Social Media & Investing – Protect Your Information

Investors increasingly turn to social media for information when making investment decisions.  Our social media lunch and learns have been some of our most well attended sessions.  This is a positive advancement as information becomes instantly available to the masses, but it also means we must be more vigilant than ever when it comes to protecting privacy and identity.

The SEC recently released two separate Investor Alerts involving investors and use of social media, focusing on what investors can do to avoid potential fraud.  We thought it would be worthwhile to provide a brief synopsis of both articles as they provide some excellent, easy to implement tips.

Part I – Avoiding Fraud

Social media is an attractive playground to criminals intent on committing fraud as it provides a platform to contact multitudes of potential victims at little to no cost.  The SEC advises on some key pointers that can be key in avoiding this type of attack. 

-          Unsolicited Offers to Invest

o   It generally goes without saying that someone contacting you out of the blue with an attractive offer is something to be wary of, but the important thing to note is how professional and personalized these offers can be made to look in this day and age.  Even if something looks extremely official, approach any unsolicited offer with extreme caution. 

-          Affinity Fraud

o   This is a new term given to an old trick.  The SEC recommends avoiding investment decisions solely on the recommendation of a member of an online group or organization to which you belong.  Scammers here prey upon your feeling of community or identifying with a like-minded individual.  Sometimes the person bringing you the opportunity maybe someone you have known for years, but were scammed themselves and are passing the danger along.  Do your due diligence on your own as you would with any other investment opportunity.

-          Market Manipulation

o   Schemes known as “pump and dumps” have been around for a long time.  Someone uses false or misleading information to drive up the price of a stock just in time for them to sell their shares before the stock tanks.  The same tactic can be used in research reports or newsletters where writers are paid by companies to tout a given stock or investment.  Social media allows for all kinds of new ways to promote investments in fraudulent or unethical ways.  Always consider a person’s motivations for promoting an investment opportunity or company.  If it’s such a can’t miss opportunity, why are they telling everyone they can via Facebook or another tool rather than just keeping it to themselves?

-          High Yield Investment Programs

o   These are unregistered investments that make the promise of providing a higher yield than is generally available in the market, often with little or no risk.  Some of these offers use the term “prime bank”.  Lots of return, very little risk is always a dangerous and often fraudulent combination.  Turn and run the other way.

-          Common Red Flags

o   As with anything in life, beware of anything that sounds too good to be true, promises anything guaranteed (especially returns) or pressures you to buy immediately.  The trick here is that with interest rates at historic lows, scammers can promise relatively low returns and still turn a few heads, but it still doesn’t mean it’s a legitimate opportunity or a good idea.

Part II – Securing Your Accounts

-          Passwords

o   The bottom line is to use different passwords on different accounts and make sure the password is extremely challenging.  Use passwords to secure your mobile devices as well, especially if they have access to your social media accounts. 

-          Links

o   Tread cautiously when clicking on links, even if sent by a friend.  If the link looks funny or the message does not sound like a typical message a friend would send, simply delete.

-          Privacy Settings

o   The default privacy settings on many social media sites may not offer adequate protection.  Take the time to go in periodically (sites will update available settings often) and customize your privacy settings to minimize the amount of personal data available.

-          Requests from Financial Professionals

o   Perhaps most importantly, always know that no financial institution, advisor or other investment related organization should ever ask you for personal data, account information, social security numbers, etc. via a social media website.  Any request should be ignored and reported to proper channels. 

The bottom line as with so much in life is “buyer beware”.  If something sounds too good to be true or can’t miss, than it most likely is.  If you want more detailed information on any of the above or care to see links to real-life cases where these incidents have taken place, you can find the original SEC reports below.

Social Media and Investing: Avoiding Fraud

Social Media and Investing: Understanding Your Accounts

Have a great week!

Chip Workman, CFP®

cworkman@taaginc.com

www.taaginc.com

Preventing Identity Theft & Fraud

I recently had the priviliege of hearing Detective Jim Kelley of the Blue Ash Police Department give a presentation on preventing identity theft and fraud. There was great information shared in the session and well worth passing along in this week’s blog.

