Is Your Nest Egg Safe? The Crucial Steps Seniors Must Take to Stop Investment Fraud…

Dear Mr. Miller:

I’m scared.   So many scams out there and, being a senior and not as tech savvy as the younger people, I’m a target.   I have $1 million in my securities account and I can’t afford to lose this—it’s all I have to live on.  How do I prevent someone from stealing it?

Worried Sick

A Multi-Billion Dollar Threat to Seniors
ACATS Fraud Exposed–A Threat to Your Securities Account
The First Line of Defense–Securing Your Personal Paperwork
Your Digital Lock–Why You Need 2FA
Staying Ahead of the Theft with Account Triggers
The Value of a Personal Relationship in Account Security
The Essential Move–Freezing Your Credit Records
Seeking Help–Professional Support for Security Monitoring

Dear Worried:

A Multi-Billion Dollar Threat to Seniors:  You are right to be worried–very worried!  According to the FBI, seniors lost almost $4.9 billion (with a “B”) in 2024 alone.  That’s a lot of money.  And the losses are probably higher because not everyone reports due to embarrassment, lack of realization of the loss, or lack of knowledge as to how to report it.

ACATS Fraud Exposed– A Threat to Your Securities Account:  I was browsing YouTube recently and came across a new scam of which I was unaware.  It is called the ACATS scam.  ACATS stands for Automated Customer Account Transfer Service; that is the system used by brokerage firms to move investment assets between firms.   You can find various videos on this scam on YouTube by simply searching within that service for “ACATS scam”   Here’s a link to the video I initially watched.

Basically, the scammer has your personal information such as name, social security number, and address (with so many hacks of major firms, it is readily available on the internet, at least on the “dark web”), and opens an account at a financial institution (different from yours) in your name.  Now, the institution is supposed to run a check to make sure you are you and no one is trying to steal your identity.  Apparently, that process is not performed as well as it should be at some institutions–so we can’t rely on that.  The scammer then initiates a transfer from your real account to the fraudulent account and the receiving institution requests the assets from the real account at your institution.  The ACATS system is built for speed and is automated.  There is little human review and it generally happens in 3 days–often before the victim notices anything awry.

Once the assets are received in the fraudulent account, the scammer liquidates them and moves the money to a bank account elsewhere–money gone!

The First Line of Defense–Securing Your Personal Paperwork:  Since most of us don’t review our securities accounts every day, or even every other day, what can you do to avoid being a victim.  First, protect your personal information.  Shred all paper that has any of this information, i.e. bank statements, medical bills, insurance communication, etc.  You can buy a shredder–I did that years ago and found that it just wasn’t practical for me–always seemed to jam if I put more than a few pages into it simultaneously.  I now use a shredding service.  There are a number of them and you can collect your paper over a few months, place them in garbage bags and take them to the shred center.  You can even exercise the option to watch them shred it.  Or, a bit less secure but much better than putting it out with the trash is just take it to the UPS store (many have shredding services). Costs are very low, no matter which option you choose.

Require digital statements rather than paper as mail can be stolen out of many mail boxes.  Or use a locked box that you rent at UPS or various other locations.

Your Digital Lock–Why You Need 2FA:  Many securities firms offer “two factor authentication” (2FA).  That is an option that, at a base level, sends a text message with a code to your phone or email after you enter your user name and password.  That way, if the scammer has your user name and password (or runs software that can try all sorts of permutations in seconds), he still typically can’t get in without the 2FA code.  No, this is not a 100% protection (and neither are any of the other suggestions in this article) but it can help reduce the probability of fraud considerably.

Staying Ahead of the Theft with Account Triggers:  Many securities firms have “alerts” you can activate which will cause the system to send you a text message when certain “triggers” occur.  You could set a trigger for transactions over $5000 or whatever number is somewhat rare for your account transactions to exceed so that you don’t get messages every day.  Or, when entire accounts are moved.  There are typically a number of choices.

The Value of a Personal Relationship in Account Security:  Some firms don’t have any alerts but rely on their personal relationships with you.  One firm explained to me that if they (holding the legitimate account) received a transfer request such as I described above, they would send a docusign over the internet, then request a physically signed document “medallion signature guarantee,” and then call/email the account holder at the address/phone number on record and speak to him/her personally.  They commented that that’s one value of a personal relationship rather than a do it yourself approach.

The Essential Move–Freezing Your Credit Records:  And for goodness sake, freeze your credit records, at least, with the three major credit reporting bureaus so someone cannot steal your credit.  It is free and incredibly easy to do and not that difficult to remove when you need to apply for a car loan or what have you.  Of course, you need to remember to re-institute the freeze after the lender has obtained the necessary report.  And you want to freeze the credit for both yourself and your partner.

And here’s a link to a scam that almost cost me, personally, big time and a discussion of some other protections.

Seeking Help–Professional Support for Security Monitoring:  Yes, these financial scams can be worrisome but their are steps you can take.  Give us a call at 760-436-8832 so we can discuss how our firm can assist you.  For some clients, we advise that they place us on retainer to review suspicious emails/letters so the client has someone to call if they are unsure.  Others may authorize their financial/securities institution to allow their power of attorney holder to monitor accounts on line, receive alerts.  In some cases the senior can hire a trusted service to do the monitoring.