According to a report published by the Federal Trade Commission in February this year, consumers lost more than $10 billion to financial fraud in 2023. A large portion of that came from imposter scams. With the convenience the digital age has brought us come the challenges of protecting our personal and financial information. It has become a balancing act of access versus security. Here are 10 things you can do to minimize the risk of being a financial fraud victim.
1. Use Complex Passwords
No password is completely unbreakable. However, common passwords like “Rover2024” are far easier for hackers to break than complex passwords—and hackers tend to focus their attention on the path of least resistance in attempting to steal personal information.
A complex password consists of a random string of letters (both upper and lower case), numbers, and special characters. Cybersecurity experts recommend a password of 12 or more characters. Avoid using repeating or sequential characters. In addition, skip using familiar names like your first-born child or any portion of a date significant to you, like the year you graduated high school. A great example of a complex password is “B46$TNx%jMxR”.
2. Don’t Reuse Passwords
Cybersecurity experts also strongly suggest avoiding reusing passwords. Far too many people use the same password or a similar variation of the same password across multiple sites. When your credentials for one website are compromised, it is common for hackers to test that personal log-in information on other websites. If you are unlucky enough to have a password compromised, it is best to limit the exposure risk for your sensitive information to one site.
These first two tips bring up an important issue: How should you safeguard this list of complex and unique passwords while still being able to conveniently access them? Writing them down is one option. If you must write them down, keep the list in a very secure location like a home safe. Certainly don’t keep the list in your Notes app for any and all to find. An increasingly popular online security option is to use a web-based password vault service. This is especially useful if you have the service incorporated into your mobile device or computer browser so it can autofill your passwords. Many new apps allow for the use of the mobile device’s biometric security measures in place of reentering your password each time. This is only recommended if your mobile device or computer is password-protected in case it is lost or stolen.
3. Use Two-factor Authentication
Two-factor or multi-factor authentication adds an additional layer of protection to your sensitive information. Users log in as normal but are only granted access once they receive and enter a one-time security code. This code is received via text message, email, or phone call based on information already existing in the account profile. When enabled, the username and password are not enough to access the account, and your personal information is better secured.
4. Password-protect Your Devices
Most modern mobile devices and computers can be protected with a password to protect from unauthorized use. Furthermore, mobile devices offer face or fingerprint recognition features to make accessing your mobile device faster and more convenient. Enabling these will add another layer of security for your personal information to your devices.
5. Go Paperless
Not only does going paperless reduce waste and save costs, but it also has security benefits as well. The less sensitive information that can be lost or stolen from the traditional mail delivery system, the better. You also add the benefit of being able to conveniently retrieve previous statements or confirmations, and you may even save a tree or two!
6. Consider a Monthly Credit Monitoring Service
Monthly credit monitoring is a wonderful tool for keeping up to date on account changes or new accounts opened in your name. Many credit card companies offer a limited version as a perk of being a cardholder. There are also a number of fee-based services that will monitor and alert you to changes in your credit report.
7. Review Your Statements Regularly
Whether you get your statements in the mail or access them via an app or website, it is highly recommended to review them regularly. Look for abnormal activity and catch it before it gets out of hand.
8. Order Your Free Annual Credit Report
Federal law entitles you to a free annual copy of your credit report. You will be able to see your credit activity and history and head off any potential issues. Visit annualcreditreport.com for more information.
9. Freeze Your Credit
If you don’t plan on making any major purchases that require opening a new credit account, consider freezing your credit. Each of the three major credit bureaus allows you to freeze your credit to prevent new accounts from being opened until you unfreeze it. This does not prevent you from using your current accounts, it simply prohibits new accounts from being opened. You can unfreeze at any time.
10. Always Verify with Whom You Are Sharing Information
Impersonation incidents are on the rise. It is becoming increasingly difficult to tell if an incoming call, email, or text message is from a bad actor pretending to be someone from your financial institution. Often, they will have just enough information to give you the impression they are legitimate. However, they are missing a key piece that stands between you and them stealing your money or personal information. You can protect yourself by never giving anyone your password or two-factor authentication security code over the phone. If you get an unexpected call from someone claiming to be from your financial institution, do not share any sensitive information. Instead, get the person’s name and company and let them know you will call them back. Immediately hang up and call the company back at a phone number you have verified. It could come from your statement, the back of the credit card, or the company’s official website. Let them know you were recently contacted, the name of the person, and that you want to resolve the financial issue. The verified entity will be able to confirm if the contact was legitimate. If they have no record, it’s likely fraudulent.
Furthermore, do not click on links in your email or text messaging that you were not expecting to receive, even if they look legitimate. Be wary of anyone asking you to send funds in the form of a gift card or through a money-transit service like Western Union.
Ultimately, the key to protecting your identity and finances is to share as little as possible and always err on the side of caution. Verify, verify, and verify! Complex and unique passwords can be challenging to incorporate into your life. But the alternative of getting your identity or money stolen is far worse. While not all financial fraud can be prevented, your main responsibility is to make it as difficult as possible for thieves to steal your personal information. Be safe out there!
