Financial Fraud Protection Tips to Keep Your Accounts Safe

In the past, thieves used to rob banks, break into houses, and steal physical money. But in a largely digital world, it’s much easier for them to sit behind a keyboard and hack their way into your accounts or trick you into handing over your money. But there are financial fraud protection tools out there. You don’t have to be at the mercy of modern high-tech thieves. Taking some steps in advance will go a long way towards keeping your accounts safe.

See Protecting Financial Accounts from Scams and Fraud with John Buzzard for a complete transcript of the Easy Prey podcast episode.

John Buzzard is a nationally-recognized financial fraud expert. He has been in the field of credit card fraud prevention, financial scam protection, and general financial crime and fraud prevention for two decades. He is an industry analyst for a firm that works primarily with banks, credit units, and corporate entities. In addition, he works with consumers around financial fraud protection education. Customers need every edge against criminals using advanced technology, and John wants to help give them that edge.

How Financial Fraud Has Changed

There’s a saying in the fraud world that everything old is new again. Scams and fraud are cyclical. We’re not really seeing any of the old frauds completely disappearing. They just come back in new versions with a digital aspect to it. As we advance in our digital habits and technology becomes more and more a part of how we live our lives, we’re just seeing new, more digital versions of the same crime.

There was so much physicality to the scams and fraud that we saw before.

John Buzzard

Before everything was digital, scams and fraud had to be much more physical. You’ve probably heard of the “confidence guy.” A lot of things before the 1980s had to be face-to-face, over the phone, or through the mail. It was much more physical. At one point, financial crime was only something like robbing a bank or stealing from your employer.

Digital financial fraud started once we started to get into the world of ATM cards. These technological leaps let us have enormous convenience in our everyday financial lives. But there is also a huge price to pay if we’re not conscious of what’s happening and taking steps towards financial fraud protection. The business world is always trying to reduce “friction” for consumers. But it’s tough to make things easier but still keep out the bad guys. And the first person who’s going to try and figure it out is a criminal.

Financial Fraud Protection for Your Accounts

John has a personal finance mantra that he keeps in mind with his own finances: If I don’t care about them, how can I expect anyone else to care more than I do? He’s invested a lot of time in automating his processes and making sure there’s more than one set of eyes on things. He’s also conscious of places where he’s making purchases. That includes places like Amazon, Walmart, and even apps like Instacart. Any place that has his payment information, he makes sure he gets alerts for any activity.

Any place where there’s a purchase … we need to make sure that we’re alerting ourselves to any activity.

John Buzzard

People seldom take the time to set up or review these alerts. Some people talk about self-care for your mental health – your finances need self-care, too, for financial fraud protection. This can be as simple as taking thirty minutes once a week to look at the things important to you. If keeping your finances secure from criminals matters to you, it’s worth it to put in that little bit of time to keep your money secure.

Turn On Account Alerts

John highly recommends that everyone set up alerts on all of their financial accounts. Most institutions make it very easy to set up alerts for all purchases, purchases over a certain amount, or purchases through a certain method. John also has set up an alert that sends him his checking account balance every day so he can see if something strange is going on.

Most people don’t realize that they can call their bank, credit union, or investment company and ask what kind of financial fraud protection options they have in place. You may be surprised to learn about all of the tools available. If you’re disappointed by the options, it may be time to move to a different institution.

I think [alerts are] one of the big secrets for consumers. They really need to lean into that.

John Buzzard

The key is to create an environment where if something out of the ordinary happens on your accounts, you know right away. For example, John prefers to get cash back when he’s at a store instead of going to an ATM. So he has alerts set up for all ATM transactions. If a criminal withdraws some of his money at an ATM, he finds out immediately and can take action.

John also has deposit notifications set up on his accounts. That helps protect him against a check kiting scam that used to be very popular. In this scam, criminals would deposit fake checks into someone’s account. Once the account balance went up, they would withdraw the money. But when the bank figured out the checks were fake, they’d reverse the deposits, leaving the crooks to get away with the money they withdrew and the account owner that much poorer. Notifications help John spot the beginnings of this scam immediately.

