Protecting Yourself from Financial Fraud in the Digital Age

Guest author Janek Pedersen discusses seven strategies to help reduce the risk of exposure to various types of fraud in an increasingly digital world.

We live in an increasingly digital world, making financial fraud more prevalent, sophisticated, and an overall higher risk. While online banking, shopping, and investing offers greater convenience, engaging in these digital financial activities also come with the risk of exposure to various types of fraud. As technology advances, so do the opportunities for fraudsters. How can you protect yourself from their methods? Here are several strategies to address these evolving threats.

Adopt Strong Digital Security Practices
Creating strong, unique passwords for each of your online accounts is an easy way to increase your financial security. A good password should include a mix of uppercase and lowercase letters, numbers, and special characters. Avoid using easily guessable information such as a family member’s name or birthday.

Changing your passwords periodically and differentiating them across financial sites and apps is a smart move. Consider using a password manager to generate and store complex passwords securely.

Consider enabling Two-Factor Authentication (2FA) where you can. 2FA adds an extra layer of security by requiring a second form of verification beyond your password. This could be a text message, email code, or authentication app. Activate 2FA for your financial accounts, email, and other sensitive accounts. This one extra step will meaningfully increase the security of your sensitive information.

Secure your Devices
Install reputable antivirus and anti-malware software to protect your devices from malicious attacks. It is equally important to download the necessary updates to defend against new and evolving threats.

Similarly, it’s important to regularly update your operating system, browsers, and apps to patch security vulnerabilities. Cybercriminals often exploit outdated software to gain unauthorized access. Remember that cyber criminals are continually seeking out any opportunity to infiltrate systems so you must be watchful in your efforts to thwart them. If one of your devices is ever lost or stolen, you’ll have a better chance of your data being protected if you’ve already ensured that encryption is activated.

Be Vigilant with Online Transactions
Before entering any sensitive information on a website, ensure that it is secure by checking for "https" in the URL and a padlock symbol next to it. Be wary of any unfamiliar or suspicious websites. Be equally cautious with emails that appear to be from a reputable company. If you are not 100% sure you can trust the source, then avoid clicking on any links and instead navigate directly to the company website in your web browser.

Check your bank and credit card statements regularly for unauthorized transactions. Many financial institutions offer real-time alerts for transactions; utilize these to stay informed of all activity within your bank accounts. For online purchases, use credit cards or secure payment services like PayPal, which offer added layers of fraud protection compared to debit cards.

Practice Caution with Personal Information
Be mindful of the information you share online and avoid posting any sensitive or personal details on social media that could be used for identity theft. Phishing scams often come through as emails, texts, or calls asking for personal information. Verify the legitimacy of any unsolicited requests by contacting the organization directly through official channels.

Educate Yourself and Stay Informed
Make sure you understand the common fraud tactics being used and stay informed about prevalent scams. Awareness is a powerful tool in recognizing and avoiding fraudulent schemes. Similarly, follow updates from cybersecurity experts and organizations to learn about new threats and recommended practices for digital security.

Share your knowledge about financial fraud with friends and family, especially those who may not be as tech-savvy. Members of older generations can be more vulnerable to these cyber-attacks. Awareness can help protect the entire community from becoming victims of fraud.

Do not be fooled into thinking that you have protection where it may not exist. Thanks to past congressional acts, many Banks provide Federal Deposit Insurance Corporation (FDIC) insurance and financial institutions provide Securities Investor Protection Corporation (SIPC) coverage. These policies were designed to protect investors from institution failures and do not protect you from fraud.

Respond Quickly to Suspicious Activity
If you suspect unauthorized activity or receive suspicious communications, be sure to report it immediately. Promptly reporting these instances to your financial institution and relevant authorities can help lead to a better outcome. If you believe your personal information has been compromised, placing a fraud alert or credit freeze on your credit reports can help prevent further damage. You may also want to sign up for a credit monitoring service, such as from a credit bureau like TransUnion or Equifax.

Keep detailed records of any fraudulent transactions or communications. This documentation will be useful when working with financial institutions or law enforcement to resolve the issue.

Secure Your Connections
Public Wi-Fi networks can be insecure and susceptible to interception. Use a secure, private connection for financial transactions or consider using a Virtual Private Network (VPN) for added security. Ensure that your home Wi-Fi network is secured with a strong password and encryption. Regularly update your router’s firmware to protect against vulnerabilities.

In the digital age, protecting yourself from financial fraud requires a multi-faceted approach that combines strong security practices, vigilance, and education. By adopting these strategies, you can significantly reduce your risk of becoming a victim of financial fraud. Remember, staying informed and proactive is key to safeguarding your financial well-being in an ever-evolving digital landscape.

The opinions and analyses expressed in this blog post are based on Curi RMB Capital, LLC’s (“Curi RMB”) research and professional experience are expressed as of the date of our blog publishing. Certain information expressed represents an assessment at a specific point in time and is not intended to be a forecast or guarantee of future results, nor is it intended to speak to any future time periods. Curi RMB makes no warranty or representation, express or implied, nor does Curi RMB accept any liability, with respect to the information and data set forth herein, and Curi RMB specifically disclaims any duty to update any of the information and data contained in this blog. The information and data in this blog do not constitute legal, tax, accounting, investment, or other professional advice. Returns are presented net of fees. An investment cannot be made directly in an index. The index data assumes reinvestment of all income and does not bear fees, taxes, or transaction costs. The investment strategy and types of securities held by the comparison index may be substantially different from the investment strategy and types of securities held by your account. RMB Asset Management is a division of Curi RMB Capital.   

The content contained herein was generated by Curi RMB Capital with the assistance of an AI-based system to augment the effort. 

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