Identity Theft

4 Security Tips From a Former Fraudster

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You will get hacked, and here’s why.

Personal information is incredibly valuable, but unlike cash and jewels, you can’t keep thieves away by locking it up. Your name, Social Security number, credit card numbers — they’re all tangled up in things you do every day, from using computers and ATMs to paying your bills and taxes.

“The hackers will always be trying to find a way to get the data,” says Dan DeFelippi, a web developer and security consultant. “The reward is worth the time.”

Dan knows this from experience. He was arrested for fraud in December 2004, following years of making his own credit cards with stolen information.

“I started out hacking the credit card information myself and finding it myself, but the reality was it was worth less of my time to do that and worth more of my time to buy it from other people,” he says. And there’s plenty of information out there. Think of the magnitude of recent data breaches, which affected customers from big companies like Target, Neiman Marcus and Adobe. “To them (hackers), selling a card when they have millions of cards equals lots and lots of money.”

After getting caught, DeFelippi stayed away from fraud, though he admits it was really tough adjusting to life without free (aka stolen) money. He eventually worked with the Secret Service for two years as a security consultant, tapping the knowledge he gained during his fraudster days.

Tips from a Former Credit Card Thief

Despite abandoning his felonious ways nearly a decade ago, DeFelippi maintains his interest and expertise in the digital security realm. It’s a natural extension of his work as a programmer.

Having been on the other side, he knows it’s a challenge to beat out hungry hackers, who have fun searching for holes in systems and enjoy the pride of finding those weaknesses. DeFelippi used to do this for 12 hours a day.

“It’s really, really hard to overcome that,” he says. Security systems have to fight an exhausting battle against hackers craving the rush and the money — many work from countries where credit card theft brings in a way better paycheck than local jobs.

“Data breaches will happen,” DeFelippi says, “there’s nothing you can do to secure 100% of systems.”

But that doesn’t mean you should give up on security, he says. There are plenty of simple ways to protect your information.

1. Prioritize Security

The ubiquity of data breaches isn’t an excuse to make your banking password “12345.” Don’t make it easy for the hackers, DeFelippi says.

It’s worth setting up obstacles to fend off the thieves, like two-step login verification and unique password choices. He recommends two-step authorization for any service that offers it, especially email, because it’s “a big key to every kind of account you have.”

Doing this can slow hackers down — you don’t want them to have access to all your information because they got hold of one email address and password combination — which gives you more time to act.

Beyond that, DeFelippi says he always uses bank ATMs because he considers them more secure than individually owned machines (using your bank’s ATM also helps you avoid fees), and he rarely makes purchases with debit cards, preferring credit cards instead.

It makes sense — if your credit card is compromised because of a card skimmer, perhaps the thief will make a few purchases with your account. In addition to the fraud protections tied to credit cards, at least the thief used the bank’s money, not yours. While you can probably get the money back in your checking account, a fraudulently used debit card temporarily leaves you without that money, which can be a major issue for many Americans, depending on the timing and amount spent.

2. Connect Carefully

DeFelippi avoids using insecure WiFi as much as possible. Even if you’re not actively using sensitive information, like doing some online shopping or checking bank statements, you may have forgotten about something running in the background that you wouldn’t want someone else to access.

“As soon as you connect to that WiFi, anything on your computer is going to start to communicate with that WiFi,” he says. “It’s pretty easy for someone to do.”

On that note, it’s a good habit to err on the side of caution when using a secure WiFi connection to which many people have access. Entering a security key to access the network isn’t a guarantee of reduced risk.

3. Monitor Your Accounts

DeFelippi was pretty clear: Prevention isn’t everything. Even when you work hard to protect your information, it can get stolen.

That’s why you need to look out for signs of identity theft and credit card fraud. Monitoring your bank accounts is a simple way of checking for unauthorized activity, and he likes using Mint.com to review all his accounts in one place.

Data security goes beyond bank accounts. With the easy access consumers have to their credit reports and credit scores, it’s easy to spot if something is amiss. You can get your free annual credit reports from the major credit reporting agencies, and using a free tool like Credit.com’s Credit Report Card, you can compare changes in your credit scores over time, as a major shift could be a sign of identity theft. There’s also the option of paying for credit monitoring services, which will alert you when someone applies for new credit with your Social Security number.

4. Act Immediately

“If something does happen, catch it as quickly as possible,” DeFelippi says. That’s the advantage of keeping tabs on everything — when someone gets a hold of your incredibly valuable personal information, you can prevent the incident from getting out of control.”

There are regulations in place to protect consumers from the fallout of identity theft, but it can take a long time to straighten out long-lasting fraud. Your credit information, even if it was messed with by a fraudster, ends up on your credit report, which impacts your credit scores, which plays a large part in your ability to get loans and other financial services.

If you’re curious, DeFelippi was sentenced to three years of probation, which included his work with the Secret Service, and had to pay $210,000 in restitution for his crimes. He was facing 8 ½ years of prison when he pleaded guilty to the crimes.

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Image: alphaspirit

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