Avoid Financial Fraud: 5 Strategies To Protect You From Scams

Presented By: Pennsylvania Capital Management

Even if you’re a good person, your online presence isn’t guaranteed to be safe from cybercriminals. Neither is your bank card at the gas pump or supermarket. You may have a strong plan to protect your investments from the market’s ups and downs, and you might have made a lifetime’s worth of good financial decisions — but anyone can be a scammer’s next victim. Your best bet to avoid financial fraud is to develop some common sense and a few good strategies, not just relying on your good nature.

Today, we’re in the age of hyper-fast and hyper-advanced technological methods of interacting and doing business; the reality is that there are many ways that scammers and thieves will try to get at what’s not theirs. Past eras may have seen pirates and pickpockets, thieves and thugs who would muscle their way in to find the treasure and take it for themselves.

Today’s villains will still find ways to take your passport and credit cards, but now also include cyber-sneaks, which you may never see. They come at you from behind the scenes—or, rather, behind the screens—to scam their victims out of money. They try to get at your fortune by stealing identities, stealing passwords, stealing account numbers, and stealing whatever they can to get access to their victims’ accounts. 

They infiltrate the system, withdraw the money, or use the credit–and leave their victims flailing with frustration and panic that their accounts have been broken into and depleted. Some of the scams may be overt. Who hasn’t received an e-mail telling them that $5 million will be placed in their account if only they would be so kind as to pass along their bank account number? 

Others may be covert (such as getting a credit card number and using it to make purchases before you even know that someone has taken your number). It’s one of the scary parts about managing your money and trying to build your wealth in today’s society. 

The greater ease and access that technology provides raises the risk.

Since you’ve spent a lot of time, energy, money, and sweat figuring out how to build your wealth, the last thing anybody wants is to have it taken away, especially by criminals who make their living by wanting a piece of yours.

While there are mechanisms in place to help protect you if you’re the victim of fraud, identity theft, or other financial scams, that doesn’t mean you can’t lose some of your money in the process. Perhaps more importantly, even if you can protect or regain your assets, your stress levels and the time used to fight fraud can leave you reeling—and also chipping away at your wealth indirectly. 

For example, being the victim of credit card fraud when traveling can impede your self-confidence and be a royal pain in the rear end–especially when you are on a tight travel schedule.

I hope none of you have to deal with major scams during your life, but with seven out of 10 adults being targeted by scams, you should be prepared—and take steps to avoid financial fraud. This is also another advantage of having a personal wealth advisor on your team; your advisor can help you navigate these issues if they arise. 

5 Ways to Protect Yourself From Financial Fraud

Let’s briefly outline the steps to avoid financial fraud and discuss what you should do if you are a victim. 

It’s worth mentioning at the outset that a good practice for everyone is to stay vigilant by periodically checking your credit reports, by making sure no unfamiliar withdrawals are coming from your accounts, and by checking to make sure there’s no unusual activity, so you can catch any potential problems before they get too serious.

When you’re in a family situation in which three or four people may have access to certain accounts, you may assume your teenage son or daughter used that card at the mall. The reality could be that the purchase was made by someone you don’t know. I’m not recommending you run a police state with every purchase, but you do need to stay aware of any activity that is happening with your accounts for this very reason. 

Also worth mentioning: Don’t give your kids your card. Many banks will give you a different card tied to your account if that’s what you choose to do.

Your goal is to prevent fraud before it happens in cases when you can. It’s to protect your family’s wealth and to help them develop the skills necessary.

1. Get Organized

Bills, documents, account numbers, websites, files, statements, e-mails, on and on. These days, you have documentation, paper trails, and electronic trails for all of the things that make up your financial picture. How you organize them (manually, electronically, in a file, under your bed, all over your desk) is largely up to you and your organizational personality. 

I can tell you that the more organized you are, the less likely you are to let some kind of security breach happen (and more likely to nip it in the bud if it does happen).

So, if you are organized, congrats! If not, take a half day and get everything in order, or take a class. This is one of the first things you should do to avoid financial fraud because, when your systems are together and you’re aware of everything a cybercriminal could potentially target, you’ll know if something goes awry. 

Many local community colleges offer some kind of class that helps you get started in organizing your finances. You’ll likely need some kind of hybrid system of both paper files and electronic files that you keep as secure as possible to avoid any tampering.

Don’t accept excuses—from yourself, even—that you can’t get organized. There are far too many choices now to allow disorganization to permeate your life. Bonus: If you can demonstrate to your kids that you are organized, you’ll also be a good role model for them to learn from in their formative years. 

Keep a copy of your credit cards, IDs, and other important documents in a safe place. Copies facilitate the cancellation/replacement process mightily.

2. Change Up Your Passwords With A Strong Replacement 

Your account is only as strong as your password. So, if you’re trying to avoid any potential fraud – or protect against hackers – it’s a good idea to get into the habit of changing your passwords often, using passwords that aren’t easy to figure out. 

