Your Financial Privacy Is Slowly Dying, but You Can Stop It

Your financial data isn’t as private as you think. Someone knows where you buy your coffee, what you order on Amazon, and how much you spend on streaming subscriptions. This “someone” isn’t one person – it’s the financial services you use, your government, and sometimes cybercriminals too. If this makes you feel like you’re in a Black Mirror episode where you’re constantly being spied on, you’re spot on.

In one of our previous posts, we compared central bank digital currencies (CBDCs) with cash. We also discussed how governments could use digital currencies to follow and control your every move. While CBDCs are a threat to your freedom and privacy, the reality is financial services are already tracking all your transactions and more.  Payment apps like Venmo, Apple Pay, and Cash App already know who you are, what you do, and where you go..

How you spend your money should be your business. No one should stick their nose into it just because they can, but unfortunately, plenty of entities do and they use it to their benefit. Every purchase you make lets them learn a bit more about you. See why they want your data, what they do with it, and what you can do to improve your financial privacy.

Why Your Financial Privacy Matters

A lot can happen when you lose your financial privacy. Anyone, from government authorities to cybercriminals, could use your financial information in ways that are harmful to you. We’re not just talking about your financial transactions here or how much money you have in the bank. 

Banks, credit card companies, and payment apps collect a lot of your personal information as part of their Know Your Customer (KYC) process when you open an account. Depending on the company, you’ll typically have to supply your name, birth date, social security number, phone number, and address. Companies also collect data through mobile apps, including your location, device information, and digital payments. It’s a goldmine for anyone looking to buy or steal your data.

Let’s take a look at the type of information these apps normally collect. As an example, if you create a Venmo account, the company will collect your: 

• Transactional information like what you spend money on, who sends you money or receives payments from you, and when this happens
• Device information like your device type and ID, phone number, location, language settings, and browser type
• Identification data like your name, date of birth, social security number, email address, and physical address
• Location coordinates collected using your GPS, Wi-Fi, and cell-service triangulation

Are you starting to imagine what a person or entity can do if they want to abuse this data? 

Companies Are Collecting and Selling Your Data. Why Is This Dangerous? 

Let’s take a look at what happened to the American credit bureau company Equifax. In 2017, it experienced a data breach involving the financial information of 147 million Americans, or about 40% of the country’s population. This included 200,000 people’s credit card data. The US charged four Chinese military members with breaching Equifax’s system using malware in 2020. According to the FBI, this was a state-sponsored attack to extract Americans’ personal information. 

In 2022, TransUnion South Africa had a similar breach. Cybercriminals stole 54 million people’s private data, including their banking details and ID numbers. People didn’t willingly share their information with these credit companies, their banks sold it to them. Banks and other financial services also sell your personal information to other third parties. Debt collectors, data brokers, marketing companies, and research entities are all willing to pay for your data.

Here’s the kicker: you can’t prevent your bank and other financial institutions from sharing your financial information with credit bureaus (more on that in the next section) or other third parties. At the same time, credit bureaus can also sell your information. They aren’t all that bad, though, because they’re generous enough to give you a free copy of their credit report every 12 months. Right? Right.

Financial Privacy Is Shrinking along with Cash Payments

Cash might be less convenient than digital payments, but it has one advantage: the ability to pay for goods and services without institutions knowing about it. Like financial privacy, cash payments are becoming scarce, which means financial services and banking institutions are recording more transactions every year. According to the World Bank, Covid-19 caused a surge in the use of digital payments, which has only continued to grow.

In low and middle-income economies (excluding China), over 40% of adults who made merchant in-store or online payments using a card, phone, or the internet did so for the first time since the start of the pandemic.

While your privacy is slowly being eroded, banks don’t have to be transparent with you about all their business practices, and often won’t. You have access to publicly available information like their website, reports, and terms of service, but you can’t make them give you any other information — like who’s buying your data from them. 

People’s frustration with this lack of control and transparency has led to a rise in the use of cryptocurrencies. One of crypto’s biggest advantages is increased transparency, as well as the fact that no one central institution can control issuance. 

