Is Online Data Safe?

Here's a comment someone recently left on my post (over a year old now) titled Mvelopes Backs Up Its Product:

Just wondering about the security of Mvelopes. It asks for ALL financial institutions plus password, which obviously, I understand they need to make this work. But, concerned that my information might get into the wrong hands.

I've had many people leave positive comments about Mvelopes (including Quicken users) but this comment brings up a good point -- is your online data truly safe?

If you ask any service like Mvelopes, they'll assure you that your data is 100% safe and can't be stolen. But isn't that what all the banks, credit card companies, retailers, and the like tell us? And how often do we hear of another million names/data stolen? Almost daily, isn't it?

Personally, I don't use online services for just this reason -- too much vital information in one spot is just too risky for me.

How about you? Are you fine with having vital financial information online? Anyone ever been a victim when one of these sorts of services has been hacked or compromised in some sort?

Comments

[David Wynn]

For me, I see our information as already being generally unsafe online anyway, regardless of what you do. Vigilence is the only answer I've come up with... that and a good non-liability policy for purchases you don't make... which is why I check my accounts about once a day.

However, in my opinion, there are more secure companies and less secure companies. For example, PayPal is pretty god, and they let you generate fake credit card numbers now. And in terms of Mvelopes-alikes, there's Wesabe, which is known for having ultra ninja privacy techniques (it makes customer service a hassle, but I rather like that the devs are obssessed with security).

So yeah, go with a company that's known for security but be vigilent.

[MelMoitzen]

I have no problems having my data online--but realize that even if you don't specifically conduct business online, your data can still be hacked. A few of the widely reported online data breaches contained data mined from transactions of bricks-and-mortar retailers.

My parents are getting up there in years and have no interest in conducting business online for fear of being hacked. But they have no problem turning over their credit cards to total strangers several times a day who can see their CC numbers and also exactly what their signatures look like. Go figure.

[Mr. ToughMoneyLove]

Your data is "online" in some fashion (e.g., corporate intranet) whether you like it or not so why give up the convenience of online banking?

[Mo Money]

I agree with the comment above. You know your info is out there already so why not use online banking?

[Andy]

I just signed up on Mint.com a couple days ago after seeing it mentioned one day on this blog. So far I really like it.

They claim to actually make banking SAFER. Although you have to enter in all your passwords, usernames, and security questions/answers one time, they say they don't keep that information and use a third party to connect to your banks using financial industry-standard security. The actual Mint.com account only requires an email address so it's relatively anonymous. If someone gets into it, all they can do is see your transactions and balances and stuff -- not open accounts or anything.

The reason they say it's safer is because you can set up alerts to email and text message you based on activity in your accounts. That way you find out pretty fast if there is some suspicious activity.

I've been using Internet banking for years. I haven't had a problem yet. Although a computer with my student loan information and social security number was stolen from a "brick and mortar" bank.

[Kaylan]

I barely trust my bricks and mortar, brand name bank to protect my identity information. Why would I trust some upstart Web site? No way, Jose!

[Ben]

I think with some sites like buxfer you can opt to store your login credentials on your computer (e.g. with a firefox plugin) so your computer would run something like a google gears script which would download the data from your banks, then upload it to the finance management site. This is seems a little more secure than mint.com's model. Still, I am wary of these and continue to use Quicken. ...I test drove mint.com, and a few others and found they don't have nearly all the features I use in Quicken so there's not much of a reason to switch anyway.

[Phil H]

I am uncomfortable with having my data stored online because there is always some new threat to online privacy...whether it be spyware, keyloggers etc. Someone is always out there trying to hack into some online database. As far as the bricks and mortar companies, many of there security breaches are a result of someone forgetting to encrypt a database.