How to Protect Your Account from Fraud

Quick answer

• Regularly review your bank statements and credit card bills for unauthorized transactions.
• Use strong, unique passwords for all online accounts and enable two-factor authentication whenever possible.
• Be wary of unsolicited emails, texts, or calls asking for personal information.
• Secure your physical mail and shred sensitive documents before discarding them.
• Monitor your credit reports annually for any suspicious activity.
• Consider using a credit monitoring service for an extra layer of protection.

What to check first (before you act)

Account Statements and Transactions

Before you can protect your accounts, you need to know what’s happening within them. Regularly reviewing your bank statements, credit card bills, and other financial account statements is crucial. Look for any transactions you don’t recognize, no matter how small.

Personal Information Security

Your Social Security number, date of birth, and other personal details are keys to your financial identity. Ensure you know where this information is stored and how it’s being protected, both online and offline. Leaks of this data are a prime target for fraudsters.

Online Account Security

Many of our financial interactions happen online. This means the security of your passwords, the websites you visit, and the devices you use are paramount. Weak passwords or unsecured Wi-Fi can be entry points for criminals.

Physical Mail and Documents

Even in a digital age, physical mail can be a vulnerability. Unsecured mailboxes or improperly discarded documents can provide fraudsters with the information they need to impersonate you or open new accounts in your name.

Credit Report Accuracy

Your credit report is a detailed history of your credit activity. Any fraudulent activity, such as new accounts opened without your knowledge, will appear here. Checking your credit report regularly is a vital step in detecting and preventing fraud.

Time Horizon for Protection

Protecting your accounts is not a one-time task; it’s an ongoing process. The “time horizon” for your protection efforts should be continuous. The longer you wait to implement security measures or monitor your accounts, the greater the risk of undetected fraud.

Step-by-step (account protection workflow)

1. Enable Two-Factor Authentication (2FA)

• What to do: For every online account that offers it, turn on two-factor authentication. This usually involves a code sent to your phone or an authenticator app.
• What “good” looks like: Your accounts have an extra layer of security, making it much harder for unauthorized individuals to log in even if they have your password.
• Common mistake: Not enabling 2FA on all eligible accounts, leaving some vulnerable. Avoid this by making a list of your important accounts and systematically enabling 2FA on each.

2. Use Strong, Unique Passwords

• What to do: Create long, complex passwords using a mix of uppercase and lowercase letters, numbers, and symbols. Use a different password for each financial account. Consider a password manager to help you create and store them.
• What “good” looks like: Each of your online financial accounts is protected by a password that is difficult to guess or crack.
• Common mistake: Reusing the same password across multiple sites. If one account is compromised, all others with that password become vulnerable. Use a password manager to generate and store unique passwords.

3. Regularly Review Account Statements

• What to do: Set aside time each week or at least monthly to meticulously review your bank statements, credit card bills, and any other financial account activity.
• What “good” looks like: You can quickly identify any unfamiliar transactions and report them promptly.
• Common mistake: Glancing over statements and missing small, fraudulent charges. Avoid this by actively looking for anything that doesn’t match your spending habits.

4. Secure Your Physical Mail

• What to do: Use a locking mailbox if possible, and retrieve your mail promptly. Shred any documents containing personal or financial information before discarding them.
• What “good” looks like: Your physical mail is protected from theft, and sensitive information is securely destroyed.
• Common mistake: Leaving mail in your mailbox for extended periods or throwing away documents with personal data. Ensure you have a reliable shredder and make retrieving mail a daily habit.

5. Be Wary of Phishing Attempts

• What to do: Never click on suspicious links or download attachments from unsolicited emails, texts, or phone calls. If you receive a communication that seems suspicious, contact the institution directly using a known phone number or website.
• What “good” looks like: You can distinguish legitimate communications from fraudulent ones and avoid giving away sensitive information.
• Common mistake: Reacting immediately to urgent-sounding requests for information. Take a breath, verify the request independently, and never provide personal details via unverified channels.

6. Monitor Your Credit Reports

• What to do: Obtain free copies of your credit reports from each of the three major credit bureaus (Equifax, Experian, TransUnion) at AnnualCreditReport.com. Review them for any accounts or inquiries you don’t recognize.
• What “good” looks like: Your credit reports are accurate and free of fraudulent activity.
• Common mistake: Not checking credit reports often enough, or only checking one bureau. Get reports from all three bureaus annually to ensure comprehensive monitoring.

