The Internet is a powerful tool for investors, which allows them to access account information 24/7, initiate securities transactions from virtually anywhere, and quickly and inexpensively research investment opportunities. However, the Internet, as many know, is not fail safe. Hackers and identity thieves can wreck havoc on someone's personal finances unless steps are taken to protect the security of account numbers, passwords, and PINs. Additionally, investments that often sound like no-brainers all too often turn out to be frauds, according to the Federal Trade Commission.
An individual's personal information is valuable and it must be protected. For instance, if a computer user receives an email pop-up or message asking for personal information, he or she must never reply or click on the link in the message. Email should never be used to transmit personal information. Also, pop-ups such as these may contain viruses or a piece of spyware that can log a user's key-strokes when typing in an account number, password, or PIN. The safest course of action is to never respond to requests for personal or financial information over the computer.
When it comes to investments, investors should not access an online investment account until they know the site is secure. For instance, look for a key or closed padlock icon on the browser's status bar or a website URL that begins "https:" (the "s" stands for "secure"). Unfortunately, no indicator is foolproof; scammers have also forged security icons to fool users.
Investors should keep their passwords in a secure place, out of plain view, and avoid storing them on the computer. Avoid sharing passwords over the Internet, over email, or on the phone. Investors who access their accounts in a public place should be careful to position themselves so that no one can see their hands or screen.
In addition, hackers may try to figure out a password to gain access to a personal computer. Using passwords that have at least eight characters and include numbers or symbols can make it harder to access the password. The longer a password, the harder it is for a hacker to discover it. Users should also avoid common words, as some hackers use programs that try every word in the dictionary. It's also important to change passwords frequently and not use the same password for each online account an individual accesses.
Anti-virus and anti-spyware software are also a must-have for those who make financial transactions online. Anti-virus programs can remove or quarantine viruses, while anti-spyware software can undo changes spyware makes to a system. Make sure that both programs update automatically.
If available, a security token can make it even harder for an identity theft to access an online investment account. These small number-generating devices offer a second layer of security - a one-time pass-code that changes every 30 to 60 seconds. Security tokens can successfully frustrate the attempts by identity thieves.
Many investors may also be traveling business people who can access their accounts in cafes, hotels, airports, and other public places. These are "hot spots" for ideal places for identity thieves. Users are playing it safe if they decide that accessing an online investment on a public wireless connection isn't worth the security risk.
To avoid online investment scams, investors should always independently verify claims. Before making an investment, turn to unbiased sources, such as the U.S. Securities and Exchange Commission, a state securities regulator, and self-regulatory organizations such as Amex and Nasdaq. Fraudsters will falsely assure investors that an investment is properly registered with the appropriate agency and provide a contact to verify. Instead of speaking with a government official, the number will lead you to the fraudster or their colleagues, who will give the company, the promoter, or the transaction high marks.
Investors who believe their personal information has been stolen or misused should file an identity theft report with the police and also filed a compliant with the Federal Trade Commission.