the increasing use of credit cards in the modern world. Most of us are carrying less and less cash on our persons.
One company currently implementing this product is CO-OP Financial Services. This company is one of the largest processors of credit cards sponsored by credit unions. OnDot has also announced an agreement with BECU (Boeing Engineers Credit Union), based in the state of Washington, the 4th largest credit union, to begin to roll out this option during the summer of 2014. So, credit union members will be among the first to use this new product. Credit unions have often been in the forefront of new services for financial customers, so this continues this historical trend.
Considerations When Using this Product
Down sides of this product consist of possibly being stuck without a card due to lack of mobile service. And, of course, the need to carry a smart mobile phone. Not everyone uses or wants to use a mobile phone. Clearly, some pre-planning is necessary when using this application. This is no different than most things in life. But, the need to prevent hard earning money from being stolen speaks loudly to everyone and will most likely drive these customers to using a smart mobile phone. Plus, smart mobile phone prices are dropping currently due to competition with VoIP systems.
Conclusion
Currently, OnDot is not offering their product to individual customers, moving at this time to bring some larger credit card companies on board. These companies will offer the service to their clients directly. If the financial world can spend less on fraud, this should lower their costs and allow more money to be invested in customer products. This could lower banking fees, or at least prevent them from increasing even more. But, this will likely change in the future and then individual customers will be able to use this product. More than likely, the public will demand the service. Keep an eye out for this new technology.
