Here’s Traci’s interview with David Phillipi from Bankers Bank of the West on the Fraud Busting Podcast. We talk about check fraud and some of the biggest fraud scams bankers are seeing now.
Traci Brown: David, thank you so much for coming on Fraud Busting. I am thrilled to get reconnected with you and have you here for a few minutes.
David Philippi: Yes, thank you so much, Traci. I appreciate it. Good to connect again.
Traci Brown: It’s been, what, a couple years we decided since we met, when I spoke at your event. I don’t know, which one was it? Because it was Banker’s Bank of the West, but I spoke for two events. I spoke for your Cyber Event and your Payments Conference.
David Philippi: Correct.
Traci Brown: I remember them both for different reasons, but the Cyber Conference was right when we were going through the new Supreme Court justice. What was his name? And there were all the problems. You know his name.
David Philippi: Yes.
Traci Brown: Sexual assault.
David Philippi: I don’t recall.
Traci Brown: Yea, anyway. All of that was going on, and I had learned by that time to not talk about politics on stage because someone gets upset with objective – just analysis, and so I remember having to do a bonus side session in the hallway for people who wanted to know the objective body language of was this guy lying on not.
David Philippi: Okay.
Traci Brown: Anyway, that’s why I remember your event. Tell me, what’s been going at Banker’s Bank of the West? You’re not a retail bank. Why don’t you explain a little bit about what you all do?
David Philippi: Overall, I just tell people when they ask, we’re a bank for the banks. We work in 11 different, if not more, states, and we work for the community banks. That being said, I travel, myself, I travel to all those 11 states, if not more, but we are everything that a community bank is except we do not have a teller line. We do everything else from loans to operations, cash management to merchant processing, credit cards, ATM, debit, and that is my wheelhouse, the bank card.
Traci Brown: Okay, okay. Because there is payment system in place. Are you all responsible for making that work for the community banks? Is that what I’m getting out of this?
David Philippi: That’s correct. Our wheelhouse is we are a reseller for a larger organization, if you will, that does the processing in the back end there. Instead of them going to these large corporations, massive, and start calling into a help desk, they call me or two other people. We get to know the customers. We get to know what they like. We had a customer yesterday, it was her big 4-0, her 40th birthday. Talking about that, it’s those little things that we push. Our mission statement is to champion community banking, and that is what we strive to do.
Traci Brown: Oh, I love that. Community banks are so vital. We get stuck with Chase and Wells Fargo and the big ones, but the little ones are really what makes a lot of communities go and really builds small business.
David Philippi: That’s it. Community banks are community. That’s the prime thing. They are small town USA, all the way up to Denver. We have community banks here in Denver as well.
Traci Brown: Oh, yea. Let’s get to know you a little bit, for everybody in the audience. I thought of the name we couldn’t think of. It was Kavanaugh. Brett Kavanaugh.
David Philippi: Oh, yes.
Traci Brown: Yes, yes. Quite a situation he had there. Okay. Let’s talk about you a little bit. Now, are you working at home now?
David Philippi: I am. I’ve been working at home for, this is week eight, as of today actually. I got a call from my boss eight weeks ago, or two months from an airport as I was traveling for business. “Don’t come into work since you have been traveling”, and then that following week he goes, “Don’t come into work for 14 days.” Then the next thing you know, “Don’t come into work until next month.” I’m spoiled. My wife brings me food. I’m locked into a room, so our four kids don’t interrupt during conversation such as this. But I’m very blessed and very spoiled, I will say that.
Traci Brown: Oh, wow. Okay. Are you wearing pants?
David Philippi: No. Shorts.
Traci Brown: Okay. Alright. What’s the habit that you’ve acquired during this whole quarantine that maybe you would never have if you weren’t at home the whole time?
David Philippi: Stretching in the early morning. I wake up still at the same . . . a little later than normal, about 5:30. I go into my closet and stretch and keep myself in the closet until our little kids, four and two, wake up so that they don’t know that I’m here. I’m actually at the office. My four-year-old is a little worried. He goes, “Dad, everyone’s sick. Make sure you wear a mask and you’re safe.” I’m like, “Anytime I go outside, I wear a mask.” I’m very careful with my wording there. I’m not lying to him. I’m just not telling the full truth.
