A additional write up for the Complete Guide To The Paranoid User has become evident after re-reading some older work. I missed the mark on some other key details that will be addressed in subsequent write ups. In this document I shall walk through additional attack vectors and dangers that come from the financial infrastructure.
What a credit freeze does is block the ability for your credit score to be checked which is a requirement for taking out lines of credit such as mortgages, auto loans, credit cards. It is not something you want to do if you plan on taking out a new line of credit in the near future, but if you are not, it does provide an additional layer of security in the event someone acquires enough of your personal information to try to take out a line of credit with your identity. As this is an additional layer of security it is certainly no guarantee to prevent that from happening, but it is an easy and free step you can take to protect your finances.
The three main credit bureaus you will want to freeze your credit with are...
It is also important that when you enable these freezes you follow good security practices with any passwords, PINs, and email accounts you may associate with the credit bureaus that would be utilized to either unfreeze your credit or reset your password. It is also worth mentioning that there is more than just the big three credit bureaus listed below.
ChexSystems - the credit bureau for checking accounts. When you apply for a checking account, the bank will likely review your account with ChexSystems to determine whether you are a risk for having an account. ChexSystems collects and reports data on checking account applications, openings, closings, and the reason for the bank account being closed. You should review your ChexSystems credit report at least once a year to be sure there's no inaccurate information that could prevent you from switching banks or opening a new account.
Certegy - maintains a database of check-writing history to help businesses decide whether to accept checks from consumers. They also provide check screening services for retail businesses that accept checks. Businesses use Certegy to reduce the risk of check fraud and may decline to accept a check from you if you have negative information in your report. Even if you are not a heavy check writer, checking your report from Certegy can help you detect when someone else may have written bad checks in your name.
Innovis - often referred to as the fourth credit bureau because it collects similar information to the big three credit bureaus. Innovis provides ID verification data to help with fraud detection and prevention, and many businesses use them for pre-screening potential customers. They also collect many pieces of non-traditional credit information like rent payments, magazine subscriptions, and utility bills. You can order your annual credit report from Innovis by mail, phone, online, or in person.
Clarity Services - owned by Experian, collects and provides information on many of the credit transactions that are not included in traditional credit reports from the major credit bureaus. They focus on businesses in subprime lending, including payday loans, installment loans, auto title loans, check cashing services, and rent-to-own businesses. Experian uses data collected by Clarity Services to generate its Clear Early Risk Score to help lenders evaluate non-prime consumers who are considering alternative financing. Clarity Services provides a printable form that you can mail or fax along with a copy of your government issued ID to request a copy of your credit report.
CoreLogic Teletrack - reports on many different types of subprime lending products, including payday loans, rent-to-own businesses, furniture stores, auto finance, subprime credit card issuers, and debt buyers. These types of businesses may not report to the three major credit bureaus so your accounts will not show up on your major credit reports. Instead, these businesses pull your Teletrack credit report to determine whether to give you a loan or not. You can request a copy of your Teletrack credit report by printing and mailing a copy of the request form.
CoreLogic Credco - provides merged credit files to major lenders like mortgage and auto loan lenders. The merged credit file includes your information from all three credit bureaus in a single file. Credco also collects personal data like property ownership, loan obligations, legal property filings, rental applications, collection accounts, consumer bankruptcy, liens, judgments, and child support obligations. You can request a copy of your Credco credit report by printing and mailing a copy of the request form.
Credit and debit cards are not only financial tools that deserve protection in their own right, but also are usually associated with your real name and address. Making them a high priority whether trying to protect your money or identity on the Internet. Fortunately the methods to protect them is actually very simple and likely free. The best and easiest solution is to utilize virtual credit cards from Privacy.com, Wallester.com, OnPay.com, and Mercury.com. The way it works is that you will link your checking account or debit card with the digital wallet account and with the free account you will be able to make virtual cards that they will generate for you. Each individual card can be used with one vendor and will be declined if anyone besides the first vendor to charge it tries to. Additionally spending limits can be set on each card to limit them with the one vendor they are authorized to be used with. Lastly, all cards can be canceled at anytime which is nice if you are worried the vendor will not stop charging you and you can even make cards that cannot be charged at all to use for free trials that require card information.
The best part of these virtual cards is that essentially when the card is charged, if the vendor checks with the digital card account to verify the name and address is correct, and they will respond that they are valid regardless of what you entered when you provided the card to the vendor. Meaning you can use completely made up names and addresses with them. Although it is worth keeping in mind that some vendors will independently verify the address is real, so do not get too creative with the addresses.
Note that at least in the United States this is legal. The only real draw back is that there is no physical alternative.
