Wednesday, May 11, 2016

Privacy - A New Service To Protect Your Debit Card Number Online

Data breaches, sadly, have become commonplace. Hardly a month goes by without news of some company getting hacked and exposing customer's credit card data. The new chip and pin cards can help prevent this type of attack for locations where you physically use your card, but unfortunately, they provide no additional protection when used at online merchants.

Enter Privacy

Privacy is a new free service that lets you use random, disposable credit card numbers at online websites. Simply create an account on their website and install the browser plugin into Google Chrome or Firefox. (Support for Safari and IE is coming soon.) Whenever you have a box on a webpage to enter your credit card number, you'll see a Privacy icon. Clicking it will generate a unique credit card number for that order.


You can configure various options for each number generated - spending limits, number of users, etc. You can cancel the number at any time and prevent any further charges from being accepted. This can come in handy, not only in the event of a data breach, but also in case of problems with a company you have set up a recurring charge with. Company won't stop billing you? Simply cancel the number.


There are some limitations.

First, this only works with bank accounts and a limited number of major banks. Currently, this includes Bank Of America, Capital One 360, Chase, Wells Fargo. See here for the current list of banks.

Second, the number generated is a Visa number, so the website you use it at has to accept Visa.

My Thoughts

Reading their security policies, it seems like they do take care to secure your bank account data, so I'd be comfortable giving them my info.

I wish this service could be linked to a traditional credit card instead of a bank account. I remember years ago, credit card companies used to provide virtual card numbers to all members, but I tried to get one a while ago and found all my card issuers stopped providing that service. I don't like to use my debit card for online purchases, so I don't think service would be of much use to me.

They say you can use any name and billing address when you place an order on a website, so you've got an additional potential privacy protection there. (Obviously you'll need to use your real address for a shipping address if you want to actually receive what you purchased.)

The company makes money by getting paid the standard merchants fee as a credit card processor.

It's unclear what, if any, protections that are normally associated with credit cards would apply to purchases made using a Privacy card number. There are major differences in how much protection you have, legally, between the two types of cards. With a credit card, you are only liable for $50 in authorized charges. With a debit card, you are liable for $50 if you report the card stolen or lost within 2 days or $500 if you wait 60 days. After 60 days, you are liable for the entire amount of unauthorized charges.

Additionally, debit cards take money out of your account immediately. If you dispute a charge, you are out that money until (if) the dispute is resolved in your favor, a process which could take up to 10 days. With a credit card, you do not have to pay any amount under dispute until the dispute is resolved.

Although Privacy does say they will assist you in resolving any problems with a merchant, including filing a chargeback, they don't really specify what your liability is. With a credit card, federal law explicitly states your rights and maximum liability.

The Final Word

If you are someone who has poor credit and cannot get a credit card, this might be a good option. Or, if you are someone who is against credit cards on principle and refuses to use them, you might find this service useful. Otherwise, I think the benefits of a traditional credit card outweigh the benefits of Privacy.


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