Traci Brown: That you’re hiding from your children. Right. I got it.
David Philippi: That’s right.
Traci Brown: I hope you have a big closet.
David Philippi: I get to come out after they’re awake. I get to come out and I have our bedroom that I’m in right in, I have a whole setup here that I created, a whole standing desk type situation. I’m locked away with a fan outside the door, so they don’t hear me chattering away.
Traci Brown: You know what, I think you’ve taken the hiding thing to new levels. Good for you. Good for you.
David Philippi: Thank you.
Traci Brown: Have you seen any silver linings come out of this yet, either for yourself or for your business?
David Philippi: You know, for a business, it’s business as usual. That’s what we’re striving to do is have our customers not know that we are at home. The biggest thing that I can say for myself is I’m not out in front of the customers, and that is one thing that I love to do. I’m a people person, day in, day out. I mean, I can walk into a room and try to make conversation with practically everyone.
Traci Brown: Yea.
David Philippi: That’s one thing that I’m – I don’t want to say struggle – but learning to adapt. I’m an extrovert. But you see all these videos of extroverts freaking out, looking out the window, hoping someone walks by, I’m not like. I like literally, instantly became an introvert and loving the productivity that I’m doing at home.
Traci Brown: Wow. You did a switch. You know what, I’m very similar. I have extrovert/introvert. I can do both. I’ve got to tell you, I’m getting tired of the introvert one. I’m ready to see some people.
David Philippi: Right.
Traci Brown: And converse a little bit. Yea. I get you. There are benefits to being able to switch and some people can’t, like my husband can’t. He’s in the basement, and he is happy as a clam just doing whatever he does all day.
David Philippi: Yes.
Traci Brown: Anyway. Alright. Let’s talk a little bit about fraud because, you know, financial fraud happens everywhere. I think the first thing people think about when they think about fraud is a bank because you all literally have all the money. You have all the money. You hear about bank robberies and all sorts of things. I mean, they make cartoons about bank robbers.
David Philippi: Right. Video games.
Traci Brown: Yea, yea. Oh, video games too now, of course. I know you’ve been involved personally in some fraud, like inadvertently, but I also have a feeling that you know a lot more about how fraud really happens and what people can look for, not only if they’re working at a bank, but in their business. I’m going to let you start however you want to, but we definitely want your story and we definitely want some little tips in there.
David Philippi: Perfect. That’s great. I wrote down some notes here just to make sure I had some points.
Traci Brown: Oh, great.
David Philippi: I think one thing that I want to say is I started in banking about 13 years ago, I started in Wyoming. That’s pretty much been my career is banking. I started as a teller and I highly dislike it when people say “just a teller” because it’s not just a teller. They are the frontline literally, the frontline, or the face of the bank day in and day out. I started as a teller in Wyoming. It was great. I was a young kid. I guess I consider myself still young, but was a young punk is what I like to say.
Traci Brown: Okay.
David Philippi: I had earrings. I had a necklace. My grandmother knew the president and say, “You know, my grandson needs a job. Would you help him out?” That’s what started it. Then a year later, the bank was purchased by another one, and the new president came in and said, “Yea, we’ve got to watch this young kid here. He’s got earrings. We need him to wear a tie. No more necklace. No more earrings. We need him to straighten up.” I was that young kid that said, “No, you’re not going to tell me what to do.” The next thing you know, I’m learning how to tie a tie.
Traci Brown: Oh. (Laughing).
David Philippi: And 13 years later, I love wearing ties. Business has become more casual. Wearing ties, especially in small towns, really throws people off.
Traci Brown: Oh, interesting.
David Philippi: Yes. I love wearing suits. I love dressing up. I love looking nice, not today, but . . .
Traci Brown: Yea. Your pullover looks awesome.