Perhaps the biggest surprise was how little most of the tips had to do with computer and internet security. That’s certainly something we’ll touch on, but in this rapidly growing digital age, it seems the easiest targets for crooks continue to be your mailbox, your phone and your garbage can. Yes, dumpster diving is alive and well in the world of fraud.

Some of the top tips from the sessions . . .

1. Buy a Shredder
Detective Kelley said that if he could buy each and every home in this country a gift, it would be a simple shredder. He recommends that any piece of mail, receipts or any other document that we are disposing of get shredded. Criminals are more than happy to root through your trash cans for any information that might help them. If your trash is full of shredded documents, they’re much more likely to move on to the next victim.

2. Mind Your Mailbox
Putting outgoing mail in your mailbox and putting up the red flag doesn’t just get the attention of the mailman. It’s also a literal “red flag” that you have mail with potentially sensitive information ready to steal. Whenever possible, use an alternative method to send any outgoing mail, especially when personal information is involved.

3. Hang Up
The older we are, the more likely we’re a part of a generation that was taught to be polite on the phone. This, however, was likely when the home phone was a tool for communicating with friends, neighbors and family and not a sales tool for every scam under the sun. Detective Kelley stressed to not be too polite to just hang up on stranger or unknown callers. Your bank, credit card company or other trusted institution will never ask for your account information or personal data over the phone unless you’ve called them to resolve an issue and are asking to verify your identity. If you think the call might be legitimate, hang up and call a number that you know connects you with the right entity to confirm.

4. Be Diligent
One of the biggest things criminals bank on is that you’ll be as lazy as they are. You need to be diligent in your affairs. Go over bank and credit card statements when they come to make sure nothing fishy is on the statement. It doesn’t require hours of time or a fine-tooth comb, just a basic review to make sure everything is legitimate. The same goes for your credit report. Visit http://www.annualcreditreport.com/ to review your free credit report and check for any potential errors. You’re entitled to one free report from each of the three major credit bureaus, so set up a reminder every four months to do this today.

5. Don’t Trust E-mail
Yes, your computer is still a concern, too. Use virus protection software and be diligent in what you do online. Be especially careful with your e-mail. More and more, your e-mail contact list is the prime target. If you get a strange e-mail from a known friend or family member’s address asking for money or encouraging you to click on a link that seems out of character, just hit delete. Detective Kelley gave examples of dear friends sending an e-mail that they’re overseas, mugged and desperately need money wired, or the famous lottery that you’ve won that you just need to send a check to cover the taxes. These sound like obvious scams, but those that wish to separate you from your money will continue to get more and more sophisticated in how they go about reaching out to their victims.

6. Quick Tips
- Soak your prescription bottles and peel off the labels and shred. Labels carry a lot of personal information, and you don’t want a potential burglar to know that you’re using Ambien on a nightly basis.
- Use gel pens exclusively to write checks to avoid a fraud known as “check washing”.
- Keep personal information locked up and out of reach if you have cleaning people, home health care or other services in the home where subcontractors might be used from time to time.
- Carry around only what you need on a day to day basis. There is almost never a reason to carry your social security card, little used credit cards or other information besides the basics.

7. Listen to the Experts
Detective Kelley provided excellent information from the National Crime Prevention Council. They have a well-done brochure called “Preventing Identity Theft: A Guide for Consumers”.

The bottom line is there is still no such thing as a free lunch. No one out there wants to give you money for nothing and there’s no reason for you to send anybody money so that they can send you more money. Be vigilant, take the necessary precautions within reason and when something seems too good to be true, take a pass. If there’s any question of legitimacy when it comes to these issues, don’t be ashamed or have too much pride to ask for help. If you have been victimized in some way, report it quickly. Especially when it comes to credit card fraud, if you don’t report it quickly after discovering the discrepancy, you could be liable for the loss. Call the bank, credit card or other company first, then the authorities.

Chip Workman, CFP®
cworkman@taaginc.com
http://www.taaginc.com/