The best ones involve numbers, lowercase letters, and uppercase letters, and don’t easily make up a real word. You can use password-helping programs to help store your passwords securely so you don’t have to try to remember every iteration for every account. You can also enlist (at a cost) the help of identity and credit card protection services such as Lifelock to give you and your family additional security.

3. Double Check Information Before Purchasing & Clicking

While there may be some scenarios when you can’t avoid financial fraud (because your accounts were hacked or your account numbers were stolen off machines), there are steps you can take to reduce your chances of becoming a victim. 

Don’t wire money unless you are absolutely sure who the recipient is. In cases of fraud, it’s very difficult to recover wired money because it’s treated as cash and not protected by financial institutions.

Don’t give money to groups associated with disasters unless it’s an established charity. Typically, this would be a 501(c)(3) organization, which is duly registered as an authentic charity, such as the Red Cross. It’s sad to say, but in times of disaster, scammers can prey on the emotions of people, set up fake accounts, and take money that is intended to go toward victims and their families.

Don’t click on the e-mail link. You already know about phishing schemes (fake e-mails that appear as if they’re being sent from credible accounts). Anytime you get an e-mail that appears to be from a vendor you work with, it’s best not to click any link that’s included but rather copy and paste the link into a browser, as this will prevent them from accessing secure info. even better as a first step: Don’t look at the name that appears in the sender’s e-mail, but the actual e-mail address from where it’s coming. 

For example, a scammer could set up an account posing as a bank representative. You should know that something is fishy if you see an e-mail address like “bankofmerica@iamahugescamartist.com” that looks close to one you are familiar with – but not exactly the same.

4. Monitor Your Credit Card & Bank Statements

Contrary to popular belief, scammers don’t usually start with a thousand-dollar computer purchase with a stolen credit card. They usually start with a small item to “test the waters” and see if they’re going to be able to get away with a purchase. Therefore, to avoid financial fraud, you need to be watching your accounts and be knowledgeable about your balances. 

While many banks have fraud departments that are trained to detect unusual activity on your card or account, it’s not a bad idea for you to jump into your account and look at all purchases to make sure they’re coming from you. 

Not only should you read monthly statements, but I suggest you also monitor online activity as well, so you can do so more frequently than once a month. I review every line item on every single bill to make sure it’s legitimate and there are no errors.

5. Shred Your Paper Documents Before Disposal

Avoiding financial fraud is more than just guarding your online presence. Though we often don’t think of our paper documents being the source of theft anymore since so much activity is online, many thieves still use paper as the source of information that they can use to steal account info or open up new accounts in your name. Even if you think you’re in a respectable neighborhood where people aren’t picking through trash, the fact is that you’re better off shredding all documents with any personal info—names, addresses, and of course account information after an appropriate retention period.

Immediate Steps to Take If You’re a Victim of Financial Fraud

The moment you realize that your account or accounts have been compromised, you feel an equal mix of panic, anger, and worry. Not only do you feel violated, but you also want to make sure your assets are protected. 

Luckily, in many circumstances, your money is protected by the applicable financial institution so it can be recovered. 

One big caveat: You have to report it early. If you delay reporting fraudulent activity, you may be responsible for the money taken. So, if you do notice that your accounts have been compromised, take the following steps:

• Let your financial institution know immediately, and follow their directions on what to do about that particular account. If it’s a credit card, they will cancel it immediately and send you a new one with a new number (make sure that any online automatic payments tied to that credit card are redirected).
• Place a “fraud alert” on your credit file with the three main companies that handle credit reports—Equifax, Experian, and Transunion. This will make sure that legitimate folks who need to access your credit know that your accounts have been compromised and that you’re not responsible for the misdoings on any particular account.
• Freeze your credit. That means that no new accounts can be opened in your name. That way, if someone has stolen your info and tried to open a credit card of some type, the lenders will deny that account when they see that a freeze has been placed on any new accounts.
• Get a copy of your credit reports. This should be done from one or more of those three companies so you can inspect them for any suspicious activity and have any activity you’re not responsible for wiped off your credit report so it’s not held against you when you are applying for credit, such as mortgages or car loans.
• File an identity theft report. If your info has been used in various ways (true identity theft rather than just one card being used, for example), you’ll want to file an identity theft report with the police. 

Final Thoughts

To repeat, I hope you never become a victim of fraud or scammers. However, sometimes you can’t help the difficult situations you find yourself in even when you’ve done everything in your power to avoid financial fraud. Precautionary measures are always a good practice, and getting into the habit of double-checking everything you can is only going to give you a better chance of avoiding falling into some scammer’s trap. 

Sometimes, the best defense is a good offense. If you do find yourself in a situation where you are – or suspect you have been – a victim of financial fraud, taking quick action is key. You have a far better chance of getting your money back or having some course of action to reverse the damage if you contact your bank, credit card companies, or other financial institutions as quickly as possible and take action to prevent further damage from happening. 

There are many resources available to help you learn more about financial fraud and preventative measures, but, regardless, the strategy you take is one that’s built on diligence, logic, and common sense when navigating these treacherous online waters. Be safe, be smart, and be aware of where you’re clicking or searching.