David Philippi: Thanks. Thanks. I got somewhat dressed up for this. I just wanted to say that, as I go in, I was a teller. Within my first year we had some fraud occur, and that being check fraud. I guess you would consider it check fraud. We had a business customer that was a customer of the bank that did side jobs here and there but would do paydays periodically. I wasn’t every other week. It wasn’t the 1st and the 15th. It was just when the job was done, people got paid. It was your blue-collar workers that would come in and once the job was done, they want to get paid because they don’t bank with us. They just want cash. We’d cash their checks, and they go. I don’t remember the day of the week, but it was a Wednesday or Thursday type of deal. All of sudden we get people coming two at a time, one offs, but it started occurring throughout the afternoon. We’re like, okay, maybe they just finished a job and they needed to get paid. The dollar amounts were $1,000 and above. They weren’t small dollar amounts, if you will. They just kept occurring, more and more people, which was about normal for this company. We’re cashing them. We’re checking IDs. We’re writing their ID numbers on the checks and this and that. We’re doing our procedures and so forth. We got to one. We’re probably, I’d say, 10 checks in already. It kind of threw a red flag or something with the check didn’t look right or the business customer started going negative, so we went to . . .
Traci Brown: Oh.
David Philippi: Yes, yes. We have to get management’s approval. Can it go through their overdraft? Things of that sort. She took a look at it and decided to call the business owner. That’s what started everything, knowing that this is no legit. Every one of these that we’ve cashed has been fraud. Someone stole their check book, but it wasn’t just handwritten checks. They were actually typed out on a computer and printed. It looked to us legit and with that, you can tie the business owner’s signature onto those checks electronically, which is normal, an electronic signature that is then printed on the check. Overall, it looked normal, but that threw the red flag up to us as the tellers. We instantly stopped. Then they went to our branch that was about five minutes away and started trying to cash them there. Then they tried to go to their banks, if they had a bank, and tried cashing them there. I would say $15,000 to $20,000 within an afternoon was gone.
Traci Brown: Wow. Let’s dig into this a little bit. Do you remember? What was the tip? Besides them going negative, the customer going negative, was there another tipoff to go, wait a minute, something’s fishy here?
David Philippi: Us, the ones on the frontline, we questioned it kind of at the beginning. Usually he doesn’t . . . this isn’t a normal day, this isn’t a typical timeframe. Something just didn’t seem right, but at that time we just didn’t question it. There were enough things that fell in line that were normal that the one or two little caveats or red flags, we didn’t take that into effect, which we probably should have right away, taken it to management and just said, “Hey, this does not feel right. What’s going on?” Our internal instincts, even if it was just one of us, we did discuss I believe. I’m trying to remember. This was – what? – 12 years ago.
Traci Brown: Right, right. Yea, yea.
David Philippi: But as tellers we probably should have just came together and said, “Yea, let’s say something and make sure this is legit.” Just like your last speaker, I was listening to your podcast, one of your latest ones yesterday. The speaker said, “If it doesn’t feel right, it probably isn’t right, as well as give them a call.” They were talking about wire-transfer fraud.
Traci Brown: Oh, yea, yea. Jeffrey Hayzlett. Yes.
David Philippi: Yes. I want to sit down with that man. He’s interesting.
Traci Brown: He is fascinating. You can find him on LinkedIn. A real visionary guy and thinks big. I like him. Yea.
David Philippi: Same with the fraudster. I forget his name.
Traci Brown: Oh, Tony Sales. Yes, yea. Talked to Tony Sales.
David Philippi: That’s an interesting one too. I love the accent. I wish I had an accent. I only have a Wyoming accent.
Traci Brown: You do pretty well, but yea, Tony Sales, I had to really focus to listen to him and read his lips a little because I’m not used to that thick of a British accent talking that fast.
David Philippi: Yes.
Traci Brown: For people listening, I think we’re talking about episodes 5 and 6 on Fraud Busting, I believe with Tony Sales.
David Philippi: It’s 6 and 7.
Traci Brown: Oh, 6 and 7. Yea, that sounds about right. Tony Sales and Jeffrey Hayzlett. Yea. Okay. Did someone steal the numbers or the checkbook? Did you figure out how this all went down?
David Philippi: Yes. From what we understand, the checkbook or the check system was hacked into by someone there. It wasn’t a third party somewhere else.