7. Secure Your Devices

• What to do: Ensure all your devices (computers, smartphones, tablets) have up-to-date operating systems and security software. Use screen locks and avoid connecting to unsecured public Wi-Fi for financial transactions.
• What “good” looks like: Your devices are protected against malware and unauthorized access.
• Common mistake: Neglecting software updates or using public Wi-Fi for banking. Schedule regular updates and only conduct sensitive transactions on trusted networks.

8. Use Credit Freezes and Fraud Alerts

• What to do: Consider placing a credit freeze with each credit bureau to restrict access to your credit report, making it harder for fraudsters to open new accounts. You can also place a fraud alert, which requires lenders to take extra steps to verify your identity.
• What “good” looks like: Your credit is proactively protected against identity theft.
• Common mistake: Not understanding the process or impact of freezes and alerts. Research the implications for yourself and your legitimate credit applications before implementing them.

9. Limit Information Shared Online

• What to do: Be mindful of the personal information you share on social media and other public platforms. Avoid posting details like your full birthdate, maiden name, or pet’s names that could be used for security questions.
• What “good” looks like: Your online presence minimizes readily available personal data that fraudsters could exploit.
• Common mistake: Over-sharing personal details on social media platforms. Review your privacy settings and be selective about what you post publicly.

10. Use Secure Payment Methods

• What to do: Opt for credit cards over debit cards when possible, as credit cards generally offer stronger fraud protection. Use secure payment apps and services, and avoid sharing payment details via unsecured methods.
• What “good” looks like: Your transactions are protected by robust consumer safeguards.
• Common mistake: Relying solely on debit cards for all purchases. Understand the different protections offered by credit and debit cards and use them strategically.

What affects your score (plain language)

• Payment History: Paying bills on time is the most significant factor. Late payments can significantly lower your score.
• Credit Utilization: This is the amount of credit you’re using compared to your total available credit. Keeping this ratio low (ideally below 30%) is beneficial.
• Length of Credit History: The longer you’ve had credit accounts open and in good standing, the better.
• Credit Mix: Having a variety of credit types (e.g., credit cards, installment loans) can be positive, showing you can manage different kinds of debt.
• New Credit: Opening many new accounts in a short period can temporarily lower your score, as it may signal higher risk.
• Inquiries: When you apply for new credit, lenders check your credit report, resulting in an “inquiry.” Too many inquiries in a short time can have a minor negative impact.
• Identity Theft: If someone opens fraudulent accounts in your name, this can severely damage your credit score if not detected and resolved quickly.
• Data Breaches: While not directly affecting your score, large data breaches increase your risk of identity theft, which can indirectly harm your credit.

What NOT to do while improving credit: Avoid closing old, unused credit cards if they have a good history, as this can reduce your overall available credit and increase your utilization ratio. Also, refrain from making multiple credit applications in a short period, as this can signal financial distress.

Common mistakes (and what happens if you ignore them)

Mistake	What it causes	Fix
Reusing the same password for all accounts	If one account is compromised, all your financial accounts are at risk.	Use a password manager to create and store unique, strong passwords for every account.
Clicking on suspicious links in emails	May lead to malware installation or phishing sites that steal your credentials.	Never click links or download attachments from unknown senders. Verify requests directly with the institution.
Not enabling Two-Factor Authentication (2FA)	Easier for fraudsters to gain access even if they steal your password.	Enable 2FA on all accounts that offer it for an essential layer of security.
Ignoring unfamiliar transactions on statements	Fraudulent activity can go unnoticed, leading to larger losses and debt.	Review your statements meticulously each month and report any discrepancies immediately to your financial institution.
Sharing sensitive information via unsecured channels	Personal data can be intercepted by cybercriminals.	Only share sensitive information through secure, encrypted channels. Avoid sharing via regular email or unsecured messaging apps.
Leaving sensitive documents in the mail	Mail theft can lead to identity theft and new fraudulent accounts being opened.	Use a locking mailbox and shred all documents containing personal or financial information before discarding them.
Relying solely on debit cards for transactions	Debit cards offer less robust fraud protection than credit cards.	Prioritize using credit cards for purchases, especially online, to leverage better fraud protections.
Neglecting software updates on devices	Unpatched vulnerabilities can be exploited by malware and hackers.	Keep your operating systems, browsers, and security software updated to patch known security flaws.
Oversharing personal details on social media	Provides fraudsters with information for identity theft and security questions.	Review your privacy settings and be cautious about posting details like your full birthdate or pet’s names.

