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Take On Payments, a blog sponsored by the Retail Payments Risk Forum of the Federal Reserve Bank of Atlanta, is intended to foster dialogue on emerging risks in retail payment systems and enhance collaborative efforts to improve risk detection and mitigation. We encourage your active participation in Take on Payments and look forward to collaborating with you.

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September 14, 2015


The Cost of Free Wi-Fi

When I was a teenager, my friends and I were often on the prowl for bargain restaurant offers. The all-you-can-eat buffet at our local Chinese restaurant was a favorite, but every so often we would discover a "free meal deal." We were once reminded by my friend's dad that "nothing in life is free." That quote left a lasting impression on me.

The validity of this quote was hammered home recently during a security discussion I had with a friend on connectivity to the Internet through free public Wi-Fi. Though free public Wi-Fi is, well, free, it has "soft" costs tied to the lack of security in the connection. And these soft causes can quickly lead to the "hard" costs of fraud—from theft of personal information, user names and passwords, or payment credentials, since hackers are easily able to intercept data transmitted over the Wi-Fi network. Beyond this method, which involves a legitimate network, fraudsters can also deploy rogue Wi-Fi networks for the sole purpose of stealing information. And then, once they have that information, the fraudster can use it to access your accounts under your identity.

This does not mean that people shouldn't use free or public Wi-Fi. When I am away from my home, whether I'm at a local coffee shop or on the road at a hotel, I often seek locations with free Wi-Fi. Apparently, I am not the only one. A recent survey by a U.K. hotel chain found that free Wi-Fi was the most important factor for its customers when choosing a hotel. Free Wi-Fi even ranked higher than a good night's sleep!

However, using free public Wi-Fi and trusting it are two different things. It should never be trusted, and therefore users should do everything to protect themselves and their information. Before joining a free public Wi-Fi network, users should ensure that it is a legitimate network offered by a legitimate entity such as a business, municipality, hotel, or airport. Criminals often will use deceptive Wi-Fi names to trick users into choosing bogus Wi-Fi networks, so users should pay close attention to signage promoting Wi-Fi networks or ask staff for help in identifying legitimate networks. The Federal Trade Commission offers detailed advice on protecting yourself against Wi-Fi security risks once you are connected, including:

  • Use a virtual private network, or VPN.
  • Use SSL-encrypted connections by enabling the "Always Use HTTPS" website option.
  • Turn off file sharing.

These risks are not just limited to free public Wi-Fi networks. They are also inherent to any public Wi-Fi network, including paid networks such as the in-flight Wi-Fi that many airlines offer. It is imperative that users of public networks take the necessary steps to safeguard their information, especially while conducting financial transactions. As free public Wi-Fi spots continue to proliferate and more financial transactions move to connected devices, rest assured that fraudsters will continue to exploit this communications channel. Educating users on how to protect themselves using public Wi-Fi is critical to safeguarding financial information.

What are you doing to bring awareness to your customers about public Wi-Fi risks?

Photo of Douglas A. King By Douglas A. King, payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed


September 14, 2015 in online banking fraud , payments risk | Permalink

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