Dealing with Hacked Investment Accounts: What to Do

You spend most of your adult life saving for retirement, assuming that the money you put away in an investment account or a 401(k) will be safe. But your investment account is like your bank account or any other online account you have. It can be hacked. If someone gains access to it, they can drain your savings or worse — start trading in your name. You should be on the lookout for potential hacks and security breaches with your investment brokerage accounts. And you should know what to do if you do get hacked. Let’s make one thing clear upfront: hackers can get into your brokerage account. Banks and investment firms have strong cybersecurity measures in place. But if you do not take precautions to keep your own account safe, then you risk being hacked. One of the most common ways hackers take control of brokerage accounts is by sending fraudulent emails with malicious links . They create an email that looks like it came from your investment firm. It includes a link to a fake or malicious website. On this illegitimate website, it might ask you to enter your account credentials, which the hacker then steals. They now have access to your account and can transfer all your stocks out or sell them all. Another way hacks happen with brokerage accounts is with data breaches. The financial services industry is an obvious target for cybercriminals because these companies handle large amounts of customers’ money. They also gather a great deal of personal information on their customers. Here are some of the biggest data breaches in financial services that happened within the last 20 years: If you hold a brokerage account with an investment firm, you should know both you and your firm could be targeted by hackers. Hackers are sneaky. Their goal is usually to sneak into your account so they can steal your information and do as much damage as possible. That’s why it pays to be vigilant and keep an eye out for the following signs that someone has hacked your investment account: If a hacker compromises your credit or debit card, there are laws in place to protect you and limit your losses. However,those same laws generally do not extend to brokerage accounts. It’s highly possible that if someone fraudulently withdraws money from your investment account, you will not be reimbursed. In fact, most brokerage firms don’t address responsibility for client losses due to a cyber-related incident. Those that do put most of the responsibility on the client. The firms that have brokerage guarantees, like Vanguard with its online fraud policy or Charles Schwab with its Security Guarantee, say they will cover your losses. But only if you undertake your “responsibilities.” You are responsible for keeping your account safe. You have to review your accounts on a regular basis, protect your password and computer, and not reply to email requests for personal information. If you click on a malicious link in an email and hackers drain your account, it’s your fault for not being more cautious. And they won’t reimburse you. For this reason, it’s extremely important to protect your investment accounts and follow some of the below tips on preventing hacks. The guidelines for keeping your investment account safe are the same as for any other online account. If you already practice good personal cybersecurity in general, then these tips probably aren’t news to you. If not, you’ll definitely want to read and implement the following tips from the US Securities and Exchange Commission (SEC): Losing your life’s savings or having someone buy stocks you can’t afford is scary. There aren’t many protections for investment account fraud, and that’s even scarier. By staying vigilant, however, and signing up with a firm that takes security seriously, you can increase your chances of avoiding an investment account hack.