Mind on Money: Be prepared for cyber threats

Mind on Money: Be prepared for cyber threats

October is national cyber security month. What does it say about our modern world that we even have to have such a thing?

Cyber security, however, is a really big deal. While contemplating the full potential of the risks we all accept by being active in the online world will keep anyone staring at the ceiling all night, there are some simple things we can do to protect ourselves and the people we care about from cyber risks.

In my practice at Oak Partners I’ve experienced two specific types of cyber risks in the past year, and as a consumer I have another tip.

The first risk I have to outline is one that is easy to dismiss as a “that won’t happen to me” sort of thing. But I assure you, the people I have seen impacted by this issue over the past year all thought the same thing. The risk stems from online relationships.

I told you it was easy to dismiss, but hear me out. Not all online relationships are romantic, and with social media, the ability to share pictures in real time and the capability to profile potential targets from information readily available online, the scammers in this area have become very sophisticated.

The situations I have been exposed to in my practice all started in a modern-day friendly pen pal sort of way. The scammers presented themselves as from a faraway place, oftentimes overseas, and in a number of situations I’ve observed they present themselves as U.S. military personnel.

Over time, the relationship, based completely on online messaging or email, becomes more intimate (not necessarily romantic) and intense. In the situations I’ve observed, as the communication becomes more intense, it also becomes more dramatic and involves some sort of urgent physical risk to the online “friend." Obviously, with the imminent risk, the online friend needs money to escape the risk, and the scam is set.

I think the key to defending against this type of scam is actually provided by your professional financial relationships. In every scam of this type I’ve seen, at some point the scammer requests funds be sent by a transaction called a Fed fund wire. Fed fund wires are not typically completed by individuals and will usually involve a financial adviser or a banker. It is at this point that the adviser or banker should be trained to ask questions. It's best to be open about the purpose of the wire. Financial advisers and bankers should be conversant in preventing these types of situations. Be open, don’t be embarrassed, and take advice when he/she offers it.

On the flip side of the coin, the other scam I’ve witnessed involves co-opting professional financial relationships. This scam involves hacking a consumer’s email account, which is typically easier than a financial services company website. The scammer actually goes through the hacked email account looking to identify financial relationships. Once the relationships are identified, the scammer uses the potential victim’s own email to begin making requests for financial transactions from the investment firm or bank.

The keys to preventing this scam are twofold. First, it’s important to carefully manage your email account, regularly changing passwords and reviewing both incoming and outgoing messages. Second, never request any type of withdrawal from a financial account by email. Most firms now have rules against processing email requests for withdrawals, but a rule is only as good as the people following it.

The third risk comes in the area of online travel, namely VRBO and AirBNB. We all love these sites and the travel possibilities they have created, but they have also created risk.

All legitimate travel sites will offer a payment process through the website. The website payment button should be the only way to remit payments for these bookings. Scammers have been creating fake property profiles and when the renter reaches out through the site, the scammer requests payment through a phony email process or yes, you guessed it, a Fed fund wire. Payments made in this way do not carry the protection of the offering website, so always pay through the website process.

Opinions are solely the writer's and are for general information only and are not intended to provide specific advice or recommendations for any individual. Stock investing involves risk, including loss of principal. Marc Ruiz is a wealth advisor and partner with Oak Partners and registered representative of LPL Financial.  Contact Marc at marc.ruiz@oakpartners.com.  Securities offered through LPL Financial, member FINRA/SIPC.