We’ve written about it in the past as it relates to your Charles Schwab (or Altruist) accounts. But we recently had a very unfortunate situation and we wanted to outline what happened to a client of ours, and the subsequent conversation we had with our local banker.

The end result is that thieves are getting smarter and better every day, and we have to stay vigilant.

A Real-World Example of Modern Fraud

Unfortunately, we had a client call a few weeks back who had substantial sums of money missing from a bank/checking account. In this case, someone likely used a stolen identity to open an online bank account in our client’s name. The online bank was based out of Utah, though that detail probably doesn’t matter.

Once the new account (in our client’s name) was established, they set up an ACH transfer from the legacy account to the new account. In essence, they were moving money from the account our client controlled to an account our client didn’t control, much less know about. It started out as small transfers, hoping to go unnoticed. Then on the last day, a large transfer was made which basically wiped the account clean.

As of now, this is a pending situation so the details afterwards are not known. I’d like to believe the online bank owes our client a substantial sum but we don’t know yet. Obviously, this was extremely disturbing on many levels.

Expert Safeguards to Protect Your Accounts

So, I went to talk with our local banker today to see what safeguards could be in place to try to prevent something like this from happening. Below are some things I learned.

Monitor Your Credit

A lot of credit cards these days provide credit monitoring. My Chase card notified me the other day of my credit being pulled. Fortunately, I knew about it, but it was nice to see the reminder. Capital One, American Express, and many others will provide credit monitoring services if turned on. These services will provide a notification when or if your credit is soft/hard pulled.

Set Up Transfer Notifications

You can ask your bank to turn on notifications of transfers above a certain limit. While annoying, most banks would tell you to turn on notifications for transfers above $500. While you may get a few of these a month for regular deposits or withdrawals from/to Schwab, they can provide a nice comfort knowing you are well aware of what’s happening in your bank accounts.

Limit Checking Account Balances

Minimize the amount in your checking account, and disconnect the checking account from the savings account. Many of you like to keep balances of $50k to $100k in your personal checking account for “emergency reserves.” This is putting risk in your checking account.

Consider establishing a separate savings or money market account to hold your emergency reserves. Also, don’t set the savings account as an auto-draft on your checking account.

Additional Security Measures

Use Identity Protection Services

Credit monitoring services like LifeLock are also good ways to monitor any activity against your account. Not only does it provide alerts when your credit is pulled, but it also provides insurance up to limits if your identity is stolen.

Freeze Your Credit

If you don’t want to pay for LifeLock (I get it), then putting a credit freeze on your accounts can be useful too. It’s not guaranteed to protect your credit but generally speaking, if someone tries to pull your credit and there is a lock on the account then calling your personal phone number is the only way for them to unlock it.

Turn on Multi-Factor Authorization (MFA)

This simply means when you login to your accounts using the password, a temporary password is sent to your cell phone or email address (cell phone is better). If someone has your bank account credentials and you have MFA, it becomes much more difficult for them to access your bank.

Use a Password Manager

You need a password manager. Your password is most likely terrible and it’s already known on the dark web. Your favorite kid, high school, or hometown with a number at the end is a terrible way to create passwords. Password managers are a great tool for creating more secure passwords, and remembering them too.

Secure Your Schwab Account

If you want to lock down your Schwab account, we can do that. It complicates life but it is certainly something we’ve learned to work around.

Stay Vigilant

This situation is terrible. And listening to the banker talk, I quickly realized it is not difficult to accomplish.

Stolen identities provide the bulk of information you need to open an account. They can then start to monitor you to gain more information. Routing numbers for any bank is publicly accessible information. If they can find out your bank account number (scanned checks, stolen mail, or any other means possible) then they can tie a new bank to an old bank when opening an account.

It can really be that simple.

It’s sophisticated but simple. And you have to be on guard. Please consider some of the tips above to better secure your outside accounts!