Decision rules (simple if/then)

• If you receive an unsolicited email asking for personal information, then do not click any links or provide details because it is likely a phishing attempt.
• If you notice a transaction on your bank statement that you don’t recognize, then contact your bank immediately because it could be fraudulent activity.
• If an online service offers two-factor authentication, then enable it because it adds a critical layer of security to your account.
• If you are applying for new credit, then check your credit report beforehand to ensure there are no existing fraudulent accounts because this could impact your application.
• If you are about to discard documents with personal information, then shred them because this prevents identity theft.
• If you are using a public Wi-Fi network, then avoid conducting financial transactions because these networks are often unsecured and vulnerable to interception.
• If you suspect your identity has been compromised, then place a fraud alert or credit freeze with the major credit bureaus because this helps prevent further unauthorized activity.
• If a website asks for sensitive information, then check for “https://” in the address bar and a padlock icon because this indicates a secure connection.
• If you receive a phone call claiming to be from your bank asking for your account details, then hang up and call the bank back using the number on their official website or the back of your card because the call may be fraudulent.
• If you have multiple online accounts, then use a password manager to generate and store unique, strong passwords because reusing passwords is a major security risk.
• If you are a victim of identity theft, then file a report with the Federal Trade Commission (FTC) because this is an important step in the recovery process.
• If you are considering closing an old credit card account, then think twice if it has a good history and no annual fee because closing it can negatively impact your credit utilization ratio.

FAQ

How often should I check my bank and credit card statements?

You should review your statements at least once a month, but ideally, check them weekly for any unusual activity. Prompt detection of fraudulent charges is key to minimizing losses.

What is phishing and how can I avoid it?

Phishing is a scam where fraudsters try to trick you into revealing personal information by impersonating legitimate organizations. Avoid it by being suspicious of unsolicited emails, texts, or calls, and never clicking links or providing data unless you’ve verified the sender independently.

Is it safe to use my credit card online?

Generally, using a credit card online is safe, especially on reputable websites that use “https://” and a padlock icon. Credit cards offer strong fraud protection, often with zero liability for unauthorized charges.

What’s the difference between a fraud alert and a credit freeze?

A fraud alert warns lenders to take extra steps to verify your identity before issuing credit. A credit freeze restricts access to your credit report entirely, preventing new accounts from being opened in your name without your consent.

Should I enable two-factor authentication on all my accounts?

Yes, you should enable two-factor authentication (2FA) on every account that offers it. It provides an essential extra layer of security beyond just a password, making it much harder for unauthorized users to access your accounts.

What should I do if I find a fraudulent charge on my account?

Immediately contact your financial institution (bank or credit card company) to report the unauthorized transaction. They will guide you through their dispute process and likely reverse the fraudulent charge.

How can I protect my mail from being stolen?

Secure your mailbox with a lock, collect your mail promptly, and consider having your mail held if you’ll be away. Also, shred any documents with personal or financial information before discarding them.

Is it better to use a credit card or a debit card for online purchases?

Credit cards generally offer better protection against fraud than debit cards. If your credit card is compromised, you are typically not liable for unauthorized charges. With a debit card, the money is taken directly from your bank account, which can be harder to recover.

What are the risks of using public Wi-Fi for banking?

Public Wi-Fi networks are often unsecured, meaning your data can be intercepted by others on the same network. It’s best to avoid conducting any financial transactions or accessing sensitive accounts when connected to public Wi-Fi.

What this page does NOT cover (and where to go next)

• Specific legal recourse for victims of identity theft: This page focuses on prevention. If you’ve been a victim, research your legal rights and reporting procedures.
• Advanced cybersecurity for businesses: This guide is for personal accounts. Businesses have different, more complex security needs.
• Investment account fraud: While related, this article primarily addresses banking and credit accounts. Investment fraud has its own set of risks and protective measures.
• Reporting specific types of fraud (e.g., tax fraud, insurance fraud): These often require reporting to different agencies than general financial fraud.
• International banking security: Security measures and regulations can vary significantly outside the U.S.