While using an online company to help you gather all of your financial information in one website may be convenient, it’s important to know exactly how these data aggregators conduct business in order to protect yourself from potential security and privacy risks.
How Data Aggregation Works
At its most basic level, data aggregators collect all of your financial information, including your credit balances, insurance policies, savings, investments, etc. and put them on display in one webpage. In addition to this snapshot, some companies offer spending tracking and budgeting.
Most of this is possible because you provide the data aggregator with the login information for your various financial accounts, which allows the aggregation service to scrape the data from these outside sites and display them in one location. This automated process sifts through your financial information on a regular basis, sometimes daily, to update the information.
What Are The Risks Of This?
While the convenience of having your financial information stored in one location can be an enticing offer, it’s necessary to understand the risks that come along with sharing your security credentials with a third party.
The number one danger is your potentially increased vulnerability to a data breach that could leave you open to cyber fraud, identity theft, and unauthorized transactions. This risk increases exponentially if the aggregator you use stores all of its clients’ financial information in one place.
A significant number of data aggregators don’t face the same level of oversight as other financial institutions, and don’t face the same regulations that registered institutions do. It’s also important to keep in mind that if the company you use offers any additional products, you will likely receive sales recommendations. Each of these recommendations should be evaluated with a close eye to ensure that you aren’t just being taken advantage of.
The Financial Industry Regulatory Authority (FINRA) recently published a list of additional tips you can follow to help protect your investments. If you lost money because your financial information was compromised, Meyer Wilson may be able to help. Give us a call at one of our offices located across the United States to speak with a member of our firm today, or fill out our online form to schedule a free case evaluation.