Traci Brown: Oh, it was internal.
David Philippi: It was internal. It definitely was internal, probably from . . . my opinion would be someone said, “I could get away with this. Hey guys, come with me. Let’s cash out on a couple thousand dollars each.”
Traci Brown: Because he’s just basically doing day labor with his workers.
David Philippi: Correct.
Traci Brown: Okay. Let’s talk about preventing this from the customer’s perspective, from the business owner’s perspective, but also what can consumer’s trust that their bank will do if something like this happens? You know anything about either of those?
David Philippi: Yes. There are policies and procedures put in place as well as training. As a teller, if you’re listening, as a manager, as a business owner, if it doesn’t go right, follow your instincts and follow up with that. Again, as previous guests have said on your show, follow that instinct. Do what you need to do to investigate just that piece. If it takes 10 minutes, it takes 10 minutes. Another person said pressure them. If a fraudster is pressured, they’re going to crack. We had that a couple of times with people coming into the branch that were just suspicious, but if you sit there and make them feel uncomfortable, they’ll just leave. We have no idea what some of those intents were, what they were planning to do or not do. Maybe they were just casing the place at the time, but if you pressure them, they will feel uncomfortable.
Traci Brown: Did you just make them sit on the couches in the bank for 10 minutes until . . . What does pressure really mean?
David Philippi: This is advancing from a teller now to a branch administrative manager, so I was in charge of the tellers and the new account representatives at that time. My desk was right at the front of the door so anytime anyone walked in, we were trained to greet them, but me being who I am, wanted to greet them, shake their hands, have a cup of coffee with them, but there were a few, and not just pointing out gentlemen, but we had a female teller line and then we would have gentlemen come in and just sometimes you get that feeling of this isn’t going to be a comfortable situation. Let me present myself and make sure that they know I’m here and I am listening and watching. You know, you just stand up by the teller line, either next to them in a different station and you’re just conversing about fake business or whatever it may be, just to know that they’re there, say hi, shake their hands at that point, and maybe you start evaluating that individual. What are they wearing? What are their shoes, pants?
Traci Brown: So you can describe them later.
David Philippi: You got it.
Traci Brown: Oh, wow.
David Philippi: That’s exactly right.
Traci Brown: Okay. So the bank’s watching us all the time. Let’s go back because I have a couple more questions about this fake check situation that came up. Does the bank refund that money? How the business owner end up?
David Philippi: I don’t know the logistics on this one customer. I know that we do sit down and work with a customer individually, no matter what the situation is. I don’t know how that situation panned out, but in the end, he continued to be a customer of ours and probably still is to this day.
Traci Brown: Got it, got it. What could he have done on his end? Because there was just one signature on the check? Is moving to two the best thing to do?
David Philippi: I would say that signature would be, in that situation, print them out all day, print the check out, but then you should have a wet signature on top of that printed check, as well as possible dual. It’s just when you have day laborers and things of that sort, there are so many checks coming in and out, and he’s also working. Finding that time is probably difficult. There might have been a secretary or anything of that sort that was on the inside.
Traci Brown: Um-hum. Wow. Okay. Two signatures at least or a real signature at the very minimum.
David Philippi: Right.
Traci Brown: It sounds like, I’m betting if he was still a customer, I’m betting the bank made it right with him.
David Philippi: I think so.
Traci Brown: Now, do banks carry insurance for that kind of thing? How does that . . .?
David Philippi: Yes, there is insurance at a bank. I don’t know, again, the logistics behind it, but there is insurance for fraud loss or for loss of any type. It just depends on the amounts. Probably for a couple thousand, it’s not worth filing an insurance claim on that piece, just with the customer and do due diligence on that part.
Traci Brown: Banks write off fraud every month, whether it’s credit card fraud . . .
David Philippi: Every day.
Traci Brown: Every day. Okay. Well, that would make sense. For a small bank, what’s a fraud writeoff monthly? What’s it look like?
