Banking with a smartphone is growing in popularity as major financial institutions, such as Bank of America and Citibank, push apps that enable customers to bank on the go. Juniper Research, which specializes in market research for the mobile and digital tech sectors, forecasts that payments made through mobile-banking applications will reach $1.3 trillion worldwide by next year (2017).

Not surprisingly, the growing proliferation of smartphone banking is attracting hackers and scam artists who are breaking into smartphones to steal account information, and, in some cases, drain a person's funds. The hacking is occurring through malicious software programs, or malware, with names such as "Acecard" and "GM Bot." Cyberthieves use this malware to steal bank account numbers and passwords from people who are accessing their bank accounts from their smartphone.

This hacking is happening all over the world and targeting the two most popular mobile phone operating systems – Apple Inc.'s iOS system and Google's Android system. Both the Federal Bureau of Investigation and U.S. banking regulators are warning consumers about the potential risks of banking with their smartphones.

Manufacturers vs. Hackers

Smartphone manufacturers are responding to the rising threat of malware and compromised banking information. Apple recently provided its customers with an update to its software that can correct a security flaw that would allow hackers to remotely take control of its phones' operating system. Samsung, which primarily uses the Android operating system in its Galaxy smartphones, has published a list of tips for customers entitled "How to Keep a Smartphone From Being Hacked." The advice includes locking a smartphone when not using it, activating a phone's tracker system, protecting a phone with an anti-virus app, and only opening e-mails or clicking on website links from trusted sources.

This advice is prudent; security experts say that malware typically accesses a smartphone when someone clicks on a text message from an unknown source or taps on an advertisement. Once installed on a phone, the malware can lie dormant until the user opens his or her banking application.

Most phones are unprotected: A study by SAS and Javelin Strategy & Research reports that fewer than one-third of smartphone owners use antivirus or anti-malware software on their mobile devices. This new frontier in cybercrime is replacing more traditional forms of bank theft such as installing skimmers on automatic teller machines or credit card readers in restaurants, and also targeting desktop computers.

What Consumers Can Do

Financial institutions are working to address the growing problem of smartphone hacking – many by frequently changing their mobile-banking apps – and law enforcement is beginning to crack down on mobile phone hackers. All the same, consumers need to be aware of the problem and be proactive about securing their banking and other personal information. 

Additional steps that people can take to protect themselves include downloading apps only from trusted sources, accessing the Internet only from secure WiFi areas, and alerting their bank immediately if they notice any suspicious activity in their account or on their phone.  

For more, see 3 Ways to Avoid Electronic Pickpocketing.

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