By AKEMI KONDO DALVI
Protecting ourselves from financial crimes in the modern day can be much more elusive than what we were used to in the past.
We hear the common adage around the holidays, like “Don’t leave your Christmas gifts visible in your car while you’re gone.” Those are easy warnings to heed and implement, but it’s the unknown vulnerabilities that we’re scared of, like identity theft, embezzlement and phishing scams. Until, that is, we become the victim of such crimes and have to learn how to clean up the mess someone else has left for us.
Knowing what to do after you’ve become a victim is important, but unfortunately the crime has already occurred. What could be more valuable is knowing how to prevent such crimes from happening in the first place.
We recently had a client who was utilizing free wi-fi in the airport while catching a flight across the country for work. Being the productive woman she is, she was sending emails while waiting for her plane to arrive. One of those emails was to me. We’ll call our client “Susan.”
Susan asked me what the tax implications would be of distributing $50,000 from one of her investment accounts to create some extra liquidity around the holidays – just an inquiry. Susan’s plane arrived, she caught her flight to D.C. and returned to L.A. two days later to a phone message from me. In the message I told Susan I received her email request to distribute $75,000 from her investment account, but I needed to get verbal authorization/confirmation as well as a signature authorizing the disbursement if she wanted to proceed.
Alarmed, Susan called our office and said that she had not asked for a distribution! As it turns out, someone hacked into the wi-fi network at the airport, saw Susan’s email to me and continued the conversation where she left off … asking for $75,000 to be wired to his bank account instead of Susan’s. Thankfully we were able to detect the fraud in time.
This prompted us to interview Detective Erika Aklufi of the Santa Monica Police Department’s Criminal Investigations Division, Financial Crimes Unit. She said, “People are extremely intelligent, but they are really unaware of phishing scams where criminals are trying to elicit information or money.”
Erika explained that more often than not, a criminal has a sophisticated ring where there are money drops and bank accounts that are being hacked into as a temporary holding place for stolen money en route to yet another transfer destination. Often the holders of the “money drop” accounts are unsuspecting victims themselves and don’t know they’re a part of the scam.
It’s not a matter of if, but when, because everyone will have their identity stolen at some time. However, here are a few steps you can take now to protect yourself from becoming a victim of financial crime.
• Be aware – Just like you need to be aware of your physical safety, you need to be aware of the places you go and the people who might be able to see your personal identifying information: name, DOB, SSN, tax ID, anything that can be used to create a false persona. Be extremely aware of the different places that you are using that information and limit the use whenever possible.
• Be cautious with public wi-fi networks – Don’t count on the provider of the wi-fi network to protect your personal information. Browsing for fun is OK, but don’t sit at a coffee shop and pay all your bills online. Who knows who’s sitting there watching?
• Be cognizant of phishing scams – Don’t call the number on the notice saying your credit card has been compromised. That could be the scam! Instead, get your credit card in hand, turn it over and call the number on the back to ask if your credit card has been accessed.
• Don’t click on links in your email – Open up a new browser and go directly to the bank or credit card you wish to get information from. By clicking on a link, you could be routed to a very believable but fraudulent financial institution page. When you attempt to log in with your user ID and password, you’ll be giving that information away to the criminal who hosted the fake webpage.
• Utilize activity monitoring services – There are many low-cost services that will alert you when new accounts are opened in your name or your credit is run. You will be alerted within 24 hours of the event by text, email, mail, etc. AAA members get identity theft monitoring for free. AAA also offers a premium service for approximately $80/year where you are granted access to all three credit reports at any time so you can constantly check yourself if you want to.
• Set transaction alerts on your credit card – You can preset alerts for activity on your account that you know would be alarming or unusual, such as a transaction over a specific dollar amount.
• Be smart with your passwords – Don’t use the same password for multiple sites. Use strong passwords and change passwords frequently. Don’t use your pet’s name!! People spend hours trying to figure out your personal information, and pet names are the first thing people try to guess.
• Use a credit card over a debit card – When you use a debit card, the money is coming directly out of your bank account. If fraud occurred, the bank may give your money back, but there can be an extended period of time that your account is frozen while you and the bank are sorting out the mess. Use a credit card instead! You can dispute a bill and you are not out of money during the investigation period.
If you have already been the victim of a financial crime, let the credit bureaus help you. Get a police report and submit it to the bureaus. They will put an alert on your account for six months to seven years, noting that you have been the victim of identity theft. They’ll give you options on how to protect yourself going forward.
It can be a scary world when we realize how many predators are around us. However, it can also be empowering to know you can protect yourself and there are lots of good people out there who want to help you do so.
We wish you a safe and happy holiday season and a prosperous new year!
Many thanks to Detective Erika Aklufi, who so generously gave her time and advice to help us safeguard ourselves from identity theft and financial crimes.
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The opinions expressed above are solely those of Kondo Wealth Advisors, LLC, a Registered Investment Advisor in the state of California. Neither Kondo Wealth Advisors, LLC nor its representatives provide legal, tax or accounting advice.