David Philippi: That’s a good question. I work with approximately 20 to 25 banks on a daily basis, but we have banks from $18 million in assets which is a pretty small community bank to up to $1 billion in assets. There is a huge range there. If you’re talking a $1 billion bank, in a month they might write off a couple thousand and they’re like, ah, that’s nothing. Where you talk to another bank and they don’t want to write off $25. I mean, that’s just by choice. It’s not because they’re going to close because they can’t for $25. They just don’t want to. If they can fight it, they’re going to fight it day in, day out, for that fraud. I would say on average per month, I would say $100 to $500 could be about average in fraud loss.
Traci Brown: Oh, that’s small though for a little bitty bank. I’ve heard different numbers, up to like $25,000 for even a little bank in South Dakota.
David Philippi: I’ve had banks . . . Last year I had a bank that wrote off nothing at all.
Traci Brown: Really?
David Philippi: Yea, not one bit of fraud. That was quite interesting. They were very proud, and I was very proud of them. One of the employees of that bank really fought tooth and nail for disputes that came in, any chargeback requests, things of that nature through multiple different lines of investigation either through the customer themselves or with the merchant who maybe overcharged, things of that sort.
Traci Brown: Oh, wow. Tell me more about how are you trained as a teller, as someone that works in the lobby of a bank? What else are you looking for from people coming in that might be sketchy? Can you fill us in a little bit on that?
David Philippi: Definitely. This is probably a big one for you, would be body language.
Traci Brown: Yea.
David Philippi: Probably not to the extent in which you go, but that would be awesome training. I bet we could tell a lot at that point because man, we had some liars in there that were just blatantly dishonest, but some, you’re like, hmm, this seems a little off. Just their presence, again probably body language is big, and things that they say that isn’t your typical customer questions. I’m trying to think of what some of those would be. I haven’t been on the teller lobby side for seven years. I’ve been over here at the correspondent side. But just the way that they present themselves to anyone in the office, anyone in the lobby, even other customers, just is odd.
Traci Brown: Yea, if it doesn’t seem right. Also, the things that they say, right, because if they have a story that sounds either too good to be true, or just too ridiculous to even make sense, those are the ones. The simplest explanation is usually the right explanation. It doesn’t matter if it’s in a bank lobby or anywhere else that you might meet folks. It could be even in your business, like in whatever industry that you’re in.
David Philippi: Right.
Traci Brown: The shift in behavior is what you’ve got to find. I love that, how you’re like, oh, just put a little pressure on them. Because you’re right, criminals melt down easy and they give up easy. It’s up to you to just make it a little bit more difficult on them. One of the things that Tony Sales said, since we’re talking about him, he said there’s been this general disinterest in the customer. He said, it’s getting worse and worse.
David Philippi: Right.
Traci Brown: To the extent that we’re not paying attention to who’s across from us, we’re not getting the messages that they’re screaming at us loud and clear. I said, well, Tony, how do you sort that out? He goes, here’s what you do. He goes, ask them their birthday. Right. Because they’ll give you an ID. They probably memorized the information on the ID because it’s probably a fake ID, but he said, then, strike up a conversation, ask them what’s their horoscope sign.
David Philippi: Right.
Traci Brown: They probably won’t be able to answer it. Right.
David Philippi: It’s a good one.
Traci Brown: Little things like that can be enough just to deter people. Okay. What other kinds of fraud are you seeing in the bank? How can people avoid that same kind of problem in their business? Not only that, but have more confidence in their bank? Tell me about that.
David Philippi: The fraud that we are seeing today, I asked a couple colleagues as well, because I see some, they see others, on the personal side or within the business. What we’re seeing now are a lot of charity scams.
Traci Brown: Oh, really?
David Philippi: Saying, hey, do you want to donate here and there? As well as account takeover. Again, previous speakers have touched on this and it just helps to reiterate that it is true. It’s not just a one-off situation in the C-suite fraud or an actual fraudster telling you this. It is legit account takeover, charity scams, phone calls saying, hey, you just got a free night’s stay at the hotel, or a vacation stay, things of that sort. If it’s too good to be true, it most likely is in many different cases.
Traci Brown: Now, let’s talk a little bit, let’s dive into each of these just a little bit more. Charity scams, what are those looking like? How can people recognize it?
