We wanted to take a brief break from all things coronavirus to remind you that cybercriminals are still at work—they’re not part of the masses in the unemployment lines. We all tend to think fraud won’t happen to us, but this is how easy it can happen.
A Henssler client’s computer was infected with malware, sending information like usernames and passwords for multiple accounts at various banks and institutions back to the thief. The thief then logged into Schwab Alliance with the client’s information and requested several wires from numerous accounts. Without getting too technical, Schwab uses an algorithm to help detect potential fraudulent wires, and their system caught all of the wires, except one in the amount of $92,250. Fortunately, the client was contacted about the other fraudulent requests and looked at his accounts. He quickly saw a wire transfer that was processed and immediately contacted us. We, in turn, immediately contacted Schwab. Because it was caught so quickly, Schwab was able to inform the bank that the wire was fraudulent and request a reversal of the wire, allowing the bank to watch for the funds and return them. Luckily for our client, the funds were returned to his account.
While Schwab has insurance to protect clients against situations like this, there is no guarantee that any or all of the funds would be returned. Normally, an investigation would be conducted, and Schwab’s fraud department would determine how much of the liability to assume.
There are several things we want to point out. If the thief had requested only one wire, the client likely would not have known in time and may not have been able to get the funds back. Schwab sent a confirmation email that a wire was processing to the primary email address on the account; however, the address belonged to the wife, who does not check her emails regularly. You should use an email address that you check frequently and/or set up alerts for activities on your accounts where available. Alerts can be by text and/or email.
Because the thief had the client’s username and password, it appeared to Schwab that the wire request was legitimate. This is why we recommend setting up alerts and monitoring your accounts regularly. At Henssler Financial, we have an internal process we follow for wire requests, and Schwab has an intensive team of experts and systems in place, but not everything can be caught.
One solution that Schwab proposed was setting the client’s online profile up as “Limited Access.” This is basically a view-only option so the client cannot trade or request transactions of any kind. If you are nervous about fraud happening to you and don’t mind giving up some access to your accounts, this is an option. Under this set-up, requests for funds will have to come through your adviser. Hopefully, this will add an additional layer of protection as we have our own internal processes to help identify fraudulent activity.
We are sometimes asked, “If your credit is frozen, how can criminals access your financial accounts?” These two have nothing to do with each other. Having your credit frozen can prevent people from taking out new credit in your name but does not prevent them from accessing your account(s) if they have your username and password.
Overall, this client was very lucky that it worked out the way it did. If you take anything away from this, it should be that we all must be careful and do what we can to protect our assets.
If you have questions, contact the Experts at Henssler Financial:
- Experts Request Form
- Email: email@example.com
- Phone: 770-429-9166
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