What I learned about preventing fraud...

What I learned about preventing fraud after 20+ years in banking

Like many of you, I have been the victim of fraud. I also managed fraud for a major international bank and have spent the last several years teaching banks and corporations around the world how to avoid fraud. Here is my top ten list of things that you can do to prevent or reduce the impact of fraud.

1. Always pay with a credit card.

The Fair Credit Billing Act limits your liability for any fraudulent use of your credit card to $50. If you paid cash or by check, good luck finding the fraudster, getting a legal judgment against perpetrator or collecting on the judgment.

2. Protect yourself from identity fraud.

Keep hard copies of critical information (social security number, account numbers, etc) in a safe secure area. For electronic information, encrypt your data. And keep all electronic devices locked when not in use.

When using public Wi-Fi, avoid accessing you banking and other valuable accounts. If your information is intercepted, you may wake up and find your investments sold and funds transferred around the world.

If you see your credit score deteriorating when you have not missed payments nor dramatically increased you credit lines or credit usage, order a copy of your credit report. Check to make sure that someone has not applied for or been granted credit under your name.

Strengthen your passwords. Computers can test millions of password combinations a second. Have a least 12 digits in your password and a different password for every account. Avoid the obvious passwords: numbers in sequence, spouse’s first name, etc.

Finally, you may know the person who steals your identity. Be wary of your new love, roommates and even children. They have access to your mail, files and accounts when you are not looking or because you gave them access.

3. Don’t lend your name to someone else.

You may be asked by relatives or friends to lend them your good name and credit history by applying on their behalf for a loan. They will usually guarantee to make all the payments and may even pay you a fee. But if they default, you are responsible for the debt and may be accused of fraud.

4. When buying a car, check to make sure you get everything you paid for and didn’t pay for things you did not request.

The car sales person may throw in extra options for free and then charge you on the invoice. Or he may substitute an option that is inferior - charge for a six-cylinder engine when the actual engine has four-cylinders.

To prevent being ripped off, compare your buyer’s order with the invoice attached to the car window. And if you took out a loan to buy the car, your lender may send you a welcome letter listing the special options that the dealership says you purchased. Verify these also.

5. Don’t deposit some else’s check.

If someone asks you to deposit their checks into your account and then wire them money, minus your commission, walk away. What happens is the wire transfer funds are received tomorrow, their check bounces two days later and you are responsible for paying back the missing money to the bank.

6. Be wary of false Malware Alerts popping up on your computer.

They usually provide a telephone number to call and a button to click. Don’t do either. The result would usually be to either down load malware or convince you to pay to have non-existent malware removed.

Instead, call the software company involved to verify that the alert is valid.

7. Don’t let anyone take over your computer remotely.

If you call a trusted customer service number and are transferred to someone who says they want your permission to remotely take over your computer, hang up. The telephone line was probably hacked during the transfer and they want to access your secrets or plant malware on your computer.

8. Avoid paid referrals from Internet search sites

When you search online for a product or service at sites such as Google Ad, you will see “Ad” listings at the top of the page, which are for vendors who paid Google or the other sites for your inquiry. In many cases, these vendors are selling substandard goods and services.

Better to scroll to the non-Ad vendors and look at their ratings and reviews on Yelp and similar rating sites.

9. Know that fraud victims are the preferred targets for new frauds.

Many frauds are committed by syndicates that keep track of their victims, so they can try different fraud scams on them in the future. Or they may sell your name to other syndicates, the same way that a website may sell your name to advertisers.

If you are a recurring victim of fraud, consider having a trusted family member or advisor screen offers you receive.

10. Don’t let your guard down when staying at a hotel.

After checking in and receiving your room key in an envelope with your room number on it, place the key in a different pocket than the envelope. If both are stolen, the thief has access to your room and all of your valuables.

When charging a meal in the restaurant to your room, don’t leave the table before giving the signed bill to the waiter. Otherwise, someone can take it and use the information on it to throw a party at your expense.

But if your hamburger morphs into several bottles of Dom Perignon, demand a refund from the hotel, since the signature on the bill will probably not match your signature.

If the signatures do match, all you can do is go back to your room and crash, unless the fraudster emptied your room of the bed and everything else.