David Philippi: Text messages. I just got one. I’m not sure if it was charity necessarily, but a text message scam saying, hey, we’re trying to raise money for the Red Cross. Hey, just click here and you can donate. It will be billed to your cellular phone bill. Let’s make it easy. As a consumer, as a Millennial myself, it’s in my hands, it’s messaging. I love it. I don’t have to talk to people, even though I am an extrovert, but still. Hold my hands. All I have to do is click a button, probably hit two more buttons, I’m done. Things of that sort.
Traci Brown: Here’s the thing, because the Red Cross actually does, they’ll say you can text to donate. You’re telling me they will never text you to donate?
David Philippi: There we go. You just said. You can text. That goes back. You, the user, can choose to text this number with this code and then we’ll send you information. Not like, oh, instantly, here is the information that you seek.
Traci Brown: Oh, interesting. I think this goes back to the reason this fraud really works is that we don’t know what to expect from the organizations that we work with. Are they going to call us to confirm our account number, for instance?
David Philippi: Right.
Traci Brown: We actually don’t know the protocols of each individual company that we’re working with, and that’s why this works because we go, oh, that’s plausible. Sure, I’ll do it. Okay. Account takeover, this is a big deal. People spend a lot of time trying to take over our accounts. Talk about that a little bit. What’s it look like? How can we prevent it?
David Philippi: On the back end of our ATM/debit processing solution, we are able to sell a service, I would say, or provide a service, not Banker’s Bank, but the industry behind us, if you will.
Traci Brown: Like Visa or something like that?
David Philippi: Right. Yep. Provides a service where they would contact the end cardholder if any suspicious fraud was occurring. With those, the individual on the other line, the fraud team would contact the cardholder but should never ask for any personal information, any accounts, any cards, any date of birth, social security. What they’ll do is they’ll ask for is to verify the last transactions that occurred.
Traci Brown: Oh, that’s a good little tip there.
David Philippi: Yep. If the cardholder is asked for account numbers, hey, we want to verify your social security, your date of birth, that’s unnecessary and they should hang up. That’s where the account takeover can happen is people get used to these phone calls of a fraud team, an actual fraud team calling, that when the fraudsters call and they’re like, hey, we just want to check your balance, check that you made this purchase, that’s where we see it’s been taken over.
Traci Brown: Wow, so when someone takes over the account, basically they make your account their account, and block you out of it.
David Philippi: Yep.
Traci Brown: Then they take all your money.
David Philippi: Right.
Traci Brown: That’s a problem.
David Philippi: And change addresses. They go into depth with taking an account over, a legitimate takeover unless the bank shuts it down.
Traci Brown: Oh, wow. Now, how quickly do you all usually . . . ? Because you have your bank secrecy folks and they’re running their algorithms and they flag transactions. How long does it usually take to figure out if an account takeover is really going on?
David Philippi: I know on the debit card side. Now there are probably more algorithms on the account side. When I say card side, that’s the bread and butter of what I work with. That’s the actual piece of plastic or the global wallet, the tokenization global wallet that is on your phone, that’s where I work.
Traci Brown: Okay.
David Philippi: That and the processer has algorithms and systems in place where they see fraud trends that have already occurred or current fraud trends. They’re also monitoring the dark web. There are many different things on the debit card or credit side even that they check. Phone calls will go out, like I was saying, the fraud team. They’ll call them, try to get a hold of them. There are also text alerts that are out there, email alerts, things of that sort. That’s on the debit card side. On the account side, I don’t know what they have in today’s world on what we call the core of the bank. The account actually is held, but I know for a fact there are things monitoring that as well.
Traci Brown: Okay. Okay. Let’s see. We talked about the free vacation, the free night’s hotel. That would be a tough sell right now, I would think, to people who are paying attention. I don’t know. Some people really want to get out of the house. What else are you hearing? Let me back up. The free night’s stay, that’s just a way to get your . . . they want your credit card to secure the trip. Right. Anything else you’re hearing out there?