What is credit card authentication? Credit card authentication is the process of confirming the validity of a customer’s credit card by checking with the company that issued the card. Authentication is roughly the first half of the transaction process when using a credit card. Once the card is authenticated, the purchase is approved or denied, the money is added to the customer's credit card bill, and the payment is credited to the merchant's account. In addition to the customer, an electronic payment transaction involves four entities: the merchant, the merchant's bank, a network processor, and the issuer of the customer's card.
The merchant's bank is called the merchant acquiring bank. Most banks are members of the major card networks such as Visa and MasterCard, which enables them to act as merchant acquiring banks on behalf of businesses that accept credit card payments. The merchant, using a network processor, requests that the merchant's bank handle processing of the transaction. Once the card issuer authenticates the card and authorizes the purchase, the payment is recorded on the customer's credit card account and paid into the merchant's bank account. All merchants who accept credit or debit cards must work with a merchant acquiring bank. It is the middleman in this process, facilitating the transaction and then settling the funds for deposit into merchants' accounts.
What happens when you swipe? When a card is swiped or entered into a website, the details of the transaction are sent electronically to the merchant acquiring bank. The bank transmits the details to the card issuer for authentication. The card issuer checks all the details including the card number and type, its security code, and the cardholder billing address. Issuers have various procedures in place to ensure that a transaction is not fraudulent.
Authorization communication is the next step in the credit card transaction process. The issuer sends the new authentication to the merchant acquiring bank. The bank receives the communication and authorizes the payment to the merchant. The final authorization process also allows the merchant acquiring bank to initiate a deposit into the merchant’s account. Thus merchants rely on merchant acquiring banks for both payment processing and account servicing. In a credit card transaction, the merchant acquiring bank is also the settlement bank, receiving the payment funds and depositing them in the merchant account.
As any consumer knows, this fairly elaborate series of steps is completed in a few seconds. Merchant acquiring banks typically charge merchants transaction fees and monthly account fees. Merchant acquiring banks also cover the risks of any issues arising with non-settlement, charge-backs, and refunds, which are covered by the monthly account fees.
When it comes to purchasing items on the Internet pseudo anonymously we cannot properly do so without addressing crypto. First of all, in regards to crypto as an investment, I cannot recommend using it as a avenue for profit. However for crypto being used as an actual currency, I think it is quite obvious by now that it has found a little niche in the economy and is here to stay given the current conditions of Western governments freezing banking accounts and the like, as well as private financial institutions denying service to individuals and organizations due to “reputation risk”.
This will by no means be an all inclusive list of all crypto currencies, or even relevant ones. But if you are looking to get into crypto for using it, here is the big three...
All of which are quite widely supported by exchanges, wallets and vendors who accept crytpo. However before getting into crytpo you should definitely check what potential vendors you would be patronizing accept and pick your exchange, wallet, etc accordingly. I will say Monero are the least common of the ones listed, but still quite popular coins for actually using as currency. As for pros and cons of them. In terms of buying them on exchanges, storing them in wallets, they are all quite similar. One of the big differences to look at is the stability of the coin. If you have heard anything about crypto, it is probably the drastic swings in the value of bitcoin up or down. I think it is safe to say it is the most volatile of the ones listed, however if you are only looking to play around and get familiar with crypto, I do not think it is huge issue. Bitcoin is by far the most commonly accepted crypto and even if it does crash and goes to nothing, I do not think it is that big of a risk and could also work in favor of you with a huge upswing. The biggest concern with Bitcoin would be that it is the easiest crypto currency to trace and law enforcement can certainly do it if they are willing to.
Bitcoin transactions can be traced, as demonstrated by the multiple private dark web vendor busts, rug pull schemes, and ransomware attacks, in which authorities were able to recoup some of payments from the seizures. While there are certain ways that cryptocurrency does provide a level of anonymity, be aware that nobody today can claim a 100% anonymity at this point. The federal focus on crypto related crime, combined with the increasing sophistication of law enforcement tools to trace illicit cryptocurrency payments, means that such dealings are not anonymous. But aside from the uptick in resources dedicated to stopping crypto crime, there is a simpler reason why these kinds of transactions are not really anonymous for regular Americans.
Cryptocurrency transactions are recorded on a blockchain, which is generally public. At the same time, crypto trades are not necessarily linked to an identity, which provides a bit of anonymity for users. While there are select goods and services you can buy directly using bitcoin, in most cases it needs to be exchanged into local currency to actually spend it. And converting bitcoin into US dollars, a heavily regulated currency backed by the federal government, creates a distinct paper trail. If you want to use bitcoin or any other cryptocurrency for buying things then you're probably going to need to transfer the cryptocurrency into dollars at some point.
In order to turn bitcoin into dollars, you generally need to find a company that provides this service, such as a cryptocurrency exchange, a money transfer service or select banks. Companies like these usually abide by the "Know Your Customer" principles, which means identity verification is required to use the service. Regardless of how anonymous or pseudo anonymous bitcoin is, the services that transfer bitcoin into dollars are not anonymous, and so therefore transacting it would not be anonymous in any meaningful sense.
What is KYC? KYC refers to a financial services industry standard that protects against money laundering and other financial crime. For example, institutions under the Federal Deposit Insurance Corporation must have a clear relationship with their clients to develop a "customer risk profile," which is used to identify and report suspicious transactions to authorities. That means banks and other financial institutions are obligated to have the personal information of customers on file in order to be insured. Although the FDIC does not insure crypto, cryptocurrency exchanges operating in the US have adopted KYC standards. Both Coinbase and FTX.US require customers to confirm their identities. It is also worth noting that the FDIC, in concert with other regulatory agencies, is looking into new laws for crypto assets.
There are cryptocurrencies that people claim are 100% anonymous. However, any claim of fully anonymous transactions should be treated skeptically. We know that, through forensics analysis, we can always get to the bottom of it. Any cryptocurrencies claiming that they're 100% anonymous, we have to take it with a grain of salt.
With all of this being said, I would like to bring back the focus. It is highly unlikely they would go through the trouble of tracing back every nickel and dime given to them. However this issue is not something to be totally dismissed and I think all else being equal, you should try to use more anonymous coins even if you are not worried about law enforcement. On the subject of difficult to trace coins. The current king in that regard would be Monero. I will not get bogged down in the details, but at the moment it is deemed truly anonymous and law enforcement has bounties out for people who can find a way to trace it.
The first and easiest option for getting into crypto is through crypto exchanges. Most of them are under KYC (mentioned above) laws and the registration process will usually include submitting a photo or scan of a government id, such as a driver’s license, as well as submitting a timestamped photo of yourself to verify it and of course you will also need to link some sort of traditional checking account. Once your account is verified you will be able to login and be able to purchase any of the crypto currencies offered at that exchange. Once you have purchased your coins you can then transfer them to a wallet, which you could think of as where the coins are stored. This process will very slightly per exchange.
One option is crypto currency ATMs. They typically offer all coins discussed so far, although not always. Typically these machines are located in similar places as regular ATMs and look quite similar. Generally the way these work is before hand you will get the wallet address you intend to send to as a QR code. Then go to one of these machines and select whether you are withdrawing or depositing, what coin and amount. The amount you are withdrawing / depositing will determine how much information they want from you. $250 or less and they will want a phone number and / or email and over a certain amount, $700 or more they will want a to see a government ID. After going through the verification process, it will ask for the QR code of the address to send the coins to and afterwards you will give it the cash. With this method you very well could use the wallet address of the person you ultimately intend to send the coins to, however I would not recommend that. Since like regular ATMs, these machines typically work in set increments such as $20, $50, $100… etc. So unless the person you are trying to give the coins to wants exactly $20 and is willing to eat the fees themselves, the better bet would be just doing $100 or so to your own wallet and sending them from your wallet to theirs.
Another option, and most appealing if you would like to buy crypto without doing any verification, is to buy crypto directly from another person who has crypto. Obviously the best choice would be someone you already know and trust, but P2P (Peer 2 Peer) exchanges exist which facilitate meeting people in person to buy crypto with cash and also act as an escrow to prevent scams.
As a general guide and the procedures for different wallets and coins will be more or less that same. Also I will not be covering hardware or “cold” wallets, which are crypto wallets that are stored on something like an external HDD, I will just be covering the type of ones you install on a computer or smart phone, although I will not be covering smart phone programs, as security is a concern. Once you have chosen and installed a wallet on your computer, one of the first things that will happen when you create a new wallet is that you will be given a seed, which will be a dozen random words or so that can be used to recover the wallet should you lose access to the exact one installed on your system. Remember, with crypto the transactions are publicly logged, so it is not like the coins are physically stored in the wallet, but rather the wallet holds your keys which can claim ownership of certain transactions on the public ledger. Generally the best way to store your seed would be to write them down or print them out and store them somewhere safe like a safety deposit box at a bank or in a safe, although again if you are just using playing around money it is not quite so necessary. Ideally you should have multiple backups with at least one being somewhere besides your home and any digital backups should be encrypted
Basic instructions to set up a new wallet in a program like Electrum or Feather
In conclusion, this is a quick breakdown for financial protections for the paranoid user. While I have covered some of these in previous articles. I would like to have a more focused article on financial protections for the paranoid user.