Home > Identity Theft > Why 1 Billion Stolen Passwords Is No Reason to Freak Out

Comments 0 Comments

A billion stolen passwords sounds like a lot, but it’s no cause for alarm. After all, you knew passwords weren’t keeping your money or information safe, right? Back in 2005…yes, nearly 10 years ago…the FFIEC (government banking regulators) said passwords were inadequate protection for financial institutions.  

What does the Hold Security billion-password story mean for you? One thing it does NOT mean: this incident shouldn’t inspire you to go to Hold, or any other service, and register for an identity protection product. If you have been using standard password hygiene, such as changing your critical passwords with relative frequency,  and used them in combination with a second authentication factor, there’s very little to worry about. So don’t register to see if your password is in their list. Just change your password if you are nervous.

How do I know the risk is low? The hackers who have amassed this pile of data are using it largely to send out spam, according to the New York Times. If it were easy to steal money with the data, you can bet the criminals would be doing that instead. Spam is hard work.

It’s easy to believe a crime ring has amassed a billion passwords. After all, in one incident two years ago, LinkedIn leaked more than 6 million passwords online.  With roughly 20 years of websites forcing users to create passwords now, and 20 years of security gaffes, a billion doesn’t sound like a lot to me.

It’s important to note that login procedures are only one way that consumers are protected when they bank online, and it’s not even the most important way.  Back-end systems employed by financial institutions catch unusual transactions — such as the sudden urge to move $10,000 to a bank in Romania. This layer of tools is far more effective at stumping bad guys.

Still, this latest reminder that passwords aren’t a great way to keep your stuff safe is a good opportunity to do a review of your personal security habits and make sensible adjustments. Here are a few suggestions.

Change your passwords. It’d be great to do it once every 60 days or so, but you probably won’t. How about every daylight saving time change, when you check your smoke detector batteries?

Pick harder passwords. Easy to remember but hard to guess, yea right. Well, security pros use a trick: The passphrase. Pick a sentence and use the first letter of every word. For example: “I was born on Nov. 30″ would be IwboN30. (I wasn’t, btw). If you want to be real clever, add a special character or two into that, like !wboN30.

Pick different passwords.  I know you probably use the same passwords at various websites; you’d go insane if you didn’t. But at least use different passwords for critical sites, like your brokerage website. And think carefully about what a critical site is. Do you use Amazon’s one-click purchasing? That might as well be a bank website.

Don’t rely on passwords. Many websites will ask you some kind of “Is this a trusted computer?” question when you log in. Say yes, and you get to skip an authentication step. At my bank, it would let me skip those KBA (knowledge-based authentication) questions, like “What was your first pet’s name?” I always say no. I force the bank to use that extra layer every time. It’s another hurdle that just might make a hacker groan and move on to the next potential victim.

While we’re on KBA, think long and hard about the questions you pick. Do you post about your pets on Facebook? Then never use the pet question at a website.

Beyond the password. Back in 2005, when FFIEC said passwords weren’t good enough, it ordered banks to implement “two-factor” security. In short, that means users were supposed to be required to use something more than a mere password to log in. In theory, it meant banks were going to add hard security measures such as electronic token that generated one-time login information for all users. In practice, it has meant far less than that.  Some banks merely added those little goofy pictures meant to stop phishing.

Today, your bank might give you some two-factor options, such as requiring you to respond with a code that’s been texted to your cellphone. That’s known as “out of band” authentication, because even if a hacker has completely hijacked your computer, he or she couldn’t intercept the text login code because it is sent “out of band.”   Always take the two-factor option when you can, and better yet, take the out-of-band authentication when you can.

As a quick reminder — the authentication options that are widely available today involve, a) Something a user knows, such as a password b) Something a user has, such as a debit card, and c) Something a user is, such as a fingerprint. Two-factor authentication means two of those three options are employed.

And most of all — don’t panic!  And when you hear about a big computer hack, always think about what company stands to profit from news of the hack.

More on Identity Theft:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team