Are Online Banks Secure?

The popularity of online banking is growing, but due to their short history, there are concerns out there about security. But how different are online banks from traditional banks when it comes to safety and security?

Online bank security and money

Online banks are much like traditional banks in the sense that they must be fully insured by the Federal Deposit Insurance Corporation (FDIC) to operate. To qualify for FDIC insurance, online and traditional institutions must have certain regulatory features such as a federal or state charter, deposit insurance from the FDIC, and the ability to comply with capital adequacy guidelines like having enough capital to support growth. Additionally, these institutions must show that they are prepared for unexpected losses.

Also, all banks must be compliant with the Payment Card Industry, or PCI, which ensures that all companies that accept, process, store, or transmit credit card and debit card information keep that data secure. PCI compliance applies to all cards under Visa, Mastercard, Discover, American Express, and JCB International.

Security block card

Companies that provide online banking services, like Simple, cannot call themselves banks, but cover their regulatory needs by partnering with FDIC-insured banks; Simple partners with BBVA Compass. By establishing these partnerships, online banking services can grow their business, while ensuring security and safety for people who sign on as customers.

Online bank security and fraud

Most banking institutions—be they traditional banks, online banks, or online banking services—store your information online. Institutions are focused on keeping customer information safe and free from identity theft or fraud, and use highly sophisticated security measures to keep consumer data secure. If bank security does fail, there are numerous protections in place to limit consumer liability in situations of fraud, no matter who you bank with.

Help protect yourself against online fraud

Here are three ways you can help protect yourself against online fraud:

  • Be informed and aware of your online security
  • Choose unique, complicated passwords; consider using a password manager
  • Understand ‘phishing’ by hackers

1. Be informed and aware of your online security

Checking your bank account balance isn’t just for regretful Sunday mornings, it’s also a good idea to get in the habit of checking your transactions on your bank statement so you can identify any suspicious behavior early.

Most banks will contact you if they see anything sketchy going on from their end, such as a large purchase in a foreign place. However, banks don’t catch everything. For example, a smarter hacker may make multiple small purchases instead of a large purchase. Check out your bank’s security alerts so that you know what your bank is keeping an eye on so that you can keep an eye on the rest.

2. Choose unique, complicated passwords

Making your password difficult for hackers to crack is different than making your password difficult for any normal human being to crack. There are two things to keep in mind when making a secure password for your bank account.

First, keep obvious information out of your passwords—things like birthdays, hometowns, and pet names. It’s likely a hacker could find out this information about you, and use it to guess your password.

Second, stay away from generic passwords, which contain things like ‘password123.’ Random words and numbers are much more secure than predictable ones. For an even stronger password, try choosing a string of common words – they’re easier for the human mind to remember, but can be harder for a computer to guess.

Not using the same password over and over is a vitally important part of protecting your information online. A password manager, like LastPass or 1Password, can generate and store passwords, which makes it easy to create unique, difficult to crack passwords for each website and account you use.

3. Understand ‘phishing’ by hackers

Online phishing is when a hacker poses as an authoritative or trustworthy source (perhaps through an email, text, or phone call) and tries to get sensitive information from you—things like your social security number, passwords, or bank account and routing numbers. To avoid phishing, make sure you’re logging onto correct URLs, even if websites look similar, and make sure you check URLs in emails, texts or social media messages. Additionally, do not respond to email or text requests for personal information from an unknown source.

Security and customer service

Whether you’re with a traditional bank, online bank, or online banking service, it’s important for you as a consumer to have someone on hand who can help you when you need it most. Dealing with suspicious charges on your account can be scary and stressful, so having great customer service team as a resource is an important part of giving you peace of mind.

As an online banking service, Simple believes that customers should have peace of mind when it comes to online banking security. That’s why we’ve built functions such as card blocking from inside our app or through our website online. Worry you’ve lost your card? Log into your account and put that card on hold; if you find it, unblock it instantly. And if you’re worried about suspicious charges, send us an in-app support message, or give us a call, and we’ll look into the situation as soon as possible.

Simple believes in helping customers feel confident about their money. We’re not a bank, we’re a technology company that provides online banking services through our FDIC-insured partner, BBVA Compass. And we’re on your side. Ready to see what Simple has to offer? Read more information here, or sign up now.

Disclaimer: Hey! Welcome to our disclaimer. Here’s what you need to know to safely consume this page: Any outbound links in this post will take you away from, to external sites in the wilds of the internet; neither Simple nor our partner bank, BBVA Compass, endorse any linked-to websites. This page is intended to be informational only.

Important! Keep your account safe from fraud

As fraud attempts are on the rise recently — especially related to unemployment funds — help us keep your account safe by following these guidelines.

Use your Simple Account only for your own personal use. Don’t share your account with others or receive funds on behalf of third parties.

Don’t share your username or password with others. Never give out your login information. Simple will never ask you to tell us your password — if any third party makes such a request, it’s an attempt at fraud.

Don’t open an account at someone else’s request. If someone else asks you to open a Simple Account — such as a real estate company, prospective employer, or someone you met online — it is likely an attempt at fraud.

Be alert for unemployment insurance fraud. You may be violating the law and the terms of your Simple Account if you receive deposits of unemployment funds on behalf of someone else. There are state and federal penalties for unemployment insurance fraud (including potential fines and incarceration). If you suspect you are a victim of unemployment fraud, contact the appropriate state fraud hotline listed here.

Don’t receive funds on behalf of a third party. Keep in mind that receiving funds on behalf of a third party violates the terms and conditions of your Simple Account; in such instances, we may restrict and/or close your account and hold the funds while we await direction from enforcement agencies.

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