Good online banks with fraud protection

November 15, 2013 2:27 PM

I'm interested in switching to an online-only bank, but I want one that offers complete fraud protection. I am considering Ally Bank, but I can't tell from their website exactly what sort of coverage and reimbursement they offer. My current bank (B of A) watches my account for red flags and has been very good about immediately reimbursing me for any fraudulent purchases. It's happened about once a year when I use my debit card regularly, so I need to make sure I'm covered. I'm a student, so I don't have that much in a checking account to protect but every dollar counts.
posted by you're a kitty! to Work & Money (7 answers total)

If you're in the U.S., your liability in the event of theft is limited. And most banks do not even impose the charges they are legally able to collect.

This question from earlier today might also be useful to you. As someone who used to work with banks to clear up erroneous (fraud or otherwise) charges for retail customers, I was particularly glad to see bfranklin's advice re: where to use debit cards. The further you can keep the risk of fraud from your actual checking account, the better. It can cut down on the administrative hassle very dramatically.

If you qualify for USAA banking services, they're worth looking into.
posted by gnomeloaf at 3:01 PM on November 15, 2013 [1 favorite]

Yep, I use CCs, rather than debit, for online transactions for this reason. There's simply no way to insulate yourself against the possible inconvenience, short-term, of having a debit card get compromised. But pretty much all banks will side with you and stick the merchant with the chargeback any time your card gets used fraudulently.
posted by randomkeystrike at 3:05 PM on November 15, 2013

You should check out Charles Schwab for this kind of checking account. While it isn't technically online-only, the actual branches are very few and far between, so it has all the features of an online bank (I have had accounts with them for 5 years and never been to a branch). No minimums, free checks, all ATM fees refunded, and it's interest bearing. You do need to open a brokerage account with them in order to get a checking account, but you don't need to use it or put any money in it.

As someone who has had my debit card number stolen twice, I couldn't speak more highly of their service when it came to this (or anything else). All money immediately back in my account, amazingly helpful customer service, and no charge to have a new card sent via Fed-Ex within the week.
posted by ap_classic at 4:03 PM on November 15, 2013

gnomeloaf has it right. Reg E is the primary source of fraud protections (and coupled with FDIC insurance in the case of very big fraud that causes a bank to fail). This applies to all banks evenly.

There's some added protection some banks add for fraud and unauthorized use that goes beyond Reg E protection - but it's not all that substantive.
posted by allen.spaulding at 8:33 PM on November 15, 2013

I would say no to Ally Bank. I get paid by paper check, and their online check deposit takes days and days. Also, they consider online check deposit a privilege that can be revoked. I ended up in a bizarre situation where my account was overdrawn by like $2, so as a penalty they disabled my online check deposit. So even though I had a paycheck ready to deposit and fix the problem, they wouldn't re-enable the feature so that I could settle up the damn account. This after hours and hours hopping from manager to manager on the phone.

Now I grit my teeth and use a giant corporate bank where my checks clear in 24 hours and use credit cards for spending to avoid overdrafts and frozen money due to fraud.
posted by hamsterdam at 9:37 PM on November 15, 2013

I have both of my kids (college / high school) accounts at Capital One 360 - used to be ING Direct. If it wasn't such a PITA to move accounts I'd move my Wells Fargo there in a heartbeat. The online stuff is so much more user friendly.
posted by COD at 6:04 AM on November 16, 2013

I came here to recommend Charles Schwab. Fantastic service. Every time I've had a question they were able to resolve it on first contact - email or phone.
posted by 26.2 at 9:40 AM on November 16, 2013