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Protecting Yourself from Cyber Threats

Mary Lou Daly
December 2016
by Mary Lou Daly, CPA, CFP®

Identity theft is an increasing concern in our electronically-driven world. Scammers, phishers and identity thieves view "hacking us" as their daily job. Someone once likened it to a never-ending game of whack-a-mole. While research suggests the elderly, newly divorced and college students are the most vulnerable, there is no question that we're all targets for the bad guys. Below are actions you can take to help protect yourself.

Credit Reports
One of the best ways to protect yourself against identity theft is to check your credit reports. If you discover something suspicious on your account record, you should investigate. There are three nationwide credit bureaus that track your credit: Equifax, Experian, and TransUnion. Each credit bureau is required to provide you with one free credit report annually. To obtain a report, you will need to provide them with your social security number and date of birth. We suggest you ask for a free report from a different bureau every four months, thus allowing you to monitor your credit year-round. To get your free report, go to www.annualcreditreport.com or call 1‑877‑322‑8228. Please note that this is the only legitimate source for the free credit reports. From the FTC website:

Only one website is authorized to fill orders for the free annual credit report you are entitled to under law – annualcreditreport.com. Other websites that claim to offer "free credit reports," "free credit scores," or "free credit monitoring" are not part of the legally mandated free annual credit report program. In some cases, the "free" product comes with strings attached. For example, some sites sign you up for a supposedly "free" service that converts to one you have to pay for after a trial period. If you don't cancel during the trial period, you may be unwittingly agreeing to let the company start charging fees to your credit card.

Some "imposter" sites use terms like "free report" in their names; others have URLs that purposely misspell annualcreditreport.com in the hope that you will mistype the name of the official site. Some of these "imposter" sites direct you to other sites that try to sell you something or collect your personal information.

www.annualcreditreport.com and the nationwide credit reporting companies will not send you an email asking for your personal information. If you get an email, see a pop-up ad, or get a phone call from someone claiming to be from annualcreditreport.com or any of the three nationwide credit reporting companies, do not reply or click on any link in the message. It's probably a scam.

Security Freeze
A security freeze stops credit bureaus from releasing any information about you to new creditors. While it does not impact your ability to use the credit cards you already own, it does prohibit you (or anyone else) from opening any new forms of credit in your name while your account is frozen. If you need to apply for a new form of credit, it takes just a few minutes to unlock your account. We suggest you keep your credit file locked when you are not opening a new line of credit or arranging for other financing.

All North Carolinians can get security freezes at no cost online. You must contact each of the three credit bureaus and freeze your credit. We found the best practice is to print out one of your free credit reports prior to freezing your credit. Each credit bureau will ask you a number of questions to verify your identity, for example old phone numbers, principal and interest of your mortgage payment, etc. If you printed out a credit report, you will find most of the answers there. The freezes are credit bureau-specific and social security number-specific.

Each credit bureau will provide you with a PIN or password when you freeze your account. Store this information in a safe place. You will need the PIN or password to lift or remove your credit freeze. If you lose your PIN or password, each credit bureau can give you a new one.

If you do not have access to the internet, you can also call each credit bureau to freeze your credit. They will ask you for your full name, social security number, date of birth, past home addresses and two proofs of residence (ex. utility bill). The numbers are as follows:

  • Equifax Security Freeze: 1‑800‑685‑1111
  • Experian Security Freeze: 1‑888‑397‑3742
  • TransUnion Security Freeze: 1‑888‑909‑8872

Liability for Unauthorized use of Bank Accounts and Credit Cards
If your debit and/or credit card has been lost or stolen, it is very important to notify your bank or credit card company as soon as you realize it is missing. The Fair Credit Billing Act (FCBA) and the Electronic Fund Transfer Act (EFTA) offer protection if your credit or debit cards are lost or stolen.

Under the FCBA, your maximum liability for unauthorized use of your credit card is $50. If you report the loss before your credit card is used, you are not responsible for any charges you didn't authorize. If your credit card number is stolen, but not the card, you are not liable for unauthorized use.