Does this mean crypto payments are the answer to taking back control over your financial privacy? Not necessarily — at least, not on their own. Crypto comes with its own set of problems. Financial data protection laws also need to catch up to how people’s finance and privacy needs are changing.

Can Financial Data Protection Laws Protect You?

Yes, they can, but only up to a certain point. Legal loopholes will always exist for others to exploit. Let’s take the Gramm-Leach-Bliley Act of 1999 in the US as an example. If you’re an American, this lets you prevent a financial institution from sharing your private information.

You can’t always opt out of this, though. For example, credit card companies can share your payment history with credit bureaus without your consent. This means they can continue making money off your information and only pay you a pittance if they leak it.

Financial privacy laws can’t always protect you from government spying either. While government agencies need a justifiable reason to legally access your financial information, we’ve seen time and again they’re willing to snoop without permission.

What You Can Do to Protect Your Financial Privacy

It feels extremely frustrating when you realize how little control you have over your financial privacy. To make things worse, businesses can be careless with your financial data and authorities can spy on you, with few consequences.

Choose Companies That Support Financial Privacy

You can use your power of choice to protect your financial privacy. Before you sign on with a new bank or financial service, research their business practices. It’s not enough to take their word for it, though, you can also check whether it’s backed up with proof. As an example, at CyberGhost we have a strict No Logs policy but we don’t expect you to just believe us. That’s why we’ve had it independently verified by Deloitte.

Try to find banks and mobile payment providers known to safeguard their customers’ information. We’ve previously covered the best payment methods for privacy, although not all of these may be available in your region. If you can, avoid using unnecessary financial services like budgeting apps. Creating your own budget on a spreadsheet or notepad is both free and doesn’t invade your privacy.

You also have the power to choose your leaders if you live in a democratic country. Vote for those with your interests in mind regarding financial data protection and online privacy.

Improve Your Digital Privacy Habits

While you can’t prevent institutions from abusing their power, these habits can help boost your financial data protection:

1. Update your apps and devices. This protects your device against known security vulnerabilities. Cyber attackers can abuse these weaknesses to get into your banking apps and digital wallets. For your convenience, you could set up your apps and devices to download and install updates as soon as they’re available.

2. Use secure passwords and 2FA. Remember to use a combination of techniques to create a secure password. Better yet, use a password generator and manager for added security. You can also add two-factor authentication (2FA) like a PIN, biometric authentication, or code sent to your smartphone to prove it’s actually you who’s accessing an account or device.

3. Don’t click suspicious links. Phishing and other forms of scams are on the rise. That’s why you should always check for anything suspicious when you receive messages or emails. For extra security, call your bank, lender, or service provider and ask if it sent you the message or email.

Remember: A financial service provider will never send you a link to a page asking you to enter your login details. It’s also unlikely to ask you to update your password, unless you’ve clicked on the forgot my password button on its app or website.

4. Monitor your transactions. Regularly check your accounts for suspicious transactions and report these immediately to your bank or service provider. You can also set up automatic transaction notifications via email or text if your financial institution offers this option.

5. Boost your financial literacy. Learning how to be financially literate can help you make smart financial decisions. This includes knowing how to grow and secure your hard-earned money, and avoid financial scams, such as crypto scams.

6. Use security software. Consider installing antivirus software and a VPN on any devices you use for internet banking or online payments to protect against cybercriminals. 

Antivirus software detects and removes known viruses, malware, and spyware. This can help prevent cybercriminals from stealing your passwords, intercepting your OTPs, or stealing your identity to commit financial fraud. 

A VPN encrypts your traffic to prevent anyone from snooping on your online activity. VPNs are especially helpful if you access your bank account or digital wallet while you’re connected to a public Wi-Fi hotspot. Cybercriminals are drawn to unsecured Wi-Fi as this makes it easier to access your online traffic and steal your online banking information.

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You Should Have the Right to Proper Financial Data Protection

The fight for stronger financial privacy is never ending. It will also get tougher with the rise of digital currencies and electronic payments. While you can’t control what companies and other parties do with your data, you aren’t entirely powerless. You can choose which banks and financial services to use, you can vote for officials that support financial privacy legislation, and you can protect your online privacy.

Never let your guard down and be vocal about the importance of keeping your privacy intact.

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