BillGuard is an online financial services company that monitors your credit cards for fraudulent charges. On the surface, this sounds like something you don’t need. After all, if you see credit fraud on your bill you are going to do something about it. However, in this fast-paced world, it is all too common for people to neglect to verify all of their charges, especially the smaller ones.
In this case, there are some concerns, but it would be hard to call the service a scam.
No credit card number or PayPal account is required, so there is no way for the company to charge you for some subscription or offer.
Second, the company never asks for your Social Security number either. It does ask for some usernames and passwords, but we’ll get to that in a second.
Finally, the company just raised $10 million from some well-known venture capitalists. That doesn’t mean, in itself, that the company is legitimate. However, there are a lot of easier ways to run an online scam than to convince some big name financiers that you are on the level while running a con.
BillGuard Secure or Not?
The whole premise of BillGuard is that the company will electronically review your credit card charges and flag items that appear fraudulent, or that at least require attention. To do so, it must access your credit card statements online, and that is where it the warm and fuzzy wears off.
BillGuard uses Yodlee to access your banking information. Yodlee is legit. They’ve been around a long time and big banks, with much more at stake than you, trust them inside their systems, so there is nothing to worry about here. Bill Guard uses Yodlee to get “read-only” access to your accounts. Once you get to that point, you are golden.
However, where it gets slippery is that, in my opinion, Yodlee doesn’t implement their platform correctly in these situations. In order to use BillGuard, and the safe Yodlee back end, you have to give your username and password to BillGuard, who then passes it on to Yodlee. Compare this to how PayPal works, where you give your credit card information to PayPal, and then PayPal passes the information back to the original service, in this case BillGuard. In that system, you only have to trust PayPal, because the merchant never sees your information, but here, you have to trust BillGuard too. They say that they don’t save anything and just pass it along to Yodlee, but you just have to take their word for it.
For whatever it’s worth, this is the same way the popular online money management too, Mint.com works.
If you decide that you are comfortable with the way your account information is handled, Bill Guard is an interesting concept.
While it is true that you are very likely to notice an unauthorized charge for $800, it is equally true that you may overlook an unauthorized charge for a small amount. This is especially likely if you have a joint account with a spouse. You may just assume that an $8.35 charge from a merchant you don’t quite recognize is your wife buying lunch. Again, you’d almost certainly ask what the $800 was legit, but $8 is harder to remember. Maybe the $8.35 is actually a new charge for your credit card rewards program that you never wanted.
Additionally, there are those charges that are maybe partially unauthorized. For example, if you did subscribe to a service for $12 per year, but they charge you $15 for some reason, you might not notice that either. Comcast is a terrible offender in this area. You agree to pay $100 for your cable and internet and then 6 months later you are paying $104 because of some increase in a fee here or there. Heaven forbid if your promotional rate expires. Your bill shoots up $50 without any warning. Of course, you agreed to all this, but that doesn’t make it right.
BillGuard works by crowdsourcing monitoring credit accounts for fraudulent and unauthorized activity. For example, let’s say you do notice that $8.35 charge and report it. Then, BillGuard looks at other people’s credit card charges for an $8.35 charge from the same merchant and flags it for review. If enough people flag the charge, then the signal gets stronger.
Unfortunately, it seems that BillGuard doesn’t work so well in the one area that would really help me. I want it flagged when my Comcast bill goes up, or my cell phone bill, or whatever. However, since everyone has different accounts and packages, they wouldn’t be flagging the same things. And, since pretty much everyone gets screwed over by the cable company or phone company at some time, allowing those flags to exist would generate a lot of false positives for people who aren’t currently being tricked.
Ultimately, BillGuard is an interesting service. However, it is unnecessary if you are already vigilant about monitoring and verifying your finances. But, if you have a lot of accounts and let months go by without reviewing everything, BillGuard might be just the little help you need to keep from being scammed.