Set Up Digital Access (Even if You Don’t Use It)

Some people out there have zero interest in any of the online banking or mobile banking options that financial institutions offer. So they never bother to register for those accounts. But think about the other side of the coin. If you have the account but haven’t registered for the online access, a criminal with the right information could set up the online access for you. Now they have full access to your accounts and you have no idea – and worse, the bank has no idea it’s not you having a sudden change of heart about online accounts.

To avoid this, you only have two options. One is to call the bank and ask them to permanently block all digital access. You will never be able to have an online account, but neither will a criminal. The bad news is that many banks do not have this option. If you think you may want online access in the future, or if your institution can’t turn off online access, your only option is to register for the account yourself. That doesn’t mean you have to actually use that account. But by claiming the account, setting up a secure password, and turning on two-factor authentication for yourself, you can lock criminals out.

Secure Your Credit for Financial Fraud Protection

Financial fraud doesn’t just happen on your bank or investment accounts. It can also happen with your credit. Identity theft is so devastating because it makes it so easy for criminals to commit financial fraud. That’s why financial fraud protection also includes protecting your credit.

When credit freezing first became available through the credit bureaus, John spent half an hour freezing his credit because he didn’t want anyone else using it. Freezing your credit prevents anyone, even you, from using it. Inquiries will come back with an error and no one can open new credit accounts in your name. It’s not always convenient. If you want to buy a new car or open a new credit card, or if a rental or job application requires a credit check, you will have to un-freeze your credit. The process is much easier now than it used to be, but it still can be a hassle.

If you want to make it as easy as possible, download the apps for the three credit bureaus. With the apps, it’s a simple button tap. Tap the button to un-freeze your credit while the rental company or car dealer runs your credit, then tap the button again to freeze it again. It’s a tiny bit of hassle for a lot of protection.

Some credit cards and banks even allow you to freeze or disable individual cards. It’s another scenario where it can be a small hassle to enable a card to make a purchase and then disable it again after you’re done. But this will prevent even criminals who have your card number from spending money from your accounts, so some people think it’s worth it.

Choose Secure Payment Methods for Financial Fraud Protection

The coronavirus pandemic made many people comfortable with contactless and tap-and-go payment methods. People thought about it as a safe way to avoid contact with objects that might spread the virus. But they are also a secure, encrypted way to pay.

Think about a gas pump. The normal way to pay requires you to put your card directly into a slot on the pump. That’s a common place for criminals to set up skimmers and steal your card information. In fact, any place you insert or swipe your card is a potential opportunity for a tech-savvy criminal to steal your card information. But you can’t skim a contactless payment method. Many stores are enabling tap-to-pay options. Even gas pumps are slowly becoming more secure – if you see a cloudy black box or a logo that looks like a hand holding a square to a sideways wifi symbol, the pump accepts contactless payment.

These tap-to-pay systems are very safe and highly encrypted. And this is true of both physical debit and credit cards with tap-to-pay enabled and payment apps like Apple Pay and Google Pay. Even though they were secure, these technologies started off slowly. Research showed that at first, the only users were young men who liked the high-tech elements. John didn’t like it at first, either. But just like tools like PayPal and eBay have grown and remained in the world, these contactless systems are more secure and here to stay.

Why Cards Aren’t as Secure in the United States

The United States has mostly moved over to chip-based cards at this point. If you look at any of your cards, there is probably a little metallic chip embedded in the front. This chip enables cryptographic, highly secure financial transactions. It’s also what enables tap-to-pay options on credit cards.

In Europe, transactions are all chip and PIN. The card reader reads your chip, you enter your PIN, and the transaction is extremely secure. If the chip doesn’t work, there’s no guarantee that this card is legitimate or it’s really you using it. So that should stop the transaction. But in the US, we allow fallback. With fallback, the payment is processed through the magnetic strip (magstrip) on the back. Most of the time, transactions using fallback turn out to be fraud.

We are still in this world of the fallback … there’s fraud on [the cards] in a lot of cases.