David Philippi: No. I don’t think so. I think that’s about the hot topics. I mean, there are multiple different with “card not present” fraud happening, especially with people being home. The” card not present” in general has increase since the implementation of EMV or the chip card, the chip that’s now on almost everyone I assume – almost everyone. I have a customer that doesn’t have the chip card. They’re in very small town, USA. They just told me this week that their customers do not want the chip. I’m like, okay. We’re trying to help you.
Traci Brown: In their defense, it is a change of behavior when you’re at the checkout. Right. Because you don’t swipe it anymore. You plug it in. It took me a long time to change that. I’d swipe it and they’re like, “You’ve got to plug it in.” I’m like, “Damn it. I just put the card away.” I get it. I get why it’s necessary. However, it is a change in behavior. Let’s face it, a lot of older folks, maybe even small town, they’re not into change.
David Philippi: Right. Not at all.
Traci Brown: CNP. Let’s talk a little bit about that. Card not present. That translates to the regular person like an Amazon purchase. Right. Because the card is not there.
David Philippi: That is correct.
Traci Brown: Yea.
David Philippi: Card not present is an online transaction. CMP. That’s correct. Amazon, Netflix, any of the subscriptions. I’m trying to think of a snack one. Hello Fresh.
Traci Brown: Okay. There have been so many compromises that pretty much everybody’s card is on the dark web.
David Philippi: I bet you got that from Brett Johnson.
Traci Brown: Oh, yea. I’m talking to him Monday. Yea, so we’ll have Brett on the podcast here soon, and he’s just a . . . well, besides being a retired criminal, he’s the godfather of how we – err, not we, because I’m not one – but how criminals collaborate and buy and sell all of our information. We’re going to learn more about that. From the banker side, from your side, once a breach has happened, like the info is out there. They’re not giving it back.
David Philippi: That’s correct.
Traci Brown: It’s up to all of us to make sure we’re doing everything we can to protect our transactions. The easiest one, I’m thinking, is probably the dual authentication, which means they will text you once you have a transaction that you want to go through. They’ll text you the special code. Then you put it in. Then the transaction can go through, which is also a pain in the butt. I’m not going to lie. However, it is necessary to keep things safe, whether it’s on your bank account or on your Amazon account or your Netflix or whatever it is. What’s your take on those? What else can people be doing?
David Philippi: Yes, just like you said, the dual authentication, anything that you can verify against it, and yes, it’s a huge inconvenience, but that inconvenience is securing your money, your hard-earned money. It may take a little bit longer either through a chip or through dual authentication online, but it is for your safety. If you don’t find a website reputable, do a quick Google search. Read up on it. There is so much information out there that people have shared so that other individuals are not affected by that fraud. There are multiple different credible websites. One that I’m on, I would say monthly, I try to get on weekly, but it just takes too much, is KrebsOnSecurity.com
Traci Brown: Okay. Is it K-r-e-b-s or C?
David Philippi: K-r.
Traci Brown: Okay.
David Philippi: That man will tell you about a data breach before anyone else has. Marriott, Lowes, I’m trying to think of some other ones that we had, Target. He had articles on there about it before we got alerts saying it. We get Mastercard alerts as well as Visa alerts saying these cards have been compromised. When those cards come out, it’s not just a couple. It’s a hundred at a time.
Traci Brown: Or thousands. I mean, the Marriott breach alone. What’s your thought on when you have your Marriott account, because I travel a lot, I mean when we can travel, and I know you do too, do you store your card number when Marriott says, hey, do you want to store this on the system to make it easier next time?
David Philippi: The answer is no, but for a convenience factor, yes. I mean, I have it on there. It pretty much saves it automatically. At least, what was it? An order today, a lunch order for a colleague through a website and it said, do you want to save this? No, I don’t at all, please. In my personal life, we don’t save any. We pay online. We don’t save any recurring card information on there. My wife knows. She kind of geeks out about it. I may come home with scary stories about a bank getting hit with fraud, but she understands. She’s the one that pays the bills because I do it daily, but she takes the bills on outside my day to day and she knows not to keep a card on file. That’s the best way, but for convenience factors, like Netflix, if it’s pulled monthly or anything of that sort, people like that convenience factor to save it in there. It is possible that the recommendation would be to not.
