If you’re like me, the vast majority of your financial assets reside in cyber-space with only a login ID and password protecting your accounts. While many financial intuitions provide some sort of guarantee, a hack will nonetheless create a major headache. Perhaps even more problematic is someone stealing your identity and opening new accounts and credit cards under your name.
While no security system is 100% foolproof, there are several things you can do to reduce the risk of identity theft or fraud. First make sure your login ID and passwords use a complex series of letters, numbers and special characters and that you change them at least twice a year. Next, never and I repeat never, log onto your financial accounts using public Wi-Fi like at airports, libraries, Starbucks, etc. as they are not secure and hackers can steal your credentials.
To further protect your account, adopt a “two-factor authorization” process. The most common way is to download an app on your phone that sends a random code that you add to your login password. Thus, for someone to access your account they would need your phone (which hopefully you have password protected) as well as all your other account information. It is a very simple added level of protection. Ask your banker or broker for details.
To reduce the likelihood of identity theft you should adopt a “credit freeze” at the three major credit agencies. A credit freeze stops anyone who stole your ID from adding new credit to your account and running up large balances in your name. Anyone who has experienced this knows all too well how difficult it if to correct the damage that was done. To do this contact the agencies and request a freeze on your account. You can temporarily thaw the freeze by contacting the agencies with security codes assigned to you should you need to open a new account or add a credit line or a loan. The cost is approximately $10 per account and you need to do it for both you and your spouse. This is a great web site explaining how: http://www.clark.com/credit-freeze-and-thaw-guide.
I recommend you periodically request a credit report on yourself and look to consolidate your financial accounts and credit cards as the more you have, the higher the risk of fraud. Make sure you review your accounts regularly and balance your checkbook each month. The guarantees offered by financial institutions require you to report a fraud in a timely matter so it is incumbent on you to be pro-active.
Ray Link recently retired as CFO of FEI Company and currently serves on the board of directors of three high-tech companies. He is a CPA and holds an MBA from the Wharton School.