If you report a debit card missing before someone uses it, the EFTA says you are not responsible for any unauthorized transactions. If someone uses it before you report it lost or stolen, your liability depends on how quickly you report it:

  • $0 if reported immediately and before the card has been used;
  • $50 or less, depending upon the amount that has been used, if reported within two business days;
  • $500 or less, depending upon the amount that has been used, if not reported within two business days, but you do report it within 60 days after your bank statement is issued that shows the unauthorized use; or
  • Any amount if you fail to notify the bank within 60 days after your bank statement is issued showing the unauthorized use.

We suggest you review your bank and credit card statements each month for unauthorized charges.

Social Security Number
More and more doctors and other providers are requiring your social security number. Protect this number as much as you can. Ask why it is needed, who will have access to it and how it will be kept confidential. Memorize your social security number. Do not carry it around in your wallet or have it printed on your checks.

Shred / Delete
Paper and electronic documents with personal information need to be protected or eliminated. There is no need for you to maintain paper copies of documents held in electronic format by you or your financial institution. Paper documents should be disposed of by shredding them. Tax records older than seven years and other financial records older than three years can also be shredded.

Physically destroy old hard drives. Clear all data from old cell phones and tablets before disposing of them or trading them in to your carrier. We recommend that you follow instructions provided by the device manufacturer or your carrier to clear personal data from your specific devices.

Finances
Watch your mail for missing bills. If possible, start receiving your bills online. Review your bills each month to ensure the charges are correct.

We suggest you limit the number of credit cards you own and carry in your wallet. Prior to putting a card in your wallet, make a copy of the front and back of the card and store it in a secure location in case a card is lost or stolen. Another good recommendation is to call your credit card company in advance of a trip. Let them know where you are going and when you will be gone. This is true for long distance trips within and outside the US.

Investigate the growing number of ways to protect yourself from credit card fraud. All cards will have an alert system to help you monitor your card. For example, you may be able to receive an alert anytime your card is charged without the card being physically present. Or, you can receive an alert anytime more than X number of charges are made in one day or a charge is over a certain dollar amount. Set up an alert that best helps you. Take time to do this…the inconvenience is minor compared to dealing with fraudulent charges and having new cards issued.

Online
Passwords and PINs should be memorized if possible. If you need to write them down, do NOT store them under your keyboard or in your top desk drawer. Do not overuse a PIN or password and change your passwords regularly (monthly or quarterly). When you set up a password use at least eight characters. Be sure to include letters, numbers and symbols. Each year Splash Data publishes the "Worst Passwords of the Year." The first two passwords on the list each year are usually "123456" and "password." New for 2014 were "batman" and "superman." These two may belong to your children or grandchildren. Make sure your password is not on the list.

Internet and Email also need to be protected. Only use public Wi-Fi hotspots for casual web surfing. Understand that when using public Wi-Fi it is similar to having someone watch over your shoulder while you work. This is also true when you are at home unless your network is encrypted and password protected. A hacker's way around your encryption is through email links and pop-up advertisements. Do not click on these.

Email messages claiming that you've won money or containing pleas for help are also scams. Each summer we receive emails from clients telling us they are stuck in a faraway country and need money. Please know that we will confirm each money request by speaking to you on the phone. We do this for your protection.

Phone
Phone predators are becoming more aggressive and technologically savvy. They can record the voice of someone you love and use software to make it sound like that person is calling. The voice is often a little muffled because they are simulating the person crying. They will ask for money. Do not act without double checking.

A new scam this year is a phone call from the IRS. Please know that the IRS always contacts you in writing. Do not call the number they leave. If you must call the IRS, contact your local IRS department or call the main 1‑800 number.

Bragg's Precautionary Measures
Bragg Financial complies with strict industry regulations regarding the safe-keeping of client personal information. We maintain a written cyber-security plan that documents the procedures, processes, hardware and software in place at Bragg to ensure information security. Our cyber-security plan, our processes and our technology are reviewed and enhanced regularly as new threats emerge. Importantly, Bragg Financial does not maintain custody of your funds and securities on deposit. Custody is provided by Pershing, LLC, a division of Bank of New York Mellon, one of the largest custodians in the world with responsibility for custody, safekeeping and administration of over $30 trillion in assets. Click the links to read about Pershing, LLC and Bank of New York Mellon.

We hope this helpful. As always, please let us know if you have questions about the information provided.

This information is believed to be accurate but should not be used as specific investment or tax advice. You should always consult your tax professional or other advisors before acting on the ideas presented here.