John Buzzard

A great step for financial fraud protection would be getting rid of fallback. John thinks it’s coming. In just a few years, new cards probably won’t have magstrips at all. Until then, swiping your card is not the most secure way to pay. The best option is to use Apple Pay or Android Pay to pay through your phone or smartwatch. The next best option is to tap-and-go with your card. Inserting the chip is okay if it’s the only option. But swiping that magstrip is the least secure payment method.

Financial Fraud Protection Requires Social Media Secrecy

It really bothers John that in the modern digital world, people find themselves in pitfalls with no idea how they got there, when the answer is that they overshared on social media. What you put on social media is actually a big deal to your financial fraud protection. You can easily give away the keys to your identity on social media if you don’t know what you’re doing – and most people don’t.

You can give away the keys to your identity universe quite easily through social media.

John Buzzard

One important shift that John has had to do himself on LinkedIn is to change how you post about what you’re doing. Instead of documenting what you are about to do or what you will be doing in a few weeks, become a historical reporter about yourself. That gives criminals nothing to go on. If they know you’re going to a conference in San Antonio next week, they can plan to rob your house or call your company asking for a wire transfer for a travel emergency. If they know you just came back from San Antonio, that doesn’t help them.

Oversharing is a huge way people compromise their security. If you are able to hide your phone or email on social media, do that. And be careful how you share about minors. There’s nothing wrong with bragging about your kids or grandkids. But if you make a post about Joseph Michael Buzzard turning eleven yesterday, a criminal now has their full name, a photo, and can figure out their birthday. You’d be surprised how many children have mortgages or credit cards. It’s fine to brag, but be careful what you’re sharing.

Remember, bad guys are watching [your social media].

John Buzzard

Criminals Use Social Media to Leverage Your Emotions

Social media also lets criminals see your list of friends, followers, or connections. Then they can leverage that to commit financial fraud through a scam. A common one is messaging you saying that one of your friends is in jail and needs money for bail. Another is to say that your friend is in the ER and needs money to get their medications and get home.

These scams play on your emotions. One friend of John’s got a call from a criminal using a deepfake voice, claiming that John was in a Mexican prison and needed bail money. She knew John well enough to know that would never happen. But the scammer rattled her emotions anyway. It’s not that people are stupid or naive. These scams trigger our brains to think a loved one is in danger, which actually stops rational thought. It’s how humans are wired, and the bad guys know that and take advantage.

If a complete stranger reaches out to you, their job is to get you disturbed or upset so you’ll react. A low-tech, easy fix is to hang up. John has hung up on a lot of people. It’s okay to be rude to criminals. If you’re worried your bank really has turned off your card, call the bank, drive over there, or try to use the card. And with AI’s ability to fake a voice, don’t assume the person that sounds like your loved one really is. It’s never a bad idea to have a passphrase to ask them for to confirm the person on the phone is real. Criminals often have birthdays, social security numbers, and more. The passphrase may be the only thing they don’t have.

That [passphrase] is sometimes the only thing that a criminal doesn’t have.

John Buzzard

Know Your Rights for Financial Fraud Protection After the Fact

If you’ve been a victim of a scam or financial fraud and you lost money from an American financial institution or lender, you have some rights. Go to that institution with a complaint. Ask for your money back. Often they will start off by telling you no. But don’t accept that answer.

Unless the fraud was you trying to cheat your bank, there are things you can do to work towards financial protection after financial fraud. The Consumer Financial Protection Bureau (CFPB) oversees all banks, credit unions, and lenders. If you feel you’ve been denied by your institution after you were a victim of fraud, you can put in a complaint. John recommends being transparent with the institution. You’re the victim, and you’re going to give them a chance to resolve this, but if they don’t you’re going to file a complaint with the CFPB. Make your intentions clear, and it will change the conversation a little bit.

Also take advice from people about how you can be safer and what you can do to increase your financial fraud protection in the future. Right now, for example, plenty of people purchased an antivirus ten years ago, never paid for updates, and assume that outdated software keeps them safe from malware. It doesn’t. Be proactive, be positive, be persistent, keep your eyes peeled, and be your own advocate. It’s the only way to protect yourself.

It’s a buyer beware and be aware world.

John Buzzard

You can connect with John Buzzard on LinkedIn, where he always appreciates talking with people and receiving feedback.