5 Tips for Helping Protect Your Identity When Investing

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You may have caught the flurry of news stories recently about the Security and Exchange Commission's (SEC) announcement of, “a rule proposal to help protect investors from identity theft by ensuring that broker-dealers, mutual funds, and other SEC-regulated entities create programs to detect and respond appropriately to…,” so called, “…red flags.”

Red flags are events like the presentation of suspicious documents, unusual account activity, and recent address changes, just to name a few.

I pay attention to these things because I’ve blogged quite a bit over the past year about ways we can help protect ourselves from identity theft when sending kids to college, shopping online, donating to charity, buying a home (part 1, part 2), or traveling on vacation, for example.

The SEC announcement generated all kinds of stories in the media. Most summarized the contents of the over 100 page proposal, others discussed whether the proposed rule would make a difference, and still others how it would impact companies and their clients, especially financially.

But for me, the real story here might be summed up with this simple statement: “You mean institutions regulated by the SEC aren’t already required to detect and respond to red flags?!”

It’s easy to assume things. I assumed red flag rules from the SEC were in place, which just reminds me again to always be vigilant when it comes to protecting my identity. Things aren't always as we assume.

In fairness, I have an account at a large, reputable broker and it's pretty clear they take identity theft seriously. Apparently they chose to do that on their own as a best practice. But the point here really is not who does and who doesn't, it's that I can't assume procedures to help protect my identity are in place.

So here are 5 tips for helping protect yourself from identity theft and fraud when investing:

1. If you are thinking about investing, consider choosing a well established, reputable brokerage or advisor.

Ask around and do your due diligence. Are they registered with the SEC? Reputable brokers and brokerages have spent a lot of time building their reputations, they have track records, and that's a valuable thing to them. They should want to protect their good names and that means they should be motivated to protect your personal information. Of course, don't assume anything.

2. Be wary of unsolicited email or phone calls asking for an investment in an amazing opportunity if you just “act fast.”

There’s a good chance the only investment will be your money into a scammer's wallet compounded by the loss of your personal information. Fraudulent operations often use aggressive marketing techniques.

3. Be suspicious of glossy investment pitches promising spectacular returns.

Remember Warren Buffet here, who is widely considered the greatest investor of the 20th century. His company has reportedly averaged a little over 21% compounded annual gains. Amazing success! So when folks promise 50%, 100%, 1000% annual returns, be suspicious. Your first defense against fraud is your own skepticism when evaluating an investment.

4. Choose a strong account access password for all your financial accounts. Use a mix of upper and lower case letters, numbers, and special characters.

No “12345678” or “password” or “iloveyou” or any other easy to guess passwords. Strong passwords are the simplest thing you can do to help protect your identity and your accounts.

5. If you suspect fraud on your account, contact your financial institution immediately.

It can be a little shocking, but don't let that keep you from acting right away. Help your institution help you by notifying them right away.

If you’d like to keep up with more tips on how to protect yourself and your identity, check out the great folks at LifeLock, they're the ones who relentlessly help protect identities every day. Get great information delivered to your streams by following them on Google+, Instagram, Facebook, and Twitter (@LifeLock).

Photo credit: 401kcalculator.org

Disclosure: I’m a LifeLock Ambassador and as such I am compensated. As always my comments and opinions are my own. Mama Latina Tips Information Purposes Legal Disclosure

This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, nor is it an offer to provide advisory or other services by Mama Latina Tips Media. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Mama Latina Tips Media expressly disclaims all liability in respect to actions taken based on any or all of the information in this writing.





Silvia Martinez
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