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Learn These 5 Tips to Protect Yourself from Financial Fraud

Your information is everywhere. So how do you protect yourself from financial fraud? One of the most common types of financial fraud is identity theft. This occurs when someone steals your personal identifying information to access your credit card or bank accounts. Thieves might also use your identity to commit a crime, obtain medical benefits, apply for a job, get a credit card, or even buy a house or car. This is the type of financial fraud that can drive you to bankruptcy.

Identity theft is growing and is becoming increasingly common. That’s because in our electronically plugged-in communities, we freely share information with little regard for our personal security. It may seem innocent enough to post vacation photos on Facebook or put your birthdate on your LinkedIn Profile. But, keep in mind that a thief may not need much more than your name and date of birth to steal your identity. Armed with just a little bit of data, an online search engine, and some amateur sleuthing skills, they can put your financial life in ruins.

Who Are the Victims of Financial Fraud?

You may wonder why anyone would want to steal an ordinary person’s identity. Rockefeller? Yes. Jeff Bezos? You betcha. But a regular working stiff who’s still paying off last year’s Christmas presents? Unfortunately, thieves want your identity, your neighbor’s, as well as that of the 3-year-old toddler down the block. In fact, criminals will even nab the identities of people who are no longer living.

Make no mistake: Identity theft is big business. More than one in three Canadians will be the victim of fraud according to CPA Canada. A lot of that is financial fraud. Still, experts agree that much of financial fraud goes under-reported simply because people are too embarrassed to admit that they’ve been duped.

David Macdonald shares his knowledge and experience dealing with financial fraud and the best ways to protect yourself.

How Does the Law Protect You?

The Canadian government tries to protect citizens from fraud through a system of laws, alerts, advisories and reporting mechanisms. But, really, it’s up to individual consumers to do as much as they can to safeguard their personal information before theft occurs. Once your information has been compromised, your life becomes infinitely more complicated. It’s not a matter of making a simple phone call. You may need to work hard to restore your good name.

Don’t Companies Protect Private Information?

Keep in mind that when you give out your personal information, companies are not always doing all they can do to protect you. It’s not only large companies that are susceptible to hacking and data breaches. Lots of mom-and-pop shops store your personal financial information in unlocked file cabinets, minimally-secured databases and overstuffed Rolodexes.

How Is It Possible That I Am Not Protected?

You may have heard that you are protected from fraudulent credit card use over $50 by Visa, Mastercard, American Express and Interac. If the credit card use is unauthorized, that’s true. But if you gave your card to a friend or family member or shared your PIN, you have authorized its use. Never mind that they spent way more money than you ever intended.

Also, keep in mind that authorized use is a bit of a grey area. One bank may define it differently than another. You must take reasonable care to safeguard your account and your PIN. If you leave your card on your coffee table and your houseguest uses it, is that authorized use? Read your credit card agreement carefully or ask your financial institution. Each bank may define authorized use differently.

Authorized Use from the People You Know

Betrayal from a friend or family member can hurt. Quite frequently, these are the types of charges that go unreported and can cause you financial hardship. After all, most people don’t want to implicate a friend or family member in a crime. With a few prudent steps, you can protect yourself from further damage. For example:

  • Keep your credit cards and account information secure.
  • Do not give authorization to anyone to use your credit accounts. If you must help out, do it in person or get on the phone along with them and the entity they need to pay.
  • Do not share your PIN. Avoid using your address, important dates, or words that are easily guessed. If you use your SIN or your birthday as your PIN, you may be liable for any fraudulent use of your account.

If the damage has left you struggling to regain your financial footing, you may want to seek the advice of a Licensed Insolvency Trustee. You do have options that will allow you to deal with the debt with dignity.

Unauthorized Use and Identity Theft

With identity theft, a stranger can use your information to open new credit cards and accounts that you don’t even know exist. By the time you discover what’s happened, the damage to your credit, your finances, and even your reputation has already been done. So, how do you protect yourself?

Tips to Protect Yourself from Financial Fraud

Just because financial fraud and identity theft are such pervasive problems doesn’t mean you can’t protect yourself. Follow these tips to keep your financial data private:

1. Don’t put your personal information online.

Remember that once you put it out there, the information is available for nefarious purposes. This may happen despite your best efforts to protect yourself with privacy settings. Think twice before sharing seemingly innocuous information such as your birthday, location and workplace. Turn off geo-tagging on your photos to avoid letting people know that you are not at home.

2. Shred your trash.

This includes anything with your name on it. If it has a barcode, shred it. Do not leave your boarding pass in the trash at your hotel. Take it home and shred it. Make this your customary practice even if you live in a gated community where you believe you’re safe

3. Check your credit report frequently.

If you travel, verify it monthly or enroll in a credit monitoring service. Even better, place a fraud alert on your credit reports. It’s free or very inexpensive. If someone tries to open an account using your information, you’ll receive a phone call.

4. Put spending alerts on your credit cards.

Most banks will let you set an alert at a predetermined threshold or anytime your credit card is used. Thieves will often run up a handful of small charges to see if you’re paying attention before they hit you with a large amount.

5. Check your bills.

Review your bank statements and account transactions online or on paper. If you don’t have a budget, it’s a good idea to set one up. It will not only help you control your spending, but it will also help you to easily identify legitimate charges on your credit accounts.

6. Think twice before sharing private information of any kind.

When you’re asked to provide your SIN, ask why it’s needed, what it will be used for, and how the information will be disposed of once they are finished with it. There are privacy laws in Canada that specify whether or not your personal information, for example, your driver’s license information, can be stored. If you have doubts, ask to speak to the company’s privacy officer or request a copy of the data privacy policy

7. Don’t click on links online.

Like phone scams, online scams are growing increasingly more sophisticated. In the past, a phishing email might be littered with typos and glaringly obvious grammatical errors. These days, scams can easily go undetected. If you receive an unexpected online request for information, look up the customer service number and call the company yourself.

If You Need Financial Help

What if you have been a victim, either of identity theft or other types of financial fraud, and you are now having financial difficulty? You may be saddled with bills you cannot – or should not have to – pay. The misuse of your credit may have left you unable to meet your current financial obligations. Sometimes bad things happen.

You may have exhausted all available remedies and still find yourself in over your head. If you need assistance getting your finances in order for any reason, a Licensed Insolvency Trustee can help.

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Mary-Ann Marriott

Mary Ann has been working in the insolvency industry for 25 years. In 2005 Mary Ann received her Chartered Insolvency & Restructuring Professional (CIRP) designation and attained her license as a Licensed Insolvency Trustee (LIT) in 2014. She is passionate about helping others become financially literate, and has been a guest speaker to various groups and organizations on the topic of Money Management. Mary-Ann also hosts a weekly radio show, as a volunteer in her community. Her tagline is “Helping you have happier, healthier finances”.