Have you noticed any strange activity on your broker’s site lately? As it turns out, the term “fraudulent site” is pretty accurate in these scenarios. A document by the National Futures Association (NFA) shows the full extent of the problem in this area with 197 fake websites around the country in order to scam brokers out of $136 million.
NFA explains that the problem has existed for years, but in this case the recent disappearance of two financial firms in the industry, PFG (which was later purchased by Advisor Financial Group) and WM Financial Group, the delisting of another.
While the prospect of scams might be enough to keep you up at night, it’s the legitimacy of these fake sites that should concern you. One of the worst scams out there is so called “help desk fraud,” when legitimate financial firms create fake websites that they use to convince customers to write checks or provide other money to fraudulent parties. “Experts estimate that $4 million is lost each month to the black market of help desk scams,” NFA explains.
NFA isn’t the only source of information that’s investigating this. So far, 15 financial firms, including Boston-based Charles Schwab, have filed notices with FINRA of their fraud concerns. These include one National City Bank, in Indianapolis, Indiana. Apparently, the online content at National City Bank included an extensive financial information site, two free columns from the Federal Reserve Bank of San Francisco, and a website that even has a URL shortener.
But here’s the thing. Though no financial institutions have confirmed that all of these sites are fake, eight in-depth company investigations have found that the sites use the real logo of the financial firms in order to lure victims and deposit victim funds into accounts of high-volume wire transfer or “robocall” operations.
Preventing Fraud Through Technology
The best way to avoid such scams is to ensure that your broker has updated his or her company’s website with the latest technology to block potential hackers. For example, you may have gone to a brokerage’s official site on your own and left a few quibbles about details or problems with various parts of the process. After all, if your brokerage has hired an outside company to check over the site, the odds are good that they’ve invested some money in protecting you from a scam.
So you may well be asked, how can I protect myself from fraud? Good question. You can’t, but you can establish a realistic expectation for any site you visit to be a financial entity. In addition, it is fairly simple to limit data leakage:
Pull up a web browser tab with a firewall or similar software on it that blocks certain characters that browsers send to websites and block other types of communication, too. If you have a tab that won’t let you move past a block, switch it to another tab.
Remember: If you visit a site in an insecure manner, you are already giving the site, and therefore the fraudsters, access to your account information. You should not hesitate to switch between your bank’s secure site and a legitimate broker’s and tell that broker at what you’ve done.