Traci Brown: You’ve got to understand the risks when you’re doing it.
David Philippi: Right. Unless it’s like Apple Pay. Apple Pay is a whole different world. Not to tag Apple, Samsung Pay maybe the same, but my physical – I have an Apple credit card that they came out with. It was called nice and fancy. My physical card has a different number than what it does electronically.
Traci Brown: Oh, really?
David Philippi: Yea. The same with EMV. Every EMV transaction, the card number may be different, but there is data that is encrypted that changes every single time that chip is ran.
Traci Brown: So back up. Let’s define EMV so everybody knows.
David Philippi: EMV is a EuroPay Mastercard, Visa, and it’s EMV code is the acronym, but it’s that chip device, that little microchip, if you will, on the plastic. With that, every time it’s ran, every time, like you said, you’ve got to insert it rather than swipe it, every time you insert that, it is saying, okay, this is transaction number one on the plastic and on the processor’s end how it routes through the networks – in the weeds here – how it routes through the networks, the processor also says, okay, this is transaction number one, I am okay for this to go through, ping back, and then it’s approved. I mean, there is so much behind one single transaction that we could sit here for another two hours just going in the depths of how one transaction is ran. It’s fascinating how quick, how much is going on in such a short period of time. With EMV that’s one thing that they have.
Traci Brown: Oh, wow. Okay. That was fascinating. Okay. One last thing. If you could leave people with one tip from the banker to protect yourself, what it’s going to be? Either the most important thing we’ve talked about or maybe you’ve left something out and you’re like, I’ve got to say it.
David Philippi: I would say, now I’m coming from the banker to the banker side, and I would say know what you have as in products. Do you have rules that you can write to block certain transactions? Do you have the capability to create alerts to the end cardholder? Then that goes to the cardholder, customer, or member, whoever it may be. Do you have this capability, and if so, how do you use it so that you can have it? You can get a text alert. Almost any financial institution in today’s day and age should have text alert capabilities for the debit transactions, if not for an account transaction. That could be an ACH coming in. That could be a debit card transaction. That could be a transfer from checking to savings alert. There are multiple alerts on the banking core side as well as on the debit card side. They know what you have available. Ask questions to your banker. If you’re the consumer, go into your bank and say, hey, are there things on this debit card that it has that I don’t know about? There are multiple benefits out there for the end cardholder as well. For fraud, again if it doesn’t feel right, it’s not right. That’s one big thing there. As well as just be aware of what you’re doing with your information, be it card data, personal, anything of that sort. Especially today, working from home, we have everything at a click of a button. We want convenience. I mean, I’m going to order lunch today. I need to make sure that that website is reputable because it’s going to have my information in it.
Traci Brown: Right. Right. So yea, don’t give your info out willy nilly. Ask your bank what to expect from them, and I think your tip about, they’ll only verify your last transaction. That’s all they’re going to do over text or even over the phone if they call you.
David Philippi: That’s right.
Traci Brown: That is, just knowing that, like takes out so much that you had to think about and question. That’s the only thing that’s going to happen.
David Philippi: Yep. They’re just going to verify probably the last – I’ve had a couple, the last three or four transactions. If you say no on one of them, they’re probably going to go even deeper. They say, did you do this, transaction number one? Yes. Did you do transaction number two? No. Okay, let’s see how much of these after that did you not do? Yea, they should only ask four transaction information within the card itself.
Traci Brown: Oh, perfect. David, I’ve got to tell you, thank you so much for chatting a little bit. You’ve really been a wealth of information. I know I learned some things and I’m sure everybody listening has too. How can people get a hold of you if they have little questions or just connect with you? What’s the best way?
David Philippi: I would say LinkedIn. I don’t have social media in any other form or fashion besides LinkedIn. I’m that one Millennial that does not have Instagram or Facebook or Snapchat.
Traci Brown: You’re letting all your generation down.
David Philippi: Hey, I’m okay with that. LinkedIn would be the best way.
Traci Brown: Okay. Excellent. Ya’ll be sure you find David on LinkedIn. David, thank you so much.
David Philippi: Yes, thank you, Traci.