If you’re being asked to provide your bank account and routing number to a person or business entity, you might be wondering if it is safe to give out your bank details. Why do they need these two numbers in the first place? Maybe you’re hesitant because you’ve never given out these details before and you’re afraid it might compromise your bank account. This fear is probably tenfold if you’ve already provided these details or if someone was able to access your bank account details without your authorization.
So, what can someone do with your bank account number and routing number? Will having these banking details compromise your bank account and your money? In this post, we will discuss the different scenarios that could happen if someone gets hold of your bank account number and routing number.
When would you need to provide your bank account and routing number?
There are different situations where you would need to provide your bank account number and routing number. These are two different sets of numbers that are typically required to perform various financial transactions. Many people are often confused about the difference between these two numbers so it is important to differentiate them.
Your bank account number is the number assigned to you when you open a bank account, while a routing number is a nine-digit code to identify the financial institution where you opened your account. Unlike your bank account number that is unique to you, the routing number is the same for all customers of a specific financial institution. For example, if you opened an account in the same bank and branch as your office mates, you will all have the same routing number.
So, what kind of transactions will you need to give out your bank account number and routing number?
1. Someone needs to send money to your bank account
If someone owes you money and needs to transfer the funds to your bank account, that person will need your bank account number and routing number to complete the wire or electronic transfer. Without the routing number, it will not be possible for that person to send the money directly to your bank account.
This also applies if you want to enroll in a direct deposit scheme. For example, if you want your employer to directly deposit your salary to your account instead of receiving a paper check, you have to provide this information to your payroll department so they can complete the monthly salary transfer.
2. You want to pay for a purchase online or bill using your bank account
If you do not have a credit card, a debit card, or a money transfer app, it is possible to perform online purchases or pay for your monthly bills using your bank account. These transactions are often called Automatic Clearing House transfers or ACH transfer. For example, to set up an ACH payment, you will need to provide your bank account number and routing number.
3. You need to link your bank account to a financial app
Another reason why you will need to provide your bank account and routing numbers is when you’re linking your bank account to money transfer apps like PayPal, Venmo, or Square. Some financial management apps and tools like Mint also require your banking information to track your finances and pay your bills.
4. When you issue a check or order a new set
Issuing paper checks is still preferred by many Americans. One of the top reasons is because it provides a physical paper trail of payments that have been made. However, many people do not realize that issuing a paper check to someone is equivalent to giving out important personal information that includes your full name, home address, phone number, your signature, bank account number, and routing number. Your routing number and bank account number are printed on the bottom of every paper check you issue.
Things Someone Can Do With Your Bank Account And Routing Number
If someone has your bank account number and routing number, you might be wondering what they can do with your banking information. Here are the types of transactions that can be possibly done using these two sets of numbers.
1. Send you money using your bank account and routing number
With a bank account number and a routing number, someone will be able to send money to your bank account. The person will be able to successfully complete the transaction if they have these two sets of information.
If you are expecting money from someone or you’re on a direct deposit scheme, receiving money should not be an issue. However, it is also possible to see unexpected funds in your bank account. If this happens, it is important to check with your bank to trace the source of the funds. If you see unusually large amounts of cash in your bank account, one possible scenario is that someone might be setting you up for illegal activities like money laundering.
2. Commit ACH fraud using your bank account and routing number
ACH fraud is one of the primary risks when providing your bank account number and routing number. As discussed earlier, ACH transfers and payments can be set-up using these two pieces of information. So, if a third-party takes hold of your bank account number and your routing number, this person can use this information to set-up bill payments or transfer money out of your bank account.
Fraudsters often target commercial bank accounts but many individuals have also fallen victim to such scams. One company owner shared in a 2018 blog post that his company fell victim to fraudulent ACH transfers. They initially discovered the scam when there was an unusual payment to a credit card that the company did not have. They then discovered that a dozen illicit ACH payments amounting to $50,000 were made over a few days. The company owner shared that the thieves only needed their bank account number and routing number, which is impossible to hide as those are printed in the company checks that they issue as a business.
3. Create fraudulent checks using your bank account and routing number
If someone has your bank account number and routing number, it is possible for fraudsters to order fake checks using your bank information. They can use these fraudulent checks to pay for a purchase or they can also cash the check. They can also digitally scan the fraudulent checks and deposit the amount into their bank account.
Can someone withdraw money with my account number and routing number?
Maybe you’re wondering: How can someone steal money from my bank account using my account number and routing number? As discussed in the previous section, it is possible for someone to get money from your account using two methods: ACH transfers and using fraudulent checks. So, the answer is YES – someone can withdraw money by using these methods.
These two methods are serious crimes that’s why most thieves target commercial bank accounts because they tend to hold more money. However, it is also becoming more common for fraudsters to target small and medium businesses and even individual account holders because they usually have fewer security protocols.
Some fraudsters also avoid transferring large amounts of money at once, instead, they tend to make smaller ACH transfers so they will not be red-flagged. If an account holder is not careful about tracking expenses and monthly billing reports, these illegitimate ACH payments could even go undetected.
Can someone hack your bank account with an account number and routing number?
If you have a bank account and if you regularly keep a sizable amount of money in that account, you might be concerned if someone can hack your bank account with an account number and a routing number. In this context, the term “hacking” means gaining access to your online banking information. So, if you are enrolled in online banking, there is a risk of being hacked if your log-in details are compromised.
But can you be hacked just with an account number and routing number? This is very unlikely. With most major online banking portals in the United States, hackers cannot access your account just with an account number and routing number. Typically, they need to have additional details of your personal information to be able to perform the hack.
Can your bank account be hacked if you give out personal information?
The answer to this question will depend on what personal information you are providing. Hackers usually need to have your online banking log-in information to hack your account. This will include your username and password. Often, hackers send phishing emails pretending to be your bank to acquire this information. If you download files that contain malware or spyware, hackers could also access your online banking apps that contain your online banking details.
Many banks, however, now require multi-factor authentication to grant you access to your online banking account. With this in place, you would need to provide two or more pieces of evidence to log-in such as security questions, or sending a time-sensitive code to your email address or registered mobile number.
The only way hackers can still get through is if they have access to all of this information, meaning they have access to your email, passwords, or they have already changed the contact details where the verifications are sent. You are also at risk if some of your personal information that is normally used as answers to security questions are publicly available. Some examples are mother’s maiden name, date of birth, name of the street you grew up on, or name of your first pet.
Is it safe to give out your bank details?
Giving out your banking details to anyone, whether a person, an online vendor or a company, has risks involved. The answer to whether it is safe to give out your bank details to anyone will really depend on who you are giving the information to and what method you are using to give this information.
Which bank details must you keep secret?
If you need to use your bank account to complete financial transactions, it is impossible to keep all your bank details secret. As explained in this article, your account number and routing number will be required in several situations. If you are still using paper checks, you are already giving away valuable bank details including your personal information to the payee.
What you can still keep secret are your online banking details including your user name, password, and security questions. Put these details in a secure place. Avoid putting them on a physical paper or a digital note on your phone. If these get stolen, they can easily access your online banking account.
Your records of financial transactions must also be kept secret. Make sure that your online banking system is secure and if you are receiving printed bank statements in the mail, don’t leave these lying around unopened in a public mailbox. You should also shred these bank statements before throwing them away. In some cases, bank employees verify your identity in phone banking scenarios by asking you about your recent transactions. If someone has a copy of your bank statement, they could pretend to be you and try to get into your account through phone banking.
Ways on how you can avoid being a victim of fraud
When you become a victim of fraud or if you detect fraudulent activity, you can immediately report this to your bank so you can claim back the money lost. However, this process can be very stressful and inconvenient. There are several things that you can do to minimize the risk of being a victim of ACH fraud or check fraud.
- Only provide your banking details to trusted parties. If you need to pay for something online, it is better to use a prepaid card, a credit card, or a money transfer app rather than giving out your banking information. If you need to provide your banking details, only give out the least amount of information necessary.
- Sign-up for multi-factor authentication if you’re using online banking. Avoid using security questions with answers that are publicly available information about yourself. If you have linked bank accounts, credit cards, or debit cards to online platforms like Amazon and Facebook, make sure you also sign up for additional verification procedures.
- If you are selling stuff online, and you need to receive money, avoid giving out your account number and routing number to people you don’t know. Again, it may be safer to use money transfer apps.
- Install a security protection software on your computer to detect suspicious activity and malware that could compromise your device and banking information. You could also sign-up for an identity theft protection service that could monitor your accounts.
- Minimize issuing paper checks because checks hold critical personal information about you. Once you issue a check, it will be beyond your control whether the receiver will keep that check private and secure.
Technology has made it possible for banking transactions to be more secure, however, many people are also using technology to perform fraudulent activities. By following these security tips, you can better